Definition:
A trustless system is one that does not depend on a central trusted entity to conduct and verify transactions; rather, power and trust are distributed among the network stakeholders. In decentralized networks, such as those found in cryptocurrencies, transactions are verified in a secure manner via a global network of participants who contribute their computing resources to run and maintain the system.
Explanation:
The system is called trustless as there is no need to ‘trust’ a central authority with the responsibility of conducting, confirming, or verifying transactions. An example of a trusted system is the current banking system. For each transaction, the bank does the verification and maintains the records of everyone’s balances.
On the other hand, decentralized systems, such as Bitcoin do not have a central authority. Instead, all participants on the network are responsible for validating and securing transactions. This trustless, decentralized system is viewed as more secure as there is no single point of failure or weakness.
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