Understanding the Basics of Bitcoin: Satoshi Nakamoto's Quotes on Trust
The key concepts of Bitcoin are believed to be the reduction of trust and third parties. The current social structure is trust-based, mostly relying on third-parties, including the government, banks, and other institutions. In where we must rely on these third-parties, there is a risk of a point of failure and causing disastrous results in society.
In 2008, Satoshi Nakamoto invented bitcoin, a peer-to-peer electronic cash system and described blockchain the underpinning technology. Since then, bitcoin and blockchain have taken the world by storm and is hailed to be the answer for a perfect currency and financial system in the future.
Here is a list of quotes Satoshi Nakamoto, the founder of Bitcoin wrote about "trust.”
In the Bitcoin whitepaper
1. “Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending.”
2. “Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model.”
3. “With the possibility of reversal, the need for trust spreads.”
4. “What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party."
5. “A common solution is to introduce a trusted central authority, or mint, that checks every transaction for double spending. After each transaction, the coin must be returned to the mint to issue a new coin, and only coins issued directly from the mint are trusted not to be double-spent.”
6. “To accomplish this without a trusted party, transactions must be publicly announced [1], and we need a system for participants to agree on a single history of the order in which they were received.”
7. “The traditional banking model achieves a level of privacy by limiting access to information to the parties involved and the trusted third party.”
8. “We have proposed a system for electronic transactions without relying on trust.”
Email thread on "Bitcoin open source implementation of P2P currency"
1. “I've developed a new open source P2P e-cash system called Bitcoin. It's completely decentralized, with no central server or trusted parties, because everything is based on crypto proof instead of trust.”
2. “The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible. - Blockchain.News comment: central bank has the absolute power of money issuance and monetary policies. Central bank is not trustworthy at all and tend to devalue currency repeated.
3. “Before strong encryption, users had to rely on password protection to secure their files, placing trust in the system administrator to keep their information private.”
4. Then strong encryption became available to the masses, and trust was no longer required.
5. “It's time we had the same thing for money. With e-currency based on cryptographic proof, without the need to trust a third party middleman, money can be secure and transactions effortless.”
6. The usual solution is for a trusted company with a central database to check for double-spending, but that just gets back to the trust model.
7. “A lot of people automatically dismiss e-currency as a lost cause because of all the companies that failed since the 1990's. I hope it's obvious it was only the centrally controlled nature of those systems that doomed them. I think this is the first time we're trying a decentralized, non-trust-based system.”
8. “To Sepp's question, indeed there is nobody to act as central bank or federal reserve to adjust the money supply as the population of users grows. That would have required a trusted party to determine the value, because I don't know a way for software to know the real world value of things. If there was some clever way, or if we wanted to trust someone to actively manage the money supply to peg it to something, the rules could have been programmed for that.”
Bitcointalk discussion thread on "Bitcoin minting is thermodynamically perverse"
“Proof-of-work has the nice property that it can be relayed through untrusted middlemen. We don't have to worry about a chain of custody of communication. It doesn't matter who tells you the longest chain, the proof-of-work speaks for itself.”
Bitcointalk discussion thread on "Porn"
“Bitcoin would be convenient for people who don't have a credit card or don't want to use the cards they have, either don't want the spouse to see it on the bill or don't trust giving their number to "porn guys", or afraid of recurring billing.”
Bitcointalk discussion thread on "How To Make a Distributed Bitcoin Escrow Service"
“It's absolutely safer than a straight payment without escrow, but not as good as a human arbitrated escrow, assuming you trust the human enough.”
Bitcointalk discussion thread on "Share database blocks ?"
“The advantage of letting bitcoin download and verify the blocks is that you do not have to trust the person you're downloading them from. If you downloaded the blk*.dat files from some site, you would have to trust that site, since you would be accepting the data without verifying it yourself. if you're copying blk*.dat from another computer of yours, that should be fine.”
Bitcointalk discussion thread on "Development of alert system"
“In cases like the overflow bug or a fork where users may not be able to trust received payments, the alert should keep old versions mostly safe until they upgrade. Manual users should notice the status bar warning when looking for received payments, and the json-rpc safe mode stops automated websites from making any more trades until they're upgraded.”
Bitcointalk discussion thread on "Scalability"
“The design outlines a lightweight client that does not need the full block chain. In the design PDF it's called Simplified Payment Verification. The lightweight client can send and receive transactions, it just can't generate blocks. It does not need to trust a node to verify payments, it can still verify them itself.”
Bitcointalk discussion thread on "Escrow"
“Now, an economist would say that a fraudulent seller could start negotiating, such as "release the money and I'll give you half of it back", but at that point, there would be so little trust and so much spite that negotiation is unlikely. Why on earth would the fraudster keep his word and send you half if he's already breaking his word to steal it? I think for modest amounts, almost everyone would refuse on principle alone.”
Bitcointalk discussion thread "I broke my wallet, sends never confirm now."
“I made changes so they show up in lighter print, with the credit amount in square brackets like [+1.23], and the amount not counted towards your balance and not available for spending. This doesn't apply to transactions you sent, which you implicitly trust, since you wrote them.”
Bitcointalk discussion thread on "Ummmm... where did my bitcoins go?"
“The only disadvantage is that you have to trust the site, but that's fine for pocket change amounts for micropayments and misc expenses. It's an easy way to get started and if you get larger amounts then you can upgrade to the actual bitcoin software.”
Bitcointalk discussion thread on "Transactions and Scripts: DUP HASH160 ... EQUALVERIFY CHECKSIG"
“Since 2007. At some point I became convinced there was a way to do this without any trust required at all and couldn't resist to keep thinking about it. Much more of the work was designing than coding.”
Bitcointalk discussion thread on "Not a suggestion"
“If a client wasn't present until recently, the two ways to convince it that a transaction has a valid past is: 1) Show it the entire history back to the original generated coin. 2) Show it a history back to a thoroughly deep block, then trust that if so many nodes all said the history up to then was correct then it must be true.”
Bitcointalk discussion thread on "RFC: ship block chain 1-74000 with release tarballs?"
1. “Doing your own verifying and indexing is the only way to be sure your index data is secure. If you copy blk0001.dat and blkindex.dat from an untrusted source, there’s no way to know if you can trust all the contents in them.”
2. “The 74000 checkpoint is not enough to protect you, and does nothing if the download is already past 74000. -checkblocks does more, but is still easily defeated. You still must trust the supplier of the zipfile.”