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Trustlessness in Action: Particl's ModelLearn More
“Trustlessness” is a term often quoted as a feature of blockchain technology but what does that mean and is absolute zero trust a myth or really true? Praised as one of the characteristics that make the blockchain so revolutionary, a trustless system is one where two peers can enter a virtual hand shake agreement, i.e. smart contract, without relying on a trusted third party to facilitate.
Blockchains are good at being permissionless and having decentralized tasks that are recorded on an auditable ledger, yet not all blockchains are completely trustless, and achieving full trustlessness is challenging if not impossible. Even an open-source project like Bitcoin that is constantly being reviewed can have trust issues, not from the code but by the developers and reviewers of the code. So trustlessness is more of a term describing an ideal state on the blockchain where code is law with the caveat that humans write code and to err is human.
Before looking at how a fully trustless blockchain can be implemented by privacy advocates like Particl — an open-source project that is building a decentralized ecommerce application on the blockchain — let’s look at the obstacles standing in the way.
I Trust You, Until I Don’t
We’re conditioned to think of trust as a good thing. Traditionally, positive human relationships have required a level of trust. From an economic perspective, however, trust has significant downsides.
The greatest drawback is that trust can be broken. When you engage in a transaction with someone you believe to be trustworthy, but then they fail to deliver the promised goods or services, you suffer. In addition, trust is not efficient. It has to be cultivated and you have to invest time in evaluating how much another party can be trusted before you engage in a trade.
Blockchain technology can be leveraged to overcome the risks and inefficiencies that are associated with trust. With the right approach, it’s possible to make reliable transactions on the blockchain without knowing or trusting the person or group you are dealing with. That is because the blockchain can be used to enforce good behavior.
In Particl’s case, by creating a simple smart contract, you can ensure that if one party in a transaction fails to uphold their end of a deal, the blockchain can automatically cancel the transaction or punish the misbehaving party in another way. In effect, this feature makes it impossible for a malicious user to profit by taking advantage of the trust that another user places in them without inflicting harm on themselves as well.
The Trustless Challenge
If you buy or sell something using Bitcoin, you don’t automatically gain protection against being cheated: default Bitcoin transactions are non-reversible. The ability of the blockchain to enable transactions that are both trustless and reliable is difficult because it needs to be done without the intervention of a third party. In conventional trading contexts, transactions are typically policed by a central authority that evaluates claims about broken trust and responds accordingly. For example, if a seller cheats you on eBay, you can complain to eBay and request a refund. These authorities also charge fees or percentages of sales revenue whether they are used or not.
The downside to this approach is that it compromises privacy. In order to provide this protection against broken trust, a platform like eBay oversees transactions. It knows what buyers and sellers are doing. With a two-person trustless escrow, in contrast, reliable transactions can be implemented without the oversight of a third party. You don’t have to lose privacy to gain reliability.
The tricky thing about achieving true trustlessness on a privacy-focused blockchain is that it doesn’t happen by default. Although multiple times more efficient than building trust in public, smart contracts still need to be signed and the exchange of goods or services still needs to happen. The beauty is that an agreement can be made and successfully carried out even if one or both parties don’t fully trust each other.
A Trustless Solution
Particl leverages Bitcoin as the underlying blockchain protocol, but adds privacy enhancements that make it possible for users to perform transactions that are trustless, reliable and private. In an innovative development, PART transactions do not require users to write smart contracts themselves. Instead, this feature is built into the platform.
Central to Particl’s approach to trustless transactions is mutually assured destruction (MAD) escrow. MAD escrow is a special type of smart contract that prevents either party from profiting in the event that one cheats during a transaction.
In addition, because the smart contract is enforced automatically via the blockchain, Particl developers play no role in overseeing transactions. Their platform guarantees privacy while achieving trustlessness at the same time. Two people from anywhere in the world can enter into a binding agreement that is only finalized when both agree it is completed.
Blockchain technology’s promise is that users are no longer bound by the inefficiencies and risks associated with trust in order to make transactions. Most blockchains, however, do not yet implement truly trustless transactions. Particl is an exception, as it was developed with trustlessness at its core from the start. Particl developers aim to “square the circle” by delivering trustless ecommerce without compromising reliability or privacy.