Learn why blockchain’s concept of “trustlessness” is beneficial and how this can help achieve better security in today’s modern world
Being an emerging technology, blockchain introduces a number of new concepts that are both innovative and disruptive to today’s increasingly digitized society. One of these concepts is blockchain being a “trustless” technology, which may sound counterintuitive to a world that’s constantly seeking for security and transparency. However, the blockchain’s trustlessness is the very reason why it’s secure and why it has a great potential in changing the current paradigm of trusted centralized systems.
Why is blockchain a trustless technology?
At the heart of any blockchain is decentralization. Blockchain networks are comprised of a distributed system of nodes or computers that securely verifies and records transactions. In simple terms, blockchain is a shared peer-to-peer ledger system where information is spread through the whole network rather than just trusting it to a single authority, such is in the case of traditional banks.
It works like this: Whenever a transaction is prompted on the blockchain, the transaction is broadcasted to the whole network for verification and authentication. After a consensus is achieved to determine whether a transaction meets certain requirements, the transaction is validated and consequently recorded as a new block of data, which is then added to the chain.
All this happens in a matter of minutes, through a complex algorithm that uses cryptography to secure each block of data on the blockchain. It’s also important to note that in a distributed ledger system, data is kept pseudoanonymous, meaning that only the unique address is tied to your transaction so no other personal information is recorded, and that this data is immutable once it has been recorded to the blockchain.
This decentralized way of handling transactions takes away the need for a central authority to run, verify, approve, and record transactions, as the blockchain network can do it autonomously by itself.
What does it mean to be “trustless”?
Due to the blockchain’s role as an impartial validator of transactions, each node on the network can trust one another since the rules of trust, governance, and compliance live on top of the technology itself.
Since the blockchain, being a distributed ledger system, creates a system of trust by default, it also follows that it is a trustless technology. In this sense, trustlessness doesn’t mean that you can’t trust the technology; rather, it means trusting the system without having the need to trust the party (i.e., the person) you’re transacting with.
What are the benefits of a trustless technology?
A trustless technology, like blockchain, enables all kinds of innovations and offers myriads of benefits.
Firstly, it creates a secure system where data is shared anonymously and is stored immutably, providing users confidence and more control over their data. With more than a million points of failure rather than one, this makes it virtually impossible to compromise.
A trustless system also equates to faster and cheaper transactions. Without an intermediary facilitating the transactions, blockchain offers a more time- and cost-effective solution to legacy systems, which applies not only to financial transactions but also to other aspects of information technology such as data storage, supply chain management, and contract administration, just to name a few.
With decentralization also comes greater transparency and censorship resistance. Although data stored on the blockchain is kept anonymous, these are still made publicly available and thus fostering transparency.
It was also previously mentioned that once data has been encrypted to the blockchain, it is immutable, meaning that it cannot be changed. Any attempt to alter, remove, or censor the data takes a tremendous amount of computing energy and necessitates the majority of the vast network to agree to that single change. This makes the blockchain virtually resistant to censorship, offering better democracy and governance.
Blockchain is a disruptive technology that takes trust out of individuals and central authorities, and rather automates it. This trustlessness fulfills one of the promises of the digital age: to bring power to the people and allowing individuals to safely do business with anyone, regardless of location.
– Article written by Tinny
Tags: bitcoin, blockchain, cryptocurrencies, decentralization
Categories: Blockchain, Cryptocurrency