It is not easy to define the concept of trust. It can take many forms: trust in a friend, in a health care professional, in God, in a government, or in a currency. It does not require a complete mastery and understanding of all the technical components that make up a particular system.

For example, it is not necessary to understand the technical workings of an airplane to be "confident" that the plane will fly safely and arrive at its destination. Confidence can be gained from past experience and general knowledge accumulated over time. In the case of an airplane, we have the common knowledge that very few airplanes crash and we have confidence in the engineers who have designed, tested and validated all the parts of the aircraft and the multitude of safety regulations that constrain airlines to ensure a safe journey.

But as we have seen or experienced, this trust can be lost or at least eroded very quickly. The 2008 financial crisis, which was partly attributed to the inability of traditional institutions to contain a financial crash, has caused a renewed interest in the concept of trust among individuals. More recently, the abuses of a few companies championing the commercialization of personal data, and sometimes even accused of public coercion, have eroded users' trust in these private entities. But how could blockchain solve this trust concern?

We can consider that the need for trust lies where uncertainty reigns. Others may fail to deliver on their commitments, a sovereign authority may be weaker than we thought, a company holding personal data may be hacked, a man may corrupt a company. The blockchain tends to allow individuals to deal with each other by eliminating the need for trust, through mathematical and algorithmic means. Conceptually, this technology tends rather to maximize the degree of trust to the point of no longer caring about the need for trust.

The example of Bitcoin: trust in mathematical rigor

In the case of Bitcoin, anyone who understands the protocol can be confident that the network will generate a particular amount of new bitcoins (6.25, bitcoins) under specific conditions (whenever a miner finds the mathematical solution to close a block with the mathematical hash function) and at a particular rate (within an average of 10 minutes), without the need to rely on any financial institution or other centralized authority. Moreover, since anyone can hold a copy of the blockchain (for more than 300 GB), users can collectively review and verify all transactions executed on the network (since its inception), to ensure that they all comply with the rules of the protocol.

Miners are those who connect their computers (using mining hardware) to the blockchain (through the installation of software). Once connected, the computers (called "nodes" on the blockchain) verify the transactions and validate the blocks of the chain. We understand that it is necessary to trust the miners who validate our transactions.

Blockchain technology flow. Source: PwC Digital Services

 

Bitcoin blockchain: corruption is out

Since the nodes on the blockchain are ultimately controlled by individuals and can therefore be bribed or corrupted, additional safeguards must be introduced into these systems to further reduce the need to trust an individual miner. On the one hand, Bitcoin's "proof-of-work" consensus algorithm (although there are others) is designed to spread trust among a wide variety of miners, thus reducing the risk of individual opportunism (transactions are verified by the entire network, not by a single miner who acts as a central authority). On the other hand, since all nodes (computers connected to the network) hold a copy of the blockchain (this is a condition for mining), they can always verify that each recorded transaction is valid and legitimate. Therefore, anyone interacting with the Bitcoin blockchain can have a high level of confidence that it will work as intended, because every transaction is traceable by everyone. Hence the widely used adjective related to the Bitcoin blockchain, which is called: unforgeable. Finally, unlike a centralized entity, if one node were to fail, the entire system would not be challenged because all the other nodes in the network would take over (since everyone has the same data history). Whereas today, when a central entity is hacked, the whole system is paralyzed.

The limit to the system: trust is displaced

Trust can never be completely eliminated, it is partially displaced to the developers and miners of the network. Therefore, while the blockchain protocol can help increase trust in the way transactions will be processed, such a degree of trust is only possible to the extent that The miners as well as the core developers of the network can be trusted to act in a manner that does not compromise the security, reliability and predictability of the blockchain-based system. The source code could be changed if the majority of the network so decides. Trust is ultimately placed in the hands of the network and all its actors. A network that wants to be transparent and accessible to all.

For the time being, the Bitcoin network has proven to be unbreakable and flawless since its inception, and the constant increase in the number of nodes favors its degree of decentralization, as more and more machines verify the blocks so that they are legitimate.

Number of nodes on the Bitcoin network and its geographical distribution
Source: bitnodes.io

This is a decentralized (across all nodes) and transparent (because accessible to all) system that is kept in check by multiple entities using a transparent mathematical algorithm, rather than a single central entity with opaque means. Like airplanes, blockchain needs to accumulate experiences and general knowledge by its users and observers in order for it to be potentially widely adopted. Trust will follow.

If this technology transfers trust from traditional centralized entities to a decentralized network populated by miners, several questions arise. How can we rely on this decentralized trust? What drives miners to expend energy to record transactions? How are we identified by the miners (public and private keys)? Is it possible to stop the activity of miners and thus the validation of transactions? After understanding that the notion of decentralized trust is allowed with the blockchain, in the next episode we will explore the ins and outs of the mining system which turns out to be the heart of the trust of the blockchain.