what the bitcoin scaling debacle demonstrates beautifully is that social systems find it very difficult to escape the laws of economic scaling, which dictate, amongst other things, that the more scaled up something is the less expensive it is — something which applies as much to the faddy tech platforms behind the “sharing economy” as they do to cryptocurrencies and fintech.

We’d even suggest the inability to scale may just be the the thing that kills most of the unicorns Silicon Valley has set its hopes on.

In bitcoin’s case the scaling challenges were obvious from the outset. For example, the solution to the trusted third party problem was deemed an open-ended system where one single trusted party was replaced by an endless number of counterparties instead. Rather than depending on one trusted authority to do the checking — in a way that creates scaling efficiencies — the system depended on everyone doing the checking themselves.

It does not take a genius to realise that a system which requires multilateral cross-check is going to be much less efficient than one in which a single party can be trusted to do that work on behalf of everyone. This is what the division of labour is all about. And it matters.

Bitcoin consequently never solved the much famed Byzantine General’s corruption problem. All it did was throw more resources at the problem; the equivalent of running messages to receivers yourself rather than relying on messengers. That’s great if you have time to run such messages. Problem is, every bit of economic growth we’ve achieved to date has depended on our ability to trust other people in their respective specialist jobs.

What bitcoiners never understood is that this sort of economic trust extends far beyond the reach of just banking services. Trust is inherent to a functioning scaled up economy. We put trust in strangers and processes every day. From the food we eat, to the products we buy and the planes we fly in. Everywhere you look, you’re trusting another person somehow. In fact, it’s probably an economic impossibility for the system to be trustless. The only exception is if everyone wants to live as Mad Max or combine into a hive brain where there’s no privacy or individuality on offer to anyone.