A trustless system is one where there is no need for third-party involvement or intermediaries to complete a transactionA transaction is a record of an event that occurred in the past. Transactions typically occur during the course of... Read More. Two parties can transact directly without relying on a central authorityA central authority is an entity that holds centralized control over something, such as a financial exchange, asset, or transaction.... Read More, such as a bank. Trustless systems achieve consensusConsensus allows a distributed system such as a blockchain to function as a decentralized peer-to-peer system without the need to... Read More without the need for participants to know or trust each other or any third party. The result is a more efficient and secure system with no single point of failure. Most transactions involve trust, which is essential for a functioning economy. Trustless systems could change economic interactions by letting people put their trust in concepts instead of third parties such as institutions. A trustless system does not eliminate the need for trust; it simply minimizes it. A trustless system distributes trust in an economy that incentivizes certain behaviours.
