Security, decentralization and scalability, the three of cryptocurrency’s pillars, seem to strive to co-exist but struggle to live in harmony constantly.
You know how you cannot balance a social life, work, and sleep easily? The blockchain trilemma is similar. The belief held across the cryptocurrency community is that truly decentralized networks need to choose between security and scalability. Let us have a quick look at them before we dive in.
What Is Blockchain Trilemma?
The blockchain trilemma is the concept that decentralization, security and scalability cannot all be represented in one blockchain.
The term blockchain trilemma was coined by Vitalik Buterin, co-founder of Ethereum. He proposed this term because of his experience working on Ethereum, the second most popular cryptocurrency on the internet, which suffers from problems similar to those of the Bitcoin network.
The Three Pillars of Blockchain Technology
Decentralization- Decentralization is arguably the most important promise of cryptocurrency. Decentralized crypto is a ledger without a central authority. If a person transacts via a bank, they operate through a centralized system that can approve or deny their transaction.
Scalability- Unfortunately, blockchain scalability is a significant problem that has kept many cryptocurrencies from being used on a mass scale. For a blockchain to be practical, it needs to progress to a stage where it is subjected to thousands of transaction requests that can be processed rapidly. Ideally, projects would want their blockchain to scale to millions of transactions per second (TPS). This is one of the many reasons why Visa and MasterCard are used worldwide. Blockchain scalability needs to be built in because developers need to figure out how to make it work for specific use cases rather than just looking at transactions per second.
Security in a Blockchain- Blockchain security is the third feature many networks might choose to relax regarding the blockchain trilemma. Good blockchain security means that everything should be robust so that no one can take over the network — for example, capitalizing on network vulnerabilities to insert transactions into a network.
Potential Solutions to Blockchain Trilemma
State channels- A state channel essentially has delegated transaction processing and capacity. Its nodes do not require validation, meaning it is like an adjacent resource that does what it needs. The Layer 1 network only requires that the final state of the channel be recorded into the blockchain.
Relay Chains- Polkadot’s Relay Chain allows multiple blockchain networks to teach each other quite easily because they can connect to plenty of networks without the downsides inherent in the blockchain trilemma.
Sidechains
Layer 1
Final Thoughts
Is Blockchain Trilemma Solved? There are no projects that, as of now, fully solve the blockchain trilemma; with each approach, None were designed with that promise in mind (except Ethereum, which ultimately became a victim of its success).
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