In his recent social media post, American computer scientist and legal scholar Nick Szabo has opined that Bitcoin being trustless is a mythical idea.
The term often gets thrown around in crypto circles to imply that Bitcoin works completely without trust.
However, as Szabo argues, this is rather misleading, given that Bitcoin is actually "trust-minimized," which means that one doesn’t need to trust a central authority to maintain the ledger but still has to rely on a certain set of assumptions.
For instance, one has to assume that developers maintain the protocol correctly. Network participants also have to follow consensus rules. Moreover, there is also an assumption that legal and social frameworks don’t completely shut Bitcoin down.
"Thinking that Bitcoin, or any other cryptocurrency or blockchain protocol, is a magical anarcho-capitalist Swiss army knife that can withstand any kind of governmental attack in any legal area is insanity.
Legal attack surface
As noted by Szabo, every cryptocurrency has a "legal attack surface," which is the term that denotes the ways governments or private entities could use law to disrupt it. For instance, regulators could ban Bitcoin exchanges or make it illegal to transact in Bitcoin.
The Bitcoin layer-1 is capable of withstanding interference far better than centralized systems. However, as Szabo warns, there are limits: Bitcoin can’t magically survive every legal attack.
Arbitrary data such as ordinals could increase the threat of a legal attack, according to Szabo.
He further argues that the crypto industry lacks the expertise to manage these unpredictable legal risks.
The system requires diligent developers who would be capable of maintaining a trust-minimized design. It also needs seasoned legal experts, as well as users and community members with a sufficient level of awareness.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team