What is decentralized trust? How to achieve it?

In BanklessDAO, we often talk about blockchain technology as a revolution in the financial industry, because smart contracts create a trustless, permissionless system. But what does this first word, trust , mean?

First of all, you must know that to trust is not the same as being untrustworthy. To say that a system is trustless means that trust in humans or institutions is not a necessary condition for the system to function-it does not require human intervention to occur.

This may sound confusing, but I will discuss it in depth and provide examples below.

To understand a trustless system, we must first understand a trusted or trust-based system. This is the world we live in today.

Define a trusted system

Since ancient times, human beings have relied on trust to cooperate. for example:

  • When you put money in the bank, you trust the bank to keep your money so that you can withdraw it when you need it.
  • When you initiate a transaction on Robinhood, you believe that Robinhood will execute the transaction for you instead of freezing the transaction.
  • When you send money to a friend through Venmo, you believe that Venmo will deposit the money into your friend’s account, not someone else’s.

The trust-based system has been integrated into our society. As the above example illustrates, they are very likely to make mistakes.

What is decentralized trust? How to achieve it?

Although people living in developed countries do not often encounter major and life-changing trust issues, trust-based systems have already had terrible negative results, such as the housing crisis in 2008. For anyone living in a developing country or a country with unstable currencies, the act of surrendering their finances and lives to government officials and corrupt politicians has been proven wrong time and time again.

Before the 21st century, it was a fantasy to imagine a world of trustless systems. But with blockchain technology, all this is changing.

What is decentralized trust? How to achieve it?

Americans waited outside the bank to withdraw money to avoid running out of deposits. After choosing to trust the bank, many people lost all their deposits. Picture from: https://www.investopedia.com/terms/b/bankrun.asp

What is a trustless system?

A trustless system refers to a system that does not rely on participants to achieve expected results in a certain way. The system executes commands without relying on humans. There are no intermediaries like banks or brokers to host events. You don’t have to worry about whether the person you interact with is trustworthy. The system builds trust for you.

You don’t need a bank to keep your money, you don’t need to hire someone to protect your apple tree, and you don’t need a monk to pass on information. There are no middlemen, no intermediaries, and no promoters. All tasks are performed by the code.

Smart contracts are this trustless system. Blockchain technology uses smart contracts to promote trustless interaction between users.

Let’s break it down further:

Strangers from different countries and speaking different languages ​​can send and receive tokens to each other without the involvement of intermediaries. Smart contracts execute transactions for them. It uses if, then logic statements written in the code to execute instructions. Users trust the reliability of the code, not the moral status of the person or entity performing the transaction.

You don’t have to trust the person who does things for you, but you can trust the code.

In addition, transaction records are kept by the entire community: not by a centralized organization like Google, but by the entire community through a decentralized network to save information. Transaction records are kept on computers all over the world, so no authority can tamper with them.

But it should be noted that no system is completely trustworthy in nature. Blockchains and smart contracts were originally created by humans, and their codes must also be reviewed by humans. To achieve a trustless system, continuous efforts are needed. When a system allows users to have different motivations and ethics, and the contract still executes the transaction, people can cooperate more comfortably and safely. Regardless of the moral values ​​of you or the person you are trading with, the if and then statements are always executed.

What is decentralized trust? How to achieve it?

“Vision, Part Two: The Problem of Trust” is available at: https://blog.ethereum.org/2015/04/27/visions-part-2-the-problem-of-trust/

What is decentralized trust? How to achieve it?

Robinhood’s recent decision to stop retail trading at GameStop is an example of the trustless system that has disappointed users. This incident allowed opposing politicians of the two parties to reach a consensus: Robinhood wronged its users. For details, please see: https://twitter.com/AOC/status/1354830697459032066

How to know if the code is trustworthy?

Once the smart contract is deployed on the blockchain, its code can be publicly accessible. Most projects have a public Github and a large number of documents for the community to read, so users can research on their own to determine whether they are willing to interact with smart contracts.

Smart contracts are immutable, which means that once they are deployed on the blockchain, malicious developers cannot change their functions. Therefore, similar systems can be considered trustless because users believe that malicious participants or developers cannot abuse their power to make large-scale changes to the project: for example, freezing the power of user transactions during the GameStop price squeeze, or Collect and sell user data without their knowledge. (Speaking of which, have you begun to realize how trust-based systems have let us down?)

What is decentralized trust? How to achieve it?

A common Venmo scam is that hackers use your friend’s account to ask for money. Although anything that can be hacked will have the problem of hackers, it is still unclear how hackers entered these Venmo accounts without the user’s permission. For details, please see: https://help.venmo.com/hc/en-us/articles/360048404533-Common-Scams-on-Venmo

Can users really verify everything by themselves?

When a new agreement or project is released, people will analyze the potential problems in its code. However, users will not always watch the creation process of each new block to ensure that it is not tampered with by malicious saboteurs. In this regard, there are a series of safeguard measures, which will be carried out in future articles. Proof of Stake (Proof of Stake) and Proof of Work (Proof of Work) are consensus mechanisms used by the blockchain to build blocks and determine whether the blocks are safe. Although these two systems work in different ways, they can prevent malicious blocks from being built. These safeguards help to increase the degree of trustlessness of the system.

Is trust unnecessary in any form of currency exchange?

At the highest level, yes. The individual must accept a token that contains value. For example, they must accept that ETH is a digital asset worth trading with other assets. This is similar to when people use cash, they must also accept that the cash they trade has value.

Trust in a scarce and tradable store of value (currency) is necessary for the transition from a society that only trades goods to a society where people with different interests can exchange value to obtain what they seek

Summarize

In today’s trust-based world, transactions and systems have problems because we rely on humans to execute and maintain them. Instead of relying on human ethics or intermediaries, we can use trustless systems that execute and record events autonomously.

Remember, there is no system of complete trust, because everything must be established by people in the beginning. Once the project is up and running on the blockchain, the smart contract cannot be changed. The traditional hierarchical system is abolished, and users with different ethics and values ​​can still cooperate.

understand deeper

Watch the first 15 minutes of the following video to listen to the expert’s explanation and definition of the trustless system.

What is decentralized trust? How to achieve it?

The video of “The Future of Hybrid Smart Contracts” is available at: https://www.youtube.com/watch?v=HiuvsLNCg-Y

What is decentralized trust? How to achieve it?

“Vision, Part Two: The Problem of Trust” is available at: https://blog.ethereum.org/2015/04/27/visions-part-2-the-problem-of-trust/

What is decentralized trust? How to achieve it?

“What do we mean by “blockchain is trustless”? 》For details: https://www.preethikasireddy.com/post/what-do-we-mean-by-blockchains-are-trustless

What is decentralized trust? How to achieve it?

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/what-is-decentralized-trust-how-to-achieve-it/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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