Still, often I find people not understanding these terms, and mostly this stems from not really knowing what “trust” is.
Merriam-Webster defines “Trust” as
1a: assured reliance on the character, ability, strength, or truth of someone or somethingb: one in which confidence is placed
2a: dependence on something future or contingent : hopeb: reliance on future payment for property (such as merchandise) delivered : credit bought furniture on trust
3a: a property interest held by one person for the benefit of another b: a combination of firms or corporations formed by a legal agreement; especially: one that reduces or threatens to reduce competition
4 archaic: trustworthiness
5a(1): a charge or duty imposed in faith or confidence or as a condition of some relationship (2): something committed or entrusted to one to be used or cared for in the interest of another b: responsible charge or office c: care, custody the child committed to her trust
The use we make of the term we are using either definition #1 or #2.
Trust explained simply
Based on this definition, we can arrive at certain key characteristics of trust
- It is based on an assesment of the other party: “This person is dependable”
- This assesment is based on known behaviour: “This person has been dependable in all the actions I have seen of him”
- The assesment is projected into the future: “This person will continue to be dependable”
Of course, this leads immediately to the problem of trust:
Your assesment only can take into account the past, and any projection of the future is uncertain!
Regardless of what happened in the past, someone can always behave differently than expected. Ergo, we always take a (calculated) risk when we trust.
If financial transactions, we need to trust the intermediary to ensure the transaction goes through correctly with no hindrance, whether you are trusting your bank, your credit card provider or an online service. Like it or not, you are basing your assesment of their performance on past experiences, and your prediction might not come true. We only need to look a few years back into our past to see what happens when banks cannot hold up their end of the bargain anymore.
In short: our current system of financial transactions is held together by trust, which is based on an assesment of past behaviour.
How does trust apply to blockchains?
What blockchains do is take away the need for trust in the network: the rules make sure it works as it should.
When we agree to use a blockchain and thus let our transactions to be governed by its rules, both parties enter into a contract that is self-fulfilling. When you approve a transaction, it will go through, because the rules of a blockchain do not allow differently.
This may seem trivial, but it’s enormously powerful.
In a blockchain transaction, you do not need to asses whether the system is going to complete your transaction if it’s valid according to the rules: it’s going to go through. The rules won’t let it be otherwise.
It is this simple thing we all can get so excited about, because it eliminates a significant hurdle in transactions: the uncertainty of whether it will actually complete. In a blockchain system, because it replaces the human and organisational layer with system-wide enforced rules, you do not have this problem.
Hence: trustless: you do not need to trust. You can be certain.
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