Long-time researcher and computer scientist Nick Szabo notes that Bitcoin and other cryptocurrencies are trust-minimized rather than trustless, a distinction that is important to how states and private actors can push back.
Szabo warned that while Layer 1 of a strong system with minimal trust can withstand many types of interference, significant vulnerabilities remain in the legitimate route.
He said financial rules are a set of risks that the ecosystem has learned to deal with with the help of cryptocurrency-focused developers and a growing legal profession, but laws tied to arbitrary data create a much broader and more unpredictable attack surface.
Image: Global Sign
Minimizing trust, not trustless
Szabo told readers that while this technical design reduces the need to trust a single party, it does not completely eliminate the need for trust.
In his view, it is important to move away from the term “trustless” and use the term “minimized trust.” Because it shows real limits. Developers must continue to inform the protocol through careful selection.
Anarcho-capitalism is a wonderfully abstract ideal that can encourage innovation. It inspired me to help invent cryptocurrencies.
However, real-world cryptocurrencies are not trustless and have minimal trust. Each cryptocurrency has its own legal attack surface, and the most common ones are…
— Nick Szabo (@NickSzabo4) November 16, 2025
He said his legal work has enabled him to deal with financial law attacks in many cases, with lawyers also joining the defense.
This claim is not that Bitcoin is weak. That means the threats are not just technical, but real and legal, and those threats change with new laws and court decisions.
Regulators face practical limits
Not everyone agrees. One critic, Chris Cedar, who runs a Bitcoin seed storage company called Cedar, pushed back against some of the legal concerns, calling them a “boogeyman.”
Based on media coverage of his remarks, Cedar argued that states can use law to try to block tools and protocols, but history shows there are limits.
With all due respect, I think you place too much emphasis on speculative lawyers.
Bitcoin’s resilience was not about anticipating every possible area of law. It was about minimizing the technical points where enforcement could reach. What if regulators could block general purpose data?
— Coinjoin Chris ⚡ (@coinjoined) November 16, 2025
He cited PGP and Tor as two technologies that are unpopular with some regulators but are still available. His argument is that when a code lacks a central point of control, courts and agencies have less practical leverage to shut it down completely.
Discussion from various angles
Part of the discussion is about emphasis. Szabo focuses on unresolved legal issues and new types of laws that could be used to target content and arbitrary data placed on-chain. Seedor highlights how technological design can remove lever points that facilitate enforcement.
Both are talking about the same issue from different directions. On the one hand, we look at legal maps and see many untested routes. The other examines past enforcement and shows that states rarely prevail against widely distributed protocols.
Featured image from Yagi Studio/Flavio Coelho/Getty Images, chart from TradingView
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