Continuing our series of educational articles, this one looks at what the term ‘trustless’ means in the context of cryptocurrency. Be sure to read this one carefully.

Although it’s easy for most people to grasp the simple aspects of blockchain technology, it’s not long before you can feel out of your depth, lost in a sea of complex terms. Zero-knowledge proofs, trustless transactions, and ASIC resistance are just a few of them. Trustlessness for instance is a counterintuitive term. It seems the antithesis of a solution to society’s current problems.

At present, it’s fair to say that public trust in centralized organizations is at an all-time low. If our faith in the very structures and systems that we depend upon diminishes what alternatives do we have? This is where one of the fundamental principles of decentralized blockchain technology steps into the breach — its trustless nature.

It might seem unusual at first but the last thing you want in a cryptocurrency transaction is trust. This is because in the context of these transactions trust refers specifically to a trusted intermediary.

Prior to the advent of cryptocurrency, if you wanted to send money from one person to another any distance away, you needed to rely upon a third party that you trust to ensure the funds get to where they’re intended. Whether it’s the bank network or a company such as Western Union, they would be in the middle of the transaction taking your deposit and ensuring the right person could withdraw it.

This financial friction always comes at a cost, whether it’s a flat rate or a percentage of the total transaction volume, the trusted party would take their cut. Not only does this trust create friction in terms of cost, but it also creates friction in terms of time delays to settle the overall transaction.

Trustless systems on the other hand require no intermediary, they are settled through the decentralized technology of the blockchain. When you submit a transaction in crypto, such as sending tokens from your wallet to someone else’s it relies upon the network of miners or validators who simply ensure that the transaction is correctly recorded on-chain.

Whether the blockchain operates according to a proof of work model, or a proof of stake model the trustless nature of the transaction is essentially the same. It requires no additional third party in the form of a bank or wire transfer service to approve the transaction.

When El Salvador adopted Bitcoin it was estimated that Western Union would lose $400 million a year from the transaction fees they were charging. When you understand the scale and power of the technology it’s easy to understand why legacy financial systems and the politicians they finance are so anti-crypto.

Trustless, therefore, doesn’t mean an absence of trust, as the initial reading of the word may imply. In the crypto space, it means the absence of predatory third parties that insert themselves between people. It means the absence of waiting days for a transaction to resolve. It means financial freedom for people and access to financial tools they would otherwise be denied.

As more parts of society begin to adopt blockchain technology we’ll see trustlessness applied to many more areas of daily life. This technology has the power to bring truth, transparency, and equality, as well as financial freedom to everyone throughout the world. That’s why we trust the technology rather than individuals and centralized organizations.