Doing a Deal When You Don’t Trust the Other Guy

How do you trade with someone you don’t trust but have no choice because they have what you need?

Look around at the world we are entering. Rising tensions and conflict everywhere; Ukraine, Taiwan, a belligerent US and EUSSR sanctioning anyone at the drop of a hat, including those inside their unions. Yet these are the parties that expect you to trust them.

Regardless of where you stand on relevant issues, hopefully we can agree that in this heightening climate of open animosity, it becomes more troublesome to conduct negotiations and reach deals when your trust in the other party is wavering or wholly lost because of their prior actions.

The world is bifurcating broadly into the failing West (US, UK, EUSSR, Canada, UK, Australia and New Zealand) and the rest of the world - referred to commonly using terms including the developing world, Global South and BRICS.

Reality dictates opposing sides, including nations with conflicting interests still need to trade. During the Cold War, the USSR and the West traded goods, including grain and energy.

Today, the US still needs goods from China; import substitution of everything will take a decade, trillions of dollars and likely still not be feasible. The EUSSR will realise in time they have no choice but to return to Russian energy or watch their industry and populations suffer under massive price increases and short supply of everything. The West still needs food and energy from countries and people it treats as an underclass, nations who are finally standing up for themselves to former colonial masters.

But now we are facing a period even worse than the old Cold War when the sides still had a level of underlying trust. When a deal was struck, there was sufficient understanding and belief that goods would be shipped and funds received in return.

Today we find ourselves in a climate where assets are openly confiscated (Russia), users are banned from transacting (try wiring funds to Iran or many other nations), and people or nations are openly penalised (EUSSR imposing sanctions on their members Hungary and Poland). How do these ostracised parties conduct trade and transfer of value?

Trust Has Been Eviscerated

How do you trade when neither side trusts the other? How does one transact and trade value for the product you desire when the other side has clearly shown - in the case of the US and EUSSR - that fiat debt ‘money’ has been weaponised? When they’ve proved funds can and will be confiscated at their whim.

Gold bugs will say we are entering a world where gold will reign supreme again. While the physical settlement of trade with gold is still technically possible, it’s no longer feasible due to the same physicality’s limitations. It requires trust in the other party. This problem has existed with gold for thousands of years; the future will be no different.

Venezuela could reach a deal to supply oil to the US in exchange for gold. But this involves a great deal of time to ship, verify the grade of the gold, the danger of loss during transit, and the expense involved in every part of the value chain.

Where will you store your gold? If Iran and Germany want to settle a bunch of transactions, gold must be loaded onto a plane and flown thousands of miles to Iran. Only to turn around and be shipped back a month later when a new group of trades settles in favour of Germany?

Use a third party to verify and store the gold you say? Like the formerly netural Switzerland? That hasn’t worked out so well in the past for Venezuela, whose gold in London has been seized. Whichever way you look at it, gold still involves significant elements of trust throughout its value chain, and this cannot change in the physical realm - it is a tangible ‘thing’.

Why does Bitcoin offer such immense potential for the future of money? The same reason gold doesn’t work - it has no physical presence and most importantly, requires no trust of the other party. Transactions are final and verifiable; another party cannot seize that value once transferred.

The inherent lack of trust in our new world is the key driver that will see Bitcoin dominate the future as the world’s new money that withstands openly hostile trade partners that don’t have faith in one another.

Bitcoin requires no trust. A pragmatic deal for a good you need can be reached with a trade partner you despise. As long as the deal in question benefits both sides, the seller of goods can ship the goods and rest assured, the money he has received after one hour (six block confirmations) can not be reversed nor confiscated by an overzealous US Treasury.

Now that is powerful; money that requires no permission, no third-party interference possible and no trust of the other party to the transaction. You don’t need to know who is on the other side of the deal as long as the terms are fulfilled.

Bitcoin offers the perfect solution for a world growing increasingly devoid of trust.

Where to From Here?

Until now, I’ve painted the picture of what is wrong with the current system in a world devoid of trust. For those already aware of this, ask yourself - what is the most likely solution for the reality you know to be true?

What we currently call ‘money’ today is a fiat-based debt obligation. Except you no longer can trust the other side issuing the debt. Will they hold up their end of the deal or even if they do, will they inflate away your value by printing ever-increasing piles of debt?

You can believe the world will continue functioning with these debt obligations, printed at will by governments, who, by their own admission, don’t trust each other. Perhaps that will indeed be true for nations that do trust one another, but for an increasingly large proportion of nations - reality is changing before our eyes.

How much of the world’s value will be captured by Bitcoin vs how much remains in the fiat debt system? That is open for debate. But I would argue the current value of less than $600 billion vs a world conducting tens of trillions in transactions and asset values is wrong.

You can believe we’ll somehow move back to a costly gold standard that involves these parties above still trusting each other. Or you can realise before most of the world does that the old systems no longer work, and it’s only a question of how long it will limp along before collapsing.

Piecemeal solutions may be cobbled together including CBDCs and a BRICS currency, but these will still face the problems above; they still require trust. Alongside that will be a trustless money, Bitcoin. Good money drives out bad. It has been this way throughout history and the future will be no different.

That day is approaching faster than you realise.

Bitcoin is money, not someone else’s liability. It is the perfect money for the world we are entering, and to believe it’s not is either naive, ignorant or purposely obtuse due to vested interests or misplaced trust in the corrupt fiat system. Bitcoin is money without trust.

Choose your future money wisely.