We each keep this dataset—that is, the blockchain that contains a record of every single transaction that happens in the particular monetary system. Since everyone’s copy is synchronized with everyone else’s, no one has to worry about fraudulent or conflicting entries. There’s now no need for a bank to manage our records.
The blockchain does it instead. As far as how money gets created and distributed in the first place, that is another story, but the Bitcoin network as well as other cryptocurrencies handle that as well. That is just on the data, or ledger, side of things. It gets far more interesting when computer code is managed in that way too. Let’s imagine a legal contract: Certain actions are taken under certain conditions. Even after the parties sign, they must still rely on the good faith of the other or our justice system to carry out their side of the agreement. Let’s take an example. Donald hates flight delays.
AIGore Insurance tells him if he pays them $5 and his flight is delayed by more than an hour, AIGore will return his $5 and pay him an additional $20. A simple insurance scheme, or perhaps it’s a bet. In any case, when Donald gives AIGore $5 he has to trust them that they will carry out their end of the bargain.