My Blockchain Primer

Trusted Third Party and Blockchain

What is Trusted Third Party?

A trusted third party is an entity which facilitates interactions between two parties who both trust the third party; the Third Party reviews all critical transaction communications between the parties.

Think of online shopping, payments, identities, etc. What gave you the confidence to purchase things off a particular e-commerce platform, make payments to another party or trust the person you are communicating with?

Thinking deeper, it is probably due to accreditation by some reliable entities that you have trust or confidence in. If you trust the reliable entity and that entity trusts the party you are dealing with, it kinds of form a transitive trust relationship between you and the other party.

Would you prefer pay the seller via direct bank transfer or through PayPal? Would you trust the identity of a person furnished by a Government registrar or some social media sites? There you go, trusted third parties. (I do hope you have chosen PayPal and Government registrar).

Compromised Trusted Third Parties?

Have you ever thought what if trusted third parties are compromised? For example, having some information manipulated or undetected changes. Just like in the case of Sandra Bullock’s identity in the movie ‘The Net’ which her identity in the Government registrar was maliciously changed and several criminal charges were added to her account, causing her to be a fugitive in her own country.

No Trusted Third Party in Blockchain?

In blockchain, there are no trusted third party. Take bitcoin for example, every transaction is validated before they are stored on the globally verifiable ledger. Once stored on the ledger, it is incredibly difficult to maliciously change them (until quantum computing comes along). Essentially, the bitcoin network contains globally verifiable immutable records that majority of the participants can vouch for. Hence, the need for a trusted third party diminishes.

Why immutable? Let’s look at the blockchain technology itself.


Treat shadowandy!

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