In today’s society, when someone wants to conclude an agreement, they usually turn to a ‘trusted’ third party – banks, notaries, insurance companies, etc. – to provide them with a paper promise. Blinded by the grandeur of their marble buildings and the splendor of their fancy suits, however, one tends to overlook the major flaw in these paper promises: the ‘just trust us’ mentality.
Paper promises are broken all the time. When a short squeeze in early 2021 caused large losses for short sellers, online trading app Robinhood temporarily restricted its users from purchasing GameStop stocks, despite its unlimited ‘let the people trade’ policy – just one classic example illustrating why ‘just trust us’ is as much of a guarantee as a pinky promise.
The issue with paper promises is that they come without a firm commitment of any kind, other than our conscience, and nothing actually compels us to deliver on that promise. You could try suing a bank or insurer for breach of contract, but their financial dominance will almost certainly ensure them a guaranteed win in every lawsuit against individuals.
Nevertheless, paper promises are so deeply ingrained in society that we never really question them or consider an alternative. There is one, however: cryptographic truth, a concept that utilizes encryption, math and physics to guarantee outcomes and thus end the inherent arbitrariness of paper promises. Over the past decade, cryptographic truth has gradually matured into more advanced forms, such as smart contracts. How are they different and – more importantly – why are they so revolutionary?