Trust in the cryptocurrency economy: framing the problem (part 1)

In the rapidly changing world of digital finance, cryptocurrencies have taken their place as a payment instrument promising decentralization, transparency, and security. However, behind the apparent promise and innovation lies a fundamental problem: the issue of trust. While attractive on paper, cryptocurrency’s decentralized nature often creates obstacles when establishing trust among ecosystem participants. From security concerns to legal uncertainty, a lack of trust is a significant barrier to widespread adoption. However, several strategies and technologies can be utilized to mitigate these challenges and build more trusting relationships in the cryptocurrency economy. In this paper, we examine the main problems of agents in the cryptocurrency economy that hinder trust from users. 

Within this blog post, we’re taking a closer look at the “well-known and naive approach” of “creating trust”. This “naive approach” features some of the biggest problems of the financial and crypto industry: it leads to centralization and is highly vulnerable to attacks both on technical and social levels. This “well-known and naive approach” has proven to be failing — yet it is essential to understand the typical argumentarium behind it.

First, let’s dive into the typical argumentarium of the financial industry.

#1 – Improve security measures

One main problem with cryptocurrencies is their vulnerability to hacking and fraud. High-profile cases of exchanges being hacked and wallets being stolen have undermined trust in the industry. To address this issue, cryptocurrency platforms should prioritize robust security measures, including multi-factor authentication, cold storage solutions, and regular security audits. Investing in a modern security infrastructure will allow platforms to instill confidence in users and demonstrate a commitment to protecting their assets.

Cryptocurrency exchange trust depends on proper private key management and procedures related to access control. As custodians of investors’ assets, cryptocurrency exchanges must ensure the confidentiality, integrity and availability of operational private keys.

#2 – Implement transparent management systems

Transparency is a key to building trust in any financial system. Establishing clear governance systems in the decentralized world of cryptocurrencies can help ensure accountability and fairness. Projects should strive for transparency in decision-making processes, code development, and financial management. Additionally, mechanisms such as community voting and decentralized autonomous organizations (DAOs) can enable participants to participate in shaping the ecosystem, fostering trust through collective decision-making.

#3 – Regulatory compliance

Legal uncertainty remains a significant challenge for the cryptocurrency industry. The lack of clear guidelines and controls can discourage institutional investors and users. To address this issue, cryptocurrency projects and exchanges must adhere to relevant regulatory requirements. By complying with Financial Transaction Control (KYC) and Anti-Money Laundering (AML) requirements, platforms can demonstrate a willingness to operate within a legal framework, thus instilling confidence in both users and regulators.

Traditional exchanges ensure that trading takes place in a legally binding and secure environment. This reputation has been earned over many years and numerous rule updates. The collaboration of cryptocurrency exchanges with traditional stock exchanges allows them to leverage the compliance and regulatory experience gained over hundreds of years of trading traditional assets. As a result, such strategic alliances are considered to have a positive impact on investor protection and perceptions of trust; and generate confidence in cryptocurrency transactions.

Exchange convergence is seen as critical to creating a platform where FIAT and crypto-assets coexist in an ecosystem that drives investor confidence.

And now?

Although the above argumentarium sounds reasonable: it has failed (from Wirecard to FTX to Credit Suisse and hundreds of more failures all over the world). The financial industry tries to “create trust using this argumentarium like a baby with a hammer” and hence continues to fail again and again. Most players in the cryptocurrency industry are simply copying this system which is – let’s face it – wrong-by-design.

Therefore let’s dive into the basics again and then develop a smarter concept in the following blog article.

Verifiable blockchain technology

The underlying technology of cryptocurrencies, blockchain, provides built-in transparency and immutability. By leveraging these capabilities, projects can implement verifiable blockchain technologies that allow users to verify transactions and track the flow of funds in real-time. Through transparent blockchain verifications and on-chain analytics tools, users can gain insight into the integrity of the network, providing confidence in the validity of transactions and the overall security of the ecosystem.

Education and Awareness

Lack of understanding is often the root cause of distrust in cryptocurrencies. Many users are unfamiliar with the technology and its potential benefits, leading to skepticism and indecision. Educational initiatives aimed at raising awareness of blockchain technology, cryptocurrency basics, and best practices for safe use can help dispel myths in the industry and allow users to make informed decisions. By providing people with the knowledge they need to navigate the world of cryptocurrencies, we can foster a more trusted and sustainable ecosystem.


Trust is a fundamental element of any financial system, and the cryptocurrency economy is no exception. As the industry continues to evolve, building trust will remain essential to unlocking the full potential of cryptocurrencies and achieving widespread adoption.


The non-profit association, Switzerland, uses a barrier-free and collaborative approach to create free banking technology for everyone. Open-source technology ensures the privacy of all participants in the financial system of the future. The blockchain-based system is fully distributed. Everyone can participate in is committed to the belief that only commercially free technology can reliably protect user privacy.

Collaboration with the scientific community plays an important role in the development of The results of research are constantly being validated by academic institutions and publicly presented at specialized conferences.


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