{"id":28,"date":"2016-05-11T20:50:00","date_gmt":"2016-05-11T20:50:00","guid":{"rendered":"http:\/\/blog.holytransaction.com\/bitcoin-trust-chain-that-banks-and\/"},"modified":"2021-08-30T19:48:51","modified_gmt":"2021-08-30T17:48:51","slug":"bitcoin-trust-chain-that-banks-and","status":"publish","type":"post","link":"https:\/\/holytransaction.com\/blog\/2016\/05\/bitcoin-trust-chain-that-banks-and.html","title":{"rendered":"Bitcoin, the trust chain that banks and governments cannot corrupt"},"content":{"rendered":"<div class=\"separator\" style=\"clear: both; text-align: center;\"><a style=\"clear: right; float: right; margin-bottom: 1em; margin-left: 1em;\" href=\"https:\/\/2.bp.blogspot.com\/-7TC6DlmGgeo\/VzOapjg-hKI\/AAAAAAAAAcs\/oj84Km1rVa0AfYK3Tocyv2AetnVoMTasgCLcB\/s1600\/chains-1493873.jpg\"><img loading=\"lazy\" decoding=\"async\" title=\"bitcoin blockchain \" src=\"https:\/\/holytransaction.com\/blog\/wp-content\/uploads\/2016\/05\/chains-1493873.jpg\" alt=\"bitcoin_blockchain\" width=\"320\" height=\"240\" border=\"0\" \/><\/a><\/div>\n<h3 style=\"text-align: justify;\">Bitcoin is a trustless money<\/h3>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">For centuries the use of money evolved according to available technologies and society needs. <b>Bitcoin<\/b> is a currency and each currency is information.<\/div>\n<div style=\"text-align: justify;\">The information must be exchanged, only this way it can be recognized and associated with a value, especially in today&#8217;s world drawn as a network.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<h3 style=\"text-align: justify;\">How trust can be betrayed<\/h3>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">Problems arise when &#8211; while exchanging information &#8211; there are intermediaries who betray the trust, for example:<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">1 .<b>central banks<\/b>, if it inflates the currency (es. quantitative easing, or a tool to inject more liquidity into the market in order to indirectly encourage households and consumer businesses);<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">2. <b>banks<\/b>, if they fail, taking away our funds on current accounts (see bail-in or, in case of failure, no longer pays the state, but shareholders , creditors and depositors);<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">3. <b>governments<\/b>, if it confiscates assets or block transfers (Amato government in &#8217;92) ;<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">4. <b>national currency<\/b>, if it is accepted everywhere (or if it is excluded from a stronger system, for example euro ) ;<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">5. <b>privacy,<\/b> if it is violated during the online shopping;<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">Whoever believes in a cryptocurrency such as bitcoin, knows that history (Argentina, Cyprus, Greece, etc.) has already shown that <b>it is not possible to have confidence in all these linked subjects, because each one carries its own interests.<\/b><\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">A centralized entity can actually change, omit or delete any data that passes through its control, since in these entities work people that have a corruptible nature.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<h3 style=\"text-align: justify;\">What is the \u201cpre-trust\u201d ?<\/h3>\n<div style=\"text-align: justify;\">Now, not only friction, costs and transaction times can be reduced, but corruption can be eliminated too. It is virtually impossible to corrupt the ledger: you cannot write on it, and you cannot change what other people write on it: it is no longer a human job.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">So, if there is no trust, to have a secure system we need a network that can perform an action associated with a cost. Since you don\u2019t know the other person you are exchanging the value \u200b\u200bwith you have to &#8220;pre-trust&#8221; in 3 basic elements: mathematicians, economists, technicians.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\"><b>1. Mathematicians,<\/b> with the asymmetric encryption, or the concept of public and private keys, you need to certify who is the true owner of the property;<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\"><b>2. Technicians,<\/b> with the network that reaches consensus through the &#8220;proof-of-work\u201d system, and valid the transactions before they are permanently written onto the blockchain, so it is no longer possible to repeat the processing fraudulently (thus solving the problem of double spending)<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\"><b>3. Economists,<\/b> because of the incentive to earn money with bitcoin. For these reasons a public blockchain cannot live without the use of bitcoin if we want to have its maximum security .<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">All the above systems are designed to work together <b>without the need for intermediaries.<\/b><\/div>\n<div style=\"text-align: justify;\">Now people are starting to use cryptocurrencies, such as Bitcoin, as a method of payment and at the same time entities that accept it are spreading quickly.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">On <a href=\"https:\/\/holytransaction.com\/blog\/2014\/02\/over-3000-bitcoin-friendly-merchants.html\" target=\"_blank\" rel=\"noopener noreferrer\">CoinMap<\/a> you can see the map of all the places where these exchanges take place. And, what is the infrastructure that supports this exchange? The blockchain.<\/div>\n<h3 style=\"text-align: justify;\">Blockchain, the infrastructure that runs bitcoin<\/h3>\n<div style=\"text-align: justify;\">The blockchain &#8211; to define it in simple terms &#8211; is a <b>timestamp,<\/b> so it is only a consequence. The important thing is the protocol, the <b>safe encryption<\/b> with which transactions are signed.<\/div>\n<div style=\"text-align: justify;\">It is not important the account balance, but how reliable is that publicly available data.<\/div>\n<div style=\"text-align: justify;\">So far, paradoxically, it relied on the piece of paper in the hands of anyone. But the paper documents are now easily forged, to be trusted more if we read the declaration of property on blockchain .<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\"><b>Lavoiser<\/b> stated: &#8220;Nothing is created, nothing is lost , everything is transformed .&#8221;<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\">But it was a law that applies only to the material world . For the digital world , in blockchain format , the new law is : &#8220;Everything is created , nothing is lost , nothing can be changed.&#8221;<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\"><i><b>This article was originally written by Massimo Chiriatti on<a href=\"http:\/\/smartmoney.startupitalia.eu\/bitcoin-blockchain\/53265-20160315-bitcoin-catena-fiducia\" target=\"_blank\" rel=\"noopener noreferrer\"> Startup Italia<\/a>.\u00a0<\/b><\/i><\/div>\n<p>Open your free digital wallet <a href=\"https:\/\/holytransaction.com\/app#!\/signup\">here<\/a> to store your cryptocurrencies in a safe place.<\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>Bitcoin is a trustless money For centuries the use of money evolved according to available technologies and society needs. Bitcoin is a currency and each currency is information. The information must be exchanged, only this way it can be recognized and associated with a value, especially in today&#8217;s world drawn as a network. How trust [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":2,"featured_media":391,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37,50,62,76,101,363,576,640,641],"tags":[740,750,764,793,1032,1233,1292,1293],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v19.6 (Yoast SEO v22.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Bitcoin, the trust chain that banks and governments cannot corrupt -<\/title>\n<meta name=\"description\" content=\"For centuries the use of money evolved according to available technologies and society needs. 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