Why cryptocurrencies cannot completely remove the need for trust

Gatecoin, a Bitcoin exchange, was hacked losing about 5% of its Bitcoin reserves. The company announced that: “Gatecoin is working to raise additional funding to cover the losses. The company hopes to reimburse all customers that have lost funds as soon as possible”. This is a very interesting statement and says that Bitcoin exchanges will have to back their reserves and guarantee to protect their customers against such loses. Why? It is a matter of trust; otherwise the platforms will never be trusted and people will not use them. This, against recent hype, says that while the blockchain establishes a trustless currency removing the need for a trusted central bank the need for trust simply re-emerges elsewhere: at the exchange operators. Isn’t this a new kind of “central bank” then?

 

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