Trustless

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Community submission - Author: Caner Ta莽o臒lu

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 property of trustlessness in a聽peer-to-peer (P2P) network was introduced by聽Bitcoin, as it allowed all transactional data to be verified and immutably stored on a public聽blockchain.聽

Trust exists in the vast majority of transactions and is a vital part of the economy. However, trustless systems have the potential to redefine economic interactions by allowing people to place trust in abstract concepts rather than institutions or other third parties.

It鈥檚 important to consider that trustless systems do not completely eliminate trust, but rather distribute it in a type of economy that incentivizes certain behaviors. In such cases, trust is minimized but not eliminated.

Centralized systems aren鈥檛 trustless since participants delegate power to a central point in the system and authorize it to make and enforce decisions.聽

In a centralized system, as long as the trusted third party can be trusted, the system will function as intended. However, serious issues can emerge if the trusted entity isn鈥檛 to be trusted. Centralized systems are subject to system failures, attacks, or hacks. Data can also be altered or manipulated by the central authority without any public authorization.

When it comes to money, centralized systems arguably have more widespread appeal than decentralized, trustless systems since people tend to be happier to direct trust towards organizations than systems. However, while organizations are made up of people who are easily corruptible, trustless systems can be governed entirely by computer code.

Bitcoin and other聽Proof of Work blockchains achieve trustlessness by providing economic incentives for honest behavior. There is a monetary incentive to maintain network security, and trust is distributed between many participants. This makes the blockchain mostly resilient to vulnerabilities and attacks, while still eliminating single points of failure.聽
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