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In different times, ‘money’ has existed in different forms: squirrel pelts, seashells, stones… Now it’s mostly ones and zeros on computer screens. 

Money is based on trust. We trust that other people behave according to something we have collectively imagined. 

With cryptocurrencies, the bottom line is no different. When coming up with a whole new currency system, you  need to come up with a whole new system of trust. How to make people trust a new kind of money? And why would this one be any better?

On the second day of Slush 2019 the Quantum Stage was taken over by Meltem Demirors, the Chief Strategy Officer at CoinShares, who shared her view on the meaning of trust in complex markets, like cryptocurrencies.

“Living in the digital world requires trust”

Our societies are built on trust: trusted products, trusted brands, and trusted institutions. Nowhere has trust been more essential than in the financial system, where we rely on a complex web of opaque intermediaries such as banks, funds and other branches of financing system. 

At the time when Bitcoin was introduced exactly 10 years ago, consumers didn’t have a functional way to operate independently of these intermediaries. 

What separates most cryptocurrencies from other current money is that there are no intermediaries. The control of the system is divided between users, unlike with modern digital currency and the central banking system. The trust is created by leveraging the blockchain technology that enables tracing each transaction back to its roots.

The Status of Banks is Changing

At the moment, banks are making more money than ever. 45% of all consume funds in the US are held by just four banks. 

According to Remirors, the next wave of banking is not going to be led by banks. 

“Not long ago, power belonged to a few big companies which all produced physical products. Now the power has shifted to digital corporations. These companies know everything about you and they control everything you do. The money of today is information. These corporations are the banks of the future,” Demirors explains.

So if a few big companies control our networks, can we trust them? Hardly. 

Can we displace these intermediaries? Demirors does not believe that intermediaries are going anywhere. But she wants to offer consumers the option to do things independently, e.g. with open-source cryptocurrencies. 

In order to bring cryptocurrencies in to our everyday lives, we need trust in one another.

“People don’t trust cryptocurrencies yet. It takes time to change human behaviour,” Demirors believes. Regardless of the slow progress, she feels optimistic: “Ten years from now, cryptocurrencies will cover much more market space.”


Photo: Tanu Kallio