What Is Trustless? Are Cryptocurrencies Really Trustless?


Hey there, folks. Welcome to another
episode of PIVX Class. Today we’re going to
talk about trust and how it
factors into your currency. My main objective here is not to
tell you who to trust or how you, in particular, should
evaluate trust in currencies. What I want to do is to get you
thinking about it because many cryptocurrencies are
striving to be trustless, and I realized when I decided
to see what the dictionary
said trustless was, it was not what crypto
enthusiasts have in mind. This class should help you
understand what cryptocurrencies
mean by trustless, and get you thinking about which ones are
or are not living up to that. So without further
ado, let’s begin. First things first. What is the dictionary
definition of trustless? Well, according to dictionary.com,
trustless means not worthy of trust. Pretty simple, but cryptocurrency
has kind of taken that and
thrown it out the window. I suppose that would be because
no one has really used the word trustless much in recent
times to my knowledge. We don’t say, “Tom is trustless.” We say, “I don’t trust Tom.” But in the end, I can only guess
as to the demise of the original
understanding of the word trustless. Language is a fluid thing. It evolves and grows
as we use it to fit our needs. This sometimes results in
these misunderstandings. But I digress. What do cryptocurrencies mean when
they say that something is trustless? Simply put, it means that
something does not require trust. So if you and me are
making some kind of deal, a trustless system would
make it so that neither
one of us would actually have to trust each other to
complete it successfully
and without incident. That sounds kind of
unpleasant though doesn’t it? Do you really want to live in a world
where no one trusts anyone else? In the end, that’s a
matter of perspective. You can view it as not trusting
anyone or you can separate choosing to trust someone
or being forced to trust someone. If you need to trade one currency
for another with someone, under traditional systems you must
trust them or trust a third party
to help you make a fair trade. In both of those scenarios,
you have to trust that either the other person or the third party
isn’t planning on cheating you. This is my opinion,
but I believe this actually
sows the seeds of distrust. Having no alternative leads you to
constantly be expecting that one day one of these
people will cheat you. Now, what if you had a system where
there was no trust required? A trustless system. Say a computer program designed
and reviewed by a diverse community whose only shared interest is that this
program does not cheat people. Well, that system would allow you
and another to trade hundreds or thousands of times without
ever having any incident. You could trade without
ever trusting them. Now, this does not mean you must
not trust them it just means that
you are not required to trust them. It also means you have
no reason to distrust them. You can meet someone you’ve never
met before for a trade and not have to
question their ethics in the slightest. There is simply no way for them
to cheat you in this deal. Now if you ask me, that can
be kind of a positive thing. When I find a new trading partner,
I can just focus on talking to them without the shadow of
doubt above our heads. Personally I kind
of like that a lot. Now, how does this fit
into cryptocurrencies? A lot of cryptocurrencies use
automated systems as well as consensus to verify things in a
manner that takes the trust
out of the equation. One of the most common examples
is sending someone a payment. Fiat currencies do it pretty well
admittedly but there are times when things get questionable
and trust comes into play. You have to trust that the bank
isn’t doing anything underhanded
or that they don’t make a mistake. You also have to trust that when
the other person said that they did not receive a payment
that they aren’t trying to get
you to send it twice. In cryptocurrency, you can look at
the blockchain and verify that your
money went to a specified address. You can even see if that money
was moved away afterward. Furthermore, transactions are all
verified by consensus so the other person knows that you
definitely did send that money and that you couldn’t have
canceled the send in any way. Financial privacy is also heavily
dependent on trust systems. Typically you have to trust
companies to not leak or sell
your financial information. To pay for their goods or services
you inevitably have to
give them this information. With certain privacy-focused
cryptocurrencies, there are
ways of getting a payment to someone without giving
them any extra information. This removes trust
from the equation. This means you could buy an
uncommon item online from a
small retailer without worrying if they handle customer
information poorly. I’ve personally avoided
small retailers because they didn’t use PayPal and I didn’t
want to take the chance
that they would be so careless. I would be even happier if I could
cut PayPal out of the equation. No offense to PayPal. This all sounds wonderful
and perfect, but I do want you to take this all
with a little grain of salt. Cryptocurrency is still growing,
learning, and evolving. There is no cryptocurrency that is
100% trustless from the ground up and there won’t be
for a really long time. Some people say it is impossible to
100% cut trust out, but if history has taught us anything
it is that nothing is impossible. But for now, it is not a reality. Currently, you have to trust the
code of the cryptocurrency, the reliability of
the wallet software, the nodes involved in communicating
your transaction, and other aspects too. Something that helps make
that trust more acceptable is that most cryptocurrencies
are open source. That means you can see their code
for those that understand the code. They can review it and
look for exploits, problems,
and scams built into the currency. Those that can’t code will have to
trust in the code audits
of those who understand it. In all that, you can see why these
trustless systems have
a long way to go. But it is awesome to see how
people are developing these
systems into that direction. And before I wrap up this segment
I would like to point out the weaknesses in trusting
fiat systems since I just kind
of hammered into crypto a bit. It can be summed
up really simply, do you know anything about
the fiat system in your country? Beyond the first layer that
you transact in, that is. Some of you do. Some more than me and that’s
great but many people don’t. I myself do not know nearly enough,
and for a long time I knew nothing. That means I was trusting a
system I knew nothing about. As I learned a few things
about it I realized every aspect of
it falls into trust. Who prints the money? How do they control it? How is my money secured? How is it moved? And more. I am forced into trusting
everything about my fiat currency. Ultimately, what system and what
currency you trust is your choice. I don’t want to deliver a
verdict for you to follow. I just wanted to put the question
of trust in your mind and allow
you to evaluate for yourself. Cryptocurrency is not a perfectly
trustless system, but it is trying. What that means for you and your
finances only you can decide. So we’ll leave it
at that for today. As always, if you have any questions, please feel free to comment below
and I will do my best to answer them. If you found this video helpful,
leave a like and consider
sharing the video. It actually helps the
channel out a lot. Thank you for tuning
into today’s class. I love having you here, and I will
see you in the next PIVX Class.

2 thoughts on “What Is Trustless? Are Cryptocurrencies Really Trustless?”

Leave a Reply

Your email address will not be published. Required fields are marked *