Unlike fiat currencies, cryptocurrencies are decentralized in nature. This
means there is no central bank or database involved. Also there is no
central authority that manages the currency network. By comparison the
fiat currencies of the United States and other countries are managed by a
single central authority like the Federal Reserve. They are centralized. All
fiat currencies of the world have a centralized oversight organization.
Cryptocurrencies are diametrically opposed to the centralized fiat
currencies because of the nonexistence of a central authority. Instead, the
cryptocurrency community and cryptocurrency miners via the network
nodes manage the validation and generation of the newly mined (“newly
minted”) cryptocurrencies. Due to this unique management method,
cryptocurrencies are commonly referred to as TRUSTLESS because no
single individual controls how cryptocurrency is generated, issued, spent,
or accounted for. There is a definite advantage in not having the need to
trust a individual to perform the moving of asset, generating a transaction
record and storing it.
In this trustless cryptocurrency system, one can still trust the
cryptocurrency community and its means to certify that the blockchain
holds a very accurate and immutable (undisputable), unalterable, proof of
cryptocurrency transactions. Cryptocurrencies are founded using software
algorithms and in it are rules that guarantee that the system can be trusted.
The mining process is also a part of the verification mechanism that allows
everyone to trust the blockchain.
Note that “trustless” is slightly inaccurate because trust is already built into
the cryptocurrency eco system. Although there is no need to trust a single
entity or authority, your trust in the eco system and fully auditable codebase
is still important.