The decentralization, scalability, and security of distributed ledger technology (Blockchain) are the basic tenets of most blockchain projects. This fantastic breakthrough was developed with the intention of establishing a new financial hemisphere in which it would no longer be necessary to rely on third parties for the operation of networks or markets in general. On the other hand, its attempt to obtain widespread acceptance faces a number of obstacles along the way.
Some blockchain projects are only able to process a certain number of transactions at once. For instance, Bitcoin can only handle about seven transactions per second, which is a relatively low number considering the sporadic growth of its user base. Other blockchain projects have similar limitations. This is terrible for their reputation all across the world. Solid attraction has always been a product of convenience and consistency; and since such a limitation exists, perhaps in an unusually glaring means, people are often skeptical about joining the wave, which causes slack in their widespread adoption, which in turn causes slack in their widespread adoption. [Case in point:]
The reason for the existence of the blockchain trilemma in the first place is due to the fact that it is a high-rising hypothesis that each essential design of decentralized networks cannot be simultaneously reinforced without weakening another. In other words, an increase in scalability typically results in a reduction in either decentralisation or security. In order to find a solution to this issue, the developers are now conducting research and testing on a variety of consensus mechanisms and scalability options, including as sharking, side chains, and state channels.
What exactly is meant by the term "Blockchain Trilemma"?
As was said earlier, the term "blockchain trilemma" refers to the idea that it is impossible to simultaneously achieve ideal levels of decentralization, security, and scalability in a blockchain. These three features are all considered to be desirable in a blockchain. When one is strengthened, it creates a weak ring around the other.
Vitalik Buterin, the co-founder of Ethereum, is credited with popularizing the concept of the blockchain trilemma. This idea was a result of his experiences working on Ethereum, which is widely regarded as the most well-known cryptocurrency available on the internet. He discovered that the Ethereum network has issues that are comparable to those that the Bitcoin network has. One issue is that none of the networks is as scalable or decentralized as many individuals would like them to be.
Having an Understanding of the Components That Make Up Blockchain
Decentralisation
Decentralisation is the most important benefit offered by blockchain networks. The entire structure is constructed with the intention of removing the interference caused by middlemen and their relics. This ensures that the network layer will continue to be accessible to anybody who is interested in taking part in it. People like digital currencies over traditional currencies such as dollars and euros for this primary reason.
Once all of your possessions are in the hands of a single organization, as is the case in centralized financial systems, you will most likely be at that organization's mercy. Think about banks and the stringent regulatory and stressful procedures they impose, or the most likely scenario: the monopolistic grip the United States government has over the United States dollar. If you have the misfortune of being blacklisted or sanctioned, they can freeze your account. This issue is resolved by the decentralized nature of blockchain technology, which ensures that individuals retain custody power over their assets.
The inability to centrally govern a large-scale blockchain decentralized system presents a significant challenge. The vast majority of blockchain networks are still required to monitor each and every transaction that takes place over their network. In this manner, the decentralization of the blockchain has a negative impact on the network's security as well as its scalability.
Scalability
Blockchain scalability has always been an essential issue in the cryptocurrency industry, and as a result, there is now a ceiling on the rate at which cryptocurrencies may be adopted on a worldwide scale.
Bitcoin, to give just one example, is a fantastic example of innovation. Bitcoin has without a shadow of a doubt one of the safest and most decentralized platforms available on the internet. However, the network's inability to scale beyond seven transactions per second is a significant limitation. Along with its slow transaction speed, this has also contributed to the negative reputation that it has garnered in the eyes of the public.
In a purely technical sense, the majority of projects would prefer it if their blockchain was more scalable, meaning that it could handle millions of transactions per second. Therefore, this is the reason why credit cards such as Visa and Mastercard are utilized on such a large scale all over the world. Instead, than focusing just on the number of transactions that can be processed in a certain time period, blockchain engineers need to determine how to make the technology functional for a variety of different applications.
Security
It doesn't matter how decentralized a blockchain is; it's meaningless if it doesn't have fool proof security, the kind that makes it highly resistant to external attacks from malevolent groups. Security is a vital component of every blockchain network. Since centralized financial systems are the ones in charge of your money, you can trust them to keep your data secure because they are the ones who can preserve the system's integrity through its closed nature.
When it comes to a decentralized blockchain, this kind of scenario is not always an easy one to handle. Cryptography and a network consensus method known as Proof of Work are both utilised in the Bitcoin blockchain to create the decentralized ledger known as the blockchain. In the context of cryptography, each block possesses a form of digital signature and is quite distributed. As a result, the block (or the hash) cannot be modified in any way. In this way, other participants will be made aware of any conflict that is caused by any one of the members.
Keeping the blockchain secure requires significantly more processing power, which is one of the most obvious drawbacks of this approach. When blockchain technology is factored into the equation, this could present a challenge. When blockchain decentralization and scalability are combined, it is possible to increase the amount of processing capacity, which in turn contributes to an increase in the number of transactions that can be processed in a given second. When attempting to construct a network, blockchain developers are required to figure out.
A Few Possible Answers to the Blockchain Conundrum
The trilemma does not have a single clear-cut answer that everyone can agree on. It is not at all feasible. However, