Trust in The Trustless System: The Hurdles to Trustless Innovation - TOKEN2049 London 2022

thank you so much for coming my name is Marcus Zhang I'm the current head at Star War Adventures for business development but I'm not really here to talk about work per se I'm here to talk about something that I actually really care about I've been in cryptocurrency since I was 14 years old about 10 years ago it's the only industry I've ever really known and I've seen it grow into the Behemoth that it's become today and I'm here to talk about it when asked about the benefits of blockchain it is almost second nature for all of us to speak of immutable ledgers transparency and decentralization together these three factors form the basis of security for blockchain and allows potential for a trustless system that is a system that does not require mediation from a discretionary party or oversight from a centralized body a system where trust in the counterparty is not required to fulfill a transaction I feel it is quite a pity that we have to remind folks that a large portion of crypto was was originally set up to be the foundations of a trustless system the big irony of crypto supporters is that many enter for the decentralization just to keep their tokens on centralized platforms leaving them knowingly or unknowingly without many of the inherent benefits of the blockchain trusting A system that requires trust ultimately leaves your fate in the hands of the entity in control of the keys as the popular saying goes not your keys not your crypto perhaps this may be fine in an Ideal World a world where there are no Bad actors and but that is so far from the reality centralized systems have shown to be the most vulnerable to misfortune as recent events show there are some characters that have chosen to make unsavory decisions to save themselves over their supporters their investors and their believers those that have been in crypto a few Cycles can see the history oftentimes repeats Mount gox cripsy bit connect 3ac Babel hot or not and the list goes on in fact there was a new addition recently all these entities are centralized and gone leaving only the disillusioned in their wake although Defy is far from perfect it seems like centralized finance and crypto is the most vulnerable to this Misfortune stealing a headline from bankless C5 broke but D5 did not it gives crypto a bad name to evangelize a trustless system only to have the industry plagued by issues of trust it is a tragic irony and prevents many from staying in the space or exploring it long enough in the first place those of us that have managed to avoid the recent catastrophes can breathe a sigh of relief for having survived but many others unfortunately have not it is they not I who have suffered but what kind of industry would we be if that is the mentality that we all had the implosion of C5 has taken out a vast Suave of newcomers that otherwise may have stayed long enough to eventually contribute it has given crypto as a whole a bad name and reaffirmed many a stubborn mindset that crypto is too dangerous or even worse entirely a scam as my mother oftentimes reminds me the industry itself suffers every time newcomers are decimated through shadowy or immoral practices that don't rightly reflect the principles of blockchain to paraphrase Toto's Africa we must seek to cure what's deep inside frightened of this thing that we've become we as an industry we as the supporters of this industry must ask ourselves why does this keep happening over and over again cycle after cycle people get burned and wrecked is it a rite of passage does everybody need to be ripped off but I suppose for me to espouse a trustless system I must talk about what is a trustless system at his most basic terms it means that trust in the counterparty is not needed to transact that you don't need to trust the exchange you don't need to trust the other guy it just happens because we know that this is what is supposed to happen usually this is achieved by having transparency and things including code and organizational structure now crypto has always been A Tale of Two Cities centralized and decentralized there's a place for both but one city is strongly growing stronger than the other and if we don't back up the weaker one it'll be gone forever and then what will we be except what we have sought to replace this transparency would allow it don't trust but verify attitude however this brings up a number of issues in itself not everyone knows how to verify imagine the typical user Persona of somebody that's new to cryptocurrency the crypto curious not many of them have the ability to independently verify a protocol's true function by combing through code some go straight to C5 while some irregardless try their hands at D5 some don't even bother to some folks don't even try to verify but immediately trust that this system on D5 is a trustless system which can lead them to put their money in untrustworthy debts with nefarious back doors eventually they may encounter a rugging in a project that will leave a distaste for independent exploration of the D5 ecosystem this leads them to search for someone that can verify on their behalf group think is strong in crypto it has always been most likely now the rugged crypto curious will default to a key opinion leader that is likely sponsored by a centralized entity that has the marketing power to present itself as a platform run by crypto experts that deserve their trust sadly some C5 providers collapse and the cryptocurists become the crypto skeptic having been rugged by both defy and C5 whereupon they leave the Space Angry and dissatisfied and every Thanksgiving dinner you'll hear about it over and over again you led me into a scam thus the cycle continues perhaps to the shock to some of you and no surprise to others this user Persona is not limited to retail many unfamiliar institutions trying their hand at crypto and even some thought leading firms in other Industries have defaulted to have followed the leader mindset as well if you would like an example please look at the three arrows creditors why did they fall for it well aside from the Allure of easy money of obtaining yields unable to be found on defy why did these creditors choose to trust the individuals in three arrows rather than a transparent trustless system the psychological maneuvering performed by nefarious entities to manufacture trusts and a false sense of security is done to provide what I call a semblance of trust to portray themselves as trustworthy irregardless of what they actually are sadly this is not limited to C5 projects as well certain D5 projects especially those in the early BSC era many early chains they did this by copying the layout and functions of other successful trustless steps leading many to trust but not verified three arrows did this by putting up a front on Twitter couching their balance sheet I'm so rich I'm so smart you should listen to me this is too complex for you to understand well trust