The Crypto Linkup

Learn / Experienced · Foundations

Trust: who holds the record?

Every system for money answers one question: who keeps the record of who owns what? At a bank, the bank does. On a shared spreadsheet, whoever has edit rights does. On a blockchain, thousands of computers keep copies and follow shared rules. This module is about learning to ask that question about any crypto product, because the answer tells you what you are really trusting.

You already know what a blockchain is and what decentralised means. Here we go a step further and treat trust as something you can examine, like a lock on a door.

Education only, not financial advice. Examples use made-up numbers, not live prices.

Three ways to keep a record

Imagine a village savings club with three possible record keepers. Each one asks you to trust something different.

What you trade away

Moving trust from a person to rules and many copies has real benefits: it is harder to censor a payment, harder to rewrite old entries, and the record is open for anyone to check. It also has costs that beginners rarely hear about.

Decentralised is a spectrum, not a badge

Projects love the word “decentralised”, but it is not an on and off switch. It helps to ask four plain questions about any chain, app or exchange:

A case study: when a few keys held everything

In March 2022, the Ronin network, which supports the game Axie Infinity, lost about 173,600 ETH and 25.5 million USDC, worth roughly 625 million US dollars at the time. Reports say the attackers took control of validator nodes, and the network had only nine of them. It was reported that the theft went unnoticed for around six days.

Nothing in the idea of a blockchain failed here. The weakness was how few parties held the power to approve withdrawals. The lesson is not “blockchains are unsafe”. It is that the number of independent holders, and how well their keys are protected, matter more than the label on the project.

A Caribbean angle

In Trinidad and Tobago, a bank account sits inside a system of regulators, deposit rules and complaint routes. When you hold crypto yourself, you step outside that safety net. That is not automatically bad, but you should choose it knowingly. Later modules cover safe habits and the local rules; for now, notice that every convenience you gain or lose is really a change in who you trust.

Common mistakes

Treating “no middleman” as “no risk”. The middleman is removed, but the risk moves to code, keys and the people operating the network.

Believing a label. A project calling itself decentralised proves nothing. Look at who can change rules and who holds keys.

Assuming permanent means correct. A permanent record also permanently stores mistakes and thefts.

Thinking only exchanges can fail. Self-held wallets, bridges and apps fail too, in different ways.

Try it yourself

Choose one crypto product you have heard of, such as an exchange, a wallet or a game. On paper, answer the four questions: who can change the rules, who can freeze you, who holds the keys, and how many independent operators keep the record. Write one sentence on what you would be trusting if you used it. If you cannot find an answer, that missing answer is itself useful information.

Keep in mind

Key terms from this lesson

Sources and credits

Explained in our own words from these sources. Figures are approximate and reported by the sources named; check them yourself. Education only, not financial advice.

Module quiz

3 questions. Tap an answer to see if you are right and why. Get 2 right to complete the module.

1. A project says it is “decentralised”. What is the best next step?

2. What was the key weakness in the Ronin case?

3. Which is a real cost of moving trust from a bank to a blockchain?

Back to Experienced →

Back to Learn →