Trustless meaning is that the participants in that system do not need to know or trust each other for the system to function. In such a system, there is no single entity that has authority over the system, and consensus is achieved without participants having to know or trust anything about the system. This is because the system’s mechanism allows for this to happen.
The property of trustlessness in a peer-to-peer (P2P) network was introduced by Bitcoin, as it allowed all transactional data to be verified and immutably stored on a public blockchain.
Traditional finance requires us to place trust in third parties and other central institutions. However, with this concept of trustlessness in blockchains, people place trust in abstract concepts.
In a centralized system, as long as the trusted third party can be trusted, the system will function as intended. However, serious issues can emerge if the trusted entity isn’t to be trusted. Centralized systems are subject to system failures, attacks, or hacks. Data can also be altered or manipulated by the central authority without any public authorization.
On the other hand, blockchains allow computer code, which is much less easy to corrupt, to govern the systems. Furthermore, honest behaviour is rewarded in Bitcoin and other Proof of Work (PoW) systems.
In conclusion, trustless meaning refers to participants in a system not knowing or trusting each other and still being able to function.