don't verify the semblance of trust is dangerous because it leads many to that mindset but why be in this position in the first place why do we seek the trust in an entity or individual when we could trust the trustless system perhaps it's the nature of humans to seek comfort in another person rather than a complicated system or worse yet a machine humans are drawn to the easiest solution which right now is to trust somebody who told them something maybe we are drawn to it perhaps we need to make the easiest solution to be an easier way to verify I think this is possibly where the issue lies how do we make trustless systems easier to verify and how do we give Comfort to those that yearn for someone to trust to ultimately have them trust the trustless system so how do we make the trustless part of crypto more accessible to those who are unable to verify what to trust to be frank I don't know if I did I would be a much bigger deal and so much more richer but quoting an article from Forbes in 2019 when it comes to trust people don't want something entirely new they want the familiar done differently so what are institutions familiar with legal Clarity perhaps certain organizational structures someone to speak to perhaps how many of us here grown whenever we hear a mechanical voice on the other end of a phone line or to find out questions redirected to an FAQ We crave human interaction and reassurance in situations of anxiety dealing with the unfamiliar causes so much anxiety and there's nothing more unfamiliar than crypto to somebody who's entirely new the easiest most default path we have in these situations is to find somebody to speak to interpersonal relationships is a characteristic of business for better or worse since the dawn of humankind ever since business has been invented we have thought of somebody else as who we're interacting with and to change that mindset overnight in this industry is a it's a crazy thing we're changing literally Human Nature to trust the machine over a person to change a practice as old as Humanity itself is no easy task and careful consideration should be taken to ease this transition into a trustless world so who here uses Discord to communicate within crypto right who here uses Twitter to talk to people find out stuff industry leaders modern technology has brought us closer together than ever before we could talk to a CEO of a multinational corporation billions of dollars and he might just reply captains of industry like CZ vitalik Elon Musk and SPF I wrote that way before this happened are able to Showcase their Humanity by airing out their thoughts on Twitter it allows us to see them as individuals beyond the companies they represent Founders are able to speak directly to Their audience and the average person all this is done to reassure them and to Foster Trust on the basis of a of a familiarity people gravitate to what is familiar and nothing is more so familiar than human interaction it's probably why corporations spend so much money to sound human on Twitter all this works well and fine for retail but for institutions there is very little such comfort in the crypto space the standards required by institutions to make decisions are typically so much higher Discord and tip and Twitter will simply not suffice as proper means of communication with millions of dollars and the jobs of hundreds of hundreds of people are at stake we cannot go off the word of strangers online either institutions like people crave the human face of business to be able to tell your boss stakeholders or colleagues that adopts person from The counterparty's Entity has told you something is not just reassuring but protects you legally from many of the issues that can arise it means that if you are told something that was not true that you had been misled and potentially even a victim of fraud however if you were to make the same claisins based on an FAQ sheet that it leaves you culpable to be personally accused of poor interpretation worse yet if you were to mislead if you were to be misled by a stranger on the internet in a professional setting you may be thought of as a fool I offer you no Solutions but I do see the de-emphasis of personal relationships as a major obstacle to building trust for the trustless systems among institutions just because that it's a D5 app that's trustless doesn't mean that there shouldn't be a customer support line so how to verify well perhaps we must also consider if an easily verifiable trustless system would even need such reassurances if what drives entities and individuals to trust individuals over trustless systems is unfamiliarity and difficulty to do verification conceivably what's needed is an easier and more transparent verification process maybe the issue is not in the trustless system but how the trustless system presents itself right now the industry standard has been for trustless protocols to get an audit that shows they are trustless this is an oxymoron as you are trusting the auditor to remain impartial and also trusting the protocol that it will actually deploy the code that it has sent to the auditor many scams have gotten an audit to give assemblance of trust only to eventually rug the project because they deployed a code that wasn't in the audit they're not obliged to actually deploy what they gave to the auditor and the auditor is not obliged to keep checking up once the audit is done the way you package something makes the difference for Mass adoption and right now the verification of trustless system is not it's not accessible to the public it's not as accessibly packaged for almost anyone that hasn't taken hours of time to learn a whole new subject that are entirely unfamiliar with does this not apply to how you present your trustless system to make it presentable so that people will understand what it actually does it's not that hard to add comments on GitHub I do it all the time through it all blockchain has been the potential to be the Catalyst for a huge paradigm shift in the way business is done for any shift to be successful there needs to be things in place to make the transition to The New Normal easier for those unfamiliar accessible reusable reliable verification at a human touch is just one such area where I see an opportunity for Change and I have spent literally basically my whole life in crypto and I really do believe in it and the way that things are going when when when forgive my language but when things hit the fan we had an opportunity to innovate in a more trustless way or to fall back on the trusted system and have Regulators look after us and to say that things are okay and it seems like we're moving more in that direction when there is actually an alternative I want all of us who believe in this cryptocurrency dream blockchain dream that we all have taken sacrifices and risks to be in to ask ourselves and I quote the late far Mulan who is that girl I see staring back right at me when will my reflection show who I am inside thank you very much