Crypto is supposed to be a beacon of hope for those who are tired of centralized institutions holding all the power. It's supposed to give control back to the people.
Crypto is supposed to be trustless with all of these transactions and contracts onchain. It's supposed to be transparent.
But it's not.
Instead we have $76 Billion lost in scams and hacks. Grifters creating rug pulls and stealing other people's money.
Now don't get me wrong, I love crypto and believe it's the future. But we have lots of issues to solve if we are really going to make it be the new financial system.
I thought they said it was trustless?
It is true that all transactions and code are open on the blockchain for all to see. This does make crypto a lot more trustless than the current financial system.
There isn't a middle man or institution that you have to trust.
But crypto is more like "trust less". There are many things you still need to trust when it comes to crypto.
How decentralized is it?
How locked down is the smart contract?
Can the creator just update the code?
Can the creator pull the funds?
What if the smart contract has a bug & can be hacked?
You are putting trust into the code, the creators, the community and decentralization of any project you want to invest/participate in.
A real life example
This happened a couple weeks ago. A well known NFT collection called Goblin Town turned all of their NFTs to an angry message with the middle finger.
The creators were mad that NFT marketplaces weren't giving them royalties anymore for sales. So they made a switch to the NFT metadata and are moving the collection to a new contract.
Many holders were upset. Some may have even agreed with the take of the founders. But the crux of the problem is that the creators had the ability to do this and most investors had no idea.
To the average joe it wasn't obvious that the creators had the power to change the face of the project from right under them. "I thought the blockchain was immutable"!
The truth of what was going on in this contract was not evident to everyone.
Do you have the technical know how?
Crypto is not easy. There is a huge learning curve for newcomers. Any kid on the block can't just checkout crypto code or transactions on Etherscan and know exactly what's going on.
It takes programming skills and knowing how the blockchain works. I was sweating bullets the first time I sent money across the internet with my self custodial wallet.
When I was writing my keyword phrase on a piece of paper I almost had a heart attack!
You may not even know what I'm talking about. That's the point. There is a lot of technical parts of crypto that makes newcomers have to trust others.
Reaching the next wave?
Hopefully you are now convinced that we have some problems. Crypto isn't really trustless and it's hard to get newcomers to join in and figure this whole crypto thing out without getting scammed.
What will push the next wave? It could be new innovations similar to something like DeFi or NFTs.
But if we are really going to get the mainstream on board, we will have to make crypto easier and more trustworthy. People can't be worrying that they are going to be losing their life savings.
We can't have people falling into scams, million dollar hacks, and grifters taking Kevin Rose's NFTs.
How do we fix this?
We need to be transparent about what is going on in a crypto project.
What are the risks?
What are people having to put their trust in?
Who has control?
How can we make this info as easy and accessible to others?
This is what TrustScore is all about. In my next post I'll be sharing how I plan to accomplish this with TrustScore.
Subscribe to follow along the journey!