ELI5: What do we mean by “blockchains are trustless”?

Preethi Kasireddy
Feb 3, 2018 · 7 min read

Intro

Many of us are guilty of describing blockchains as “trustless” systems. However, I’ve come to realize that the term “trustless” is ambiguous, confusing, and most importantly, inaccurate.

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  1. No double spending: the money is not fake, it’s a real $10 bill
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Public-Key Cryptography

Public key cryptography (or asymmetrical cryptography) uses:

  1. a set of private keys visible only to the owner
  1. preventing the transaction from being altered by anyone once it has been issued
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Machine Consensus (The Cryptoeconomic Protocol)

Blockchains have a shared ledger that gives us the absolute truth of the state of the system. It use mathematics, economics, and game theory to incentivize all parties in the system to reach a “consensus”, or coming to an agreement on a single state of this ledger.

  1. miners earning new Bitcoins for successfully solving the puzzle
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Social Consensus (Governance)

Of course, even if the machine consensus works perfectly, we can never guarantee a 100% probability of reaching consensus on other important aspects required to maintain trust in the network. For example, when the underlying network needs to be upgraded, improved, or repaired, we need some way to trust that the network and all its constituents can appropriately handle the changes. In such cases, it’s very much a coordination effort amongst constituents, or what I would call a “social consensus” (e.g. governance).

Conclusion

When we say blockchains are “trustless,” what we mean is that there are mechanisms in place by which all parties in the system can reach a consensus on what the canonical truth is. Power and trust is distributed (or shared) among the network’s stakeholders (e.g. developers, miners, and consumers), rather than concentrated in a single individual or entity (e.g. banks, governments, and financial institutions).

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