A trustless system, a fundamental principle of cryptocurrency, operates on the premise that participants do not need to know or trust each other. This principle was first introduced by Bitcoin, which allowed data to be verified and permanently recorded on the blockchain. This system facilitates transactions in a peer-to-peer environment without needing a third party.
In contrast to centralized systems such as banks, trustless systems are perceived to have superior security against the threats of hacking and data manipulation. Although centralized systems are more popular, trustless systems have the advantage of being entirely managed by computer code.