Having a trusted party isn't the problem. For one, throughput would be miserable with this system if everyone used it. You need some sort of federation at the

Having a trusted party isn't the problem. For one, throughput would be miserable with this system if everyone used it. You need some sort of federation at the very least. The bigger issue is security though. If the entire world used this, everyone would try to hack this centralised server. It would go wrong immediately. Traditional fiat money, while in some ways centralised, is less vulnerable to both of these issues, because you can transfer money without contacting the central authority, and the central authority can only mint more money.