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According to Merriam Webster, the word “trustless” implies “not deserving of trust,” however in the context of blockchain technology, it has a completely different meaning. 

In the blockchain sector, “trustlessness” simply refers to the absence of a requirement that you place your entire trust in any one individual, group, or other third party for a network or payment system to operate. 

The blockchain network’s own protocols, asymmetric cryptography, and programming are primarily how trustless systems operate and reach consensus. Peer-to-peer (P2P) transaction sending and receiving, smart contract agreements, and more are made possible by the trustless environments that blockchains have built.

In this blog, we will answer the question how trustless Bitcoin is. 

In code we trust: Bitcoin

A technological future, Bitcoin represents. An egalitarian, math-based electronic money system that is dispersed across a computer network is what its pseudonymous creator Satoshi Nakamoto believes the world should function on instead of centralized financial institutions. Additionally, the system would be “trustless” in the sense that it wouldn’t rely on a dependable third party, like a bank or the government, to settle disputes over transactions. 

The system would instead be based on “cryptographic proof instead of trust,” as Satoshi Nakamoto stated in a 2008 study, or as the slogan on T-shirts declares: “In Code We Trust.”

The arrangements have proven challenging. Bitcoin bends can be caused by price fluctuations, and the system is environmentally harmful because the computational network consumes enormous quantities of electricity.

Data scientist Alyssa Blackburn, who has spent years conducting digital reconnaissance work at Rice University and Baylor College of Medicine in Houston, claimed her effort was unconcerned with Bitcoin’s benefits and drawbacks. Her objective was to break through the veil of anonymity, follow the transaction flow from the beginning, and investigate how the largest crypto economy in the world came to be.

For transactions involving Bitcoin such as purchasing, selling, sending, and receiving money, users use pseudonyms or addresses, which are alphanumeric masks that conceal their true identities. This is how Satoshi Nakamoto had advertised the currency as being anonymous. Additionally, there appeared to be trust in anonymity because WikiLeaks said in 2011 that it would take Bitcoin donations. Over time, however, study showed data leakage, proving that the identity protections weren’t quite as effective as claimed.

In their most recent paper, which has not yet been peer-reviewed, Ms. Blackburn and her colleagues report that information leakage is eroding the once impenetrable blocks and creating a new environment of socioeconomic data.

Ms. Blackburn combined numerous leaks to reduce the number of Bitcoin addresses that would have appeared to represent various miners. She put together a list of agents and came to the conclusion that 64 significant participants, some of whom were the community’s “founders,” as the researchers termed them, mined the majority of the Bitcoin that was present during those first two years.

In the words of University of Chicago economist Eric Budish, “What they figured out, precisely how concentrated early mining and use of Bitcoin was, that’s a scientific discovery.” A two-hour video preview with the writers was given to Dr. Budish, who has done study in this area. Wow, this is cool investigative work, he thought after realizing what they had done, he said. Dr. Budish suggested calling the article “The Bitcoin 64” in reference to those pioneering significant figures.

An early reader of the study, computer scientist Jaron Lanier, deemed the investigation “interesting and significant” in terms of its goals and social ramifications.

Ms. Blackburn used simple persistence as one of her strategies. She recalled how the primary investigator, Erez Lieberman Aiden, an applied mathematician, computer scientist, and geneticist from Baylor College of Medicine and Rice University, described her approach: “I kicked it till it broke,” she said.

More specifically, Ms. Blackburn created hacks for the time frame that was of particular interest: from the beginning of the cryptocurrency to the point at which Bitcoin and the U.S. dollar were equal in value in February 2011, which was also the time when the Silk Road, a Bitcoin-based black market, was established.

Ms. Blackburn had a particular interest in miners, the agents who verify transactions by competing in a complex computational tournament — akin to a treasure hunt where the goal is to find a fortunate number. A miner receives payment in bitcoin when they succeed.

Depending on how close one is to the crypto undertow, 64 key miners may appear to be a tiny or enormous amount to them. Whether Bitcoin is actually a decentralized money has been contested by academics. The population under investigation was “far more concentrated than it seems,” according to Dr. Lieberman Aiden. Even while the study revealed that the major players totaled 64 over the course of two years, the researchers’ modeling indicated that the population’s actual size was just five or six at any given time. Additionally, the majority of the mining authority was frequently held by just one or two people.

The 324 or so gigabytes of blockchain-archived data that make up Bitcoin provided Ms. Blackburn and Dr. Lieberman Aiden with a wealth of temptation. Three-dimensional genome mapping is one of the areas of biological physics and extensively used mathematics that Dr. Lieberman Aiden’s group specializes in.

He speculated what valuables might be lurking in Bitcoin’s data lake in the same vein. Every transaction is physically documented, he claimed. These are outstanding sets of economic and sociological data. Clearly, if you can get it, there is a lot of information there.

Accessing it proved to be difficult. Ms. Blackburn was denied access to the university’s supercomputing cluster because she was thought to be mining bitcoins according to her “Bitcoin” file folder.

Tracing patterns in plots of numbers that, in theory, should have been random and meaningless was one of Ms. Blackburn’s major strategies. She was attempting to locate a “extranonce” in one example, a little field of 0s and 1s tucked away inside a longer string that encodes each block, or bundle, of transactions. Information regarding a computer’s behavior was exposed by the extranonce. This prompted Ms. Blackburn to retrace the actions of the miners, including when they were working, paused, and resumed.

Ms. Blackburn started merging addresses, connecting nodes on a graph, and condensing the actual population of mining agents once she had used a variety of toeholds to undermine the identity-masking safeguards. She then cross-referenced the findings and verified them using data she had obtained from blogs and discussion groups on bitcoin.

The study’s intent was not to identify specific individuals; the F.B.I. and the I.R.S. are responsible for apprehending Bitcoin criminals. However, the researchers were able to identify a few of the top players who were known to be Bitcoin criminals: Agent No. 19 is Michael Mancil Brown, also known as “Dr. Evil,” who was convicted in a fraud and extortion conspiracy in 2012 involving Mitt Romney, who was running for president at the time. The Silk Road’s founder Ross Ulbricht, also known as “DreadPirateRoberts,” is connected to Agent No. 67. Agent No. 1 is, of course, Satoshi Nakamoto, whose real identity the researchers did not attempt to ascertain.

The study has ramifications for data privacy, according to Yale University bioinformatics professor Mark Gerstein. Recently, he kept a genome on a private blockchain, providing a safe and impenetrable record. However, he pointed out that even while the data was immutable, in a public context like the blockchain for Bitcoin, a data set’s vastness and subtle patterns made them vulnerable to hacks.

Narrative decentralization

After compiling the list of agents, Ms. Blackburn examined the profits they had made from mining. Contrary to Bitcoin’s egalitarian promise, she discovered that a conventional distribution of income inequality arose shortly after the cryptocurrency’s launch: A small percentage of the miners possessed the majority of the wealth and power.

When the lab created “CO2 coin,” a cryptocurrency that could be used to purchase food from a student-run shop, they unintentionally recreated this relationship. Over time, certain CO2 miners achieved greater success than others, and the store raised the price of snacks to suit the tastes of the wealthy.

Ms. Blackburn noted in the formal study that the security of the network was challenged by the concentration of resources, with a miner’s computational resources being directly correlated with his or her mining profits.

If the investigation’s results were error-free, according to University College London cryptographer Sarah Meiklejohn, they would provide empirical support for a “intuition that has been floating around in this space for a long.”

However, Ms. Blackburn discovered that although some miners had the ability to carry out 51 percent attacks, they consistently opted not to. Instead, they acted benevolently, protecting the integrity of the coin even if the decentralization-based fraud-prevention system had been broken.

The team led by Ms. Blackburn used experimental economics’ methods to analyze this result. They gathered online participants to take part in game-theory simulations that simulated the “social dilemma” the founders faced, or how individuals would act if they were the trustee of an appreciating good.

“Although Bitcoin was designed to rely on a decentralized, trustless network of anonymous agents, its early success rested instead on collaboration among a small number of altruistic founders,” the paper’s authors wrote in their conclusion.

There is a finite lifespan for encryption, “a horizon beyond which it will no longer be useful,” Ms. Blackburn stated as one lesson from the tale. You cannot assume that private data will remain private forever when you encrypt it and make it public.

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