Against Trustless Finance

Bitcoiners err in thinking that because the fiat/fractional banking currency system has proved completely untrustworthy, no financial system can rely on trust. For this reason they reject historical money such as metal disks and reject any future financial system built around such money.

But, we enjoy civilization to the degree we devise practices & institutions that foster merited trust.

Historically, banks were able to profit by unsound Ponzi practices, resulting in a crisis in which the banks were unable to meet their obligation. Rather than end the criminal enterprise, the bank cut the courtly authority in on the proceeds of the fractional scheme. Ordinary bankruptcy should have allowed for these banks to be foreclosed, the vault opened by the courts, and any deficiency in repayment to be lifted from the pockets of bank directors.

Instead, the corruption of courtly authority will permit the banking system to go bankrupt only when the courtly authority itself lies in ruin.

Bitcoin does not fix this. A corrupt monopoly on security & resolution of disputes will plague us whether or not the base money is sound, as gold basically is. Gold was not driven from daily transactions by mass mining or even counterfeit coinage, but by the establishment of a financial system whose function depended less and less on physical gold. Why is it impossible for this to occur with Bitcoin? And how could Bitcoin come to be valued as the base money in the first place?

Moreover, we reject fiat currency just as much by saving metal disks as buying cryptocurrency. The important thing to end the corrupt system is to withdraw support from the fiat network as much as possible and to store value outside of it. We must through market action end the "money" printers.

The future challenge is to build a trustworthy financial system. If we intend to ship each other oil, grains, manufactured goods, and so on, non-corrupt courtly authority is needed to provide security & resolve disputes. But the presence of such an authority is precisely what it takes to engender trust, make metal function as money in the industrial economy, and eliminate the need for unbacked "trustless" cryptocurrency.