Trustlessness | Blockchain and Cryptocurrency Course: What You Need to Know | 2019

TL;DR

Bitcoin is not completely stateless or trustless, as government jurisdiction comes into play when interacting with the physical world and intermediaries in the crypto space.

Transcript

many people also think that bitcoin is a trustless system or stateless system that observation is easily exaggerated let's look at the notion of it being stateless in being beyond the control of any government well at one level this blockchain remember it exists in thousands hundreds of thousands or millions of copies spread around the world and ev... Read More

Key Insights

• 🎮 Bitcoin exists in a decentralized blockchain beyond government control at a peer-to-peer level.
• 🖐️ Interacting with the physical world through bitcoin transactions brings government jurisdiction into play.
• 🥹 Trust is necessary when using intermediaries in the crypto space, as they can hold and transfer your crypto.
• 👨‍💻 Storing your own code requires trust in the security and reliability of your storage system.
• ❓ Bitcoin can still have value and be used for transactions, even though it operates beyond government jurisdiction.
• 🌍 Governments can exert jurisdiction over individuals engaging with bitcoin when they interact with the physical world.
• 👾 Many smaller investors rely on intermediaries in the crypto space, which introduces an element of trust in these entities.

Questions & Answers

Q: Is Bitcoin beyond the control of any government?

At a peer-to-peer level within the blockchain, transactions in bitcoin are seemingly beyond government control. However, as soon as you interact with the physical world, government jurisdiction applies.

Q: What happens when you exchange bitcoin through an intermediary?

When using intermediaries like exchanges, you are trusting them with your crypto. If the exchange loses your crypto, gets hacked, or turns out to be fraudulent, you may lose your investment.

Q: Can you trust anyone in the crypto space?

Trust is necessary when dealing with intermediaries. If you choose to store your code in other ways, you must trust the security and reliability of your storage system to avoid losing or compromising your crypto.

Q: Does being stateless mean bitcoin has no value?

No, being stateless refers to being beyond government jurisdiction. Bitcoin can still have value and be used for transactions, but the moment it interacts with the physical world, governments can exercise jurisdiction over it.

Summary & Key Takeaways

• Bitcoin exists in a decentralized blockchain spread across the world, making it seemingly beyond the control of any government at a peer-to-peer level.

• However, once you interact with the physical world by exchanging bitcoin for real value, such as cash, government jurisdiction comes into play.

• Trust is also necessary when using intermediaries in the crypto space, as they hold and transfer your crypto on your behalf.