In virtually all of our dealings as humans, “trust” is one of the most important concepts – the belief in the truth, strength, and reliability of someone or something. To be “trustless” is a negative: as defined on Dictionary.com, “trustless” is an adjective that means “not worthy of trust; faithless; unreliable; false.”
That doesn’t sound good.
And it sounds like the last adjective you would want to see associated with any commercial interaction.
But in the terminology of blockchain, “trustlessness” is a good thing. In fact, it’s a core element of blockchain, cryptocurrency payments, “smart” contracts and decentralised finance (DeFi). In the world of blockchain, “trustless” simply means that trust (or lack thereof) is no longer a consideration when transacting with any other person, intermediary, institution, or third party, or to enable a network or payment system to function, guarantee that it will function, or approve any action on it.
“Trustless” systems work and achieve consensus mainly through the code, asymmetric cryptography, and protocols of the blockchain network itself. The trustless environments that blockchains have created enable the peer-to-peer (P2P) sending and receiving of transactions, smart contract agreements, and more.
In a centralised system, we trust a single third party (for example, a bank or a credit card provider) to act as the intermediary who guarantees the trustworthiness of a transaction or counterparty. Participants delegate power to a central point in the system and authorise it to make and enforce decisions.
But a “trustless” system means that the participants involved do not need to know or trust each other or a third party for the system to function. In a trustless environment, there is no single entity that has authority over the system, and consensus is achieved without participants having to know or trust anything but the system itself.
The entire point of the blockchain architecture is to ensure that existing transactions are immutable: they cannot be altered. The blockchain protocol is designed to maintain the integrity of the system, which means that the blockchain is trusted – the users do not have to trust (or know) each other, and they do not have to trust a centralised institution. That is where the ”trustlessness” lies.
The term “trustless” is actually a bit of a misnomer, because a blockchain does not eliminate trust; more correctly, it minimises the amount of trust required and distributes it across a network of people.
Where a third-party enables, controls, authenticates and guarantees a transaction, there are strings attached to that. Usually, the intermediary charges a fee, and may require detailed information about customers – for example, the Know Your Client (KYC) legislation – which removes participants’ anonymity.
In a trustless scenario, trust is dispersed across the blockchain through a network of distributed nodes that rely on the strength of cryptographic mathematics to prove ownership instead of relying on one trusted party. A trustless system enhances the speed and efficiency of conducting business. Without third parties, people have direct means to conduct transactions, and don’t have to worry about high transactional fees or a default by the counterparty. There are none of the problems that have plagued centralised systems, such as the ability for a single point of failure to paralyse the system, system attacks, and hacks. And a trustless system can be faster and more efficient.
Turning the word “trustless” around will be difficult for many; but the change is purely semantic, and the benefits of “trustlessness” in the context of the blockchain system will only become more apparent.