What does it mean to say blockchains are trustless?
Well, the term ‘trustless’ has a peculiar meaning in the context of blockchain technology. To say that “blockchains are trustless” means that you don’t need to rely on (or trust) an intermediary person or institution (like a professional in a bank or credit union) to make a transaction (such as transferring money).
For example, one popular use of blockchain technology is transferring cryptocurrency. Through decentralized networks, blockchains allow you to move cryptocurrencies directly from one person to another. Nobody from a bank, credit union, or other insured financial institution has to validate the transaction. Hence, there’s no need to place your trust in an intermediary while making transactions over blockchain.
If blockchains are trustless, what are we trusting?
Of course, making transactions over blockchain still requires you to trust something. And in this case, that something is the blockchain technology itself—or rather, the software code behind it.
In other words, to say that blockchains are trustless doesn’t really mean that you never trust anyone or anything. It means that, instead of trusting other people or institutions, you’re placing your trust in code written by someone or something.
Automating trust
In this sense, blockchain is a technology that entails automating trust. It effectively replaces trustworthy relationships with software code. The question is, should we try to automate trust in this way?
Granted, in other contexts, automation can make a lot of sense, especially when it comes to routine tasks or chores. For instance, I’m grateful for online software that does things like automatically filling out my tax forms. It saves me time during tax season, and it’s easy to trust machines to do something like data entry.
However, it’s not as easy to trust machines to do an activity that typically calls for personal connection or empathy. Take tax advice for personal finance. In this case, it may help to have rapport with a tax accountant—a trusted expert who understands your financial situation—as opposed to depending on software to spit out robotic responses. Activities based on trustworthy relationships may be among those things in life that can’t be entirely automated.
Trust remains a problem for blockchain
Tellingly, a survey of 600 executives from 15 territories found that the main reason many organizations and companies haven’t adopted blockchain was due to a lack of trust among users. According to this research:
Blockchain, by its very definition, should engender trust. But in reality, companies confront trust issues at nearly every turn. For one, users must build confidence in the technology itself. As with any emerging technology, challenges and doubts exist around blockchain’s reliability, speed, security and scalability. And there are concerns regarding a lack of standardization and the potential lack of interoperability with other blockchains.
In sum, saying that blockchains are trustless implies automating trust: replacing trustworthy relationships with software code.
And yet, if we still need to rely on trustworthy relationships for so many activities—particularly those things in life that call for personal connection and empathy—perhaps trust is something that can’t (and shouldn’t) be fully automated.
I supposed you can add that to my list of reasons as to why I doubt we could create a whole financial system built upon blockchain.
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