A recent report on trends in crypto says that consumer trust in crypto has declined since the beginning of the year. How many of them would know that crypto is generally a ‘trustless’ technology?
Morning Consult, a billion dollar decision intelligence company, has just released its Q2 report entitled “The State of Consumer Banking”. The report challenges the belief that trust is one of the most important factors in financial services relationships.
In traditional finance trust is something that is built up, probably over many years, and this is one of the main factors that leads to consumers putting their money in any particular financial company, and this trust is necessary, considering that more than one third party is likely to be involved in any given financial product.
Crypto on the other hand is very different. Third parties are not needed, and everything is coded into smart contracts. Therefore we have the term ‘trustless’, which means that there is no human involved in the transaction – just code. As long as the code is audited, and stands the test of time, meaning that it does not get hacked, then no trust in anyone is actually required.
The report from Morning Consult has only 21% of investors saying that they trust crypto a lot, while 57% say they trust it somewhat, and the remaining 21% say they don’t trust it, but that they will buy it anyway.
What was quite surprising though, was that while 67% of US adults said they trust banks, 64% of those who were owners of cryptocurrencies also trusted the banks.
The difference here maybe is that banks and other traditional financial companies spend billions on building their reputations with their customers, whilst in the main, crypto companies are offering far superior yields, and rely on this to attract their customers.
For too long, large multinational banks have been far too opaque, and do not reveal exactly what they are doing with their customer’s funds. On the other hand it may be that there are far too many hacks and rug-pulls in the crypto decentralised finance space, but these are early days, and there is very little regulation.
At least with blockchain, there is transparency – a trail that can be followed should something go amiss. Mainstream media is telling us all how untrustworthy cryptocurrencies are. However, the truth is that they don’t supply trust because it’s already baked into the code. We are entering a future where trust is just not necessary anymore.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.