Trust Will Kill Bitcoin

Through all of Bitcoin's recent troubles -- technological glitches and the collapse of the biggest cryptocurrency exchange, MtGox, the departure of key figures from the Bitcoin Foundation -- I've been reluctant to describe any of the virtual currency's problems as fatal. Now, I think the word finally applies to one of its flaws: Bitcoin now needs trust to survive.

To cryptocurrency enthusiasts, "trust" is a dirty word. "We have proposed a system for electronic transactions without relying on trust," Satoshi Nakamoto wrote in the original manifesto proposing the decentralized currency. That's what made the system better than traditional fiat money: It purported to make sure, as a matter of technology, that transactions would be carried out as intended and without the costs associated with the presence of a trusted middleman, such as a bank, in any traditional payment system.