A trustless exchange refers to a system where two parties can trade assets without needing to trust each other or rely on a central authority. Instead of depending on a middleman, such as a bank or a broker, trustless exchanges use blockchain technology to ensure transparency and security.In this setup, transactions are recorded on a public ledger that all participants can see. Smart contracts, which are self-executing contracts with the terms coded into them, facilitate these trades. They automatically enforce the terms, ensuring that both parties fulfill their obligations.This means that users do not have to worry about fraud, defaults, or manipulations since the process is governed by the code rather than human discretion. As a result, trustless exchanges lower the risk associated with trading and can enhance privacy, making them an appealing choice for many traders.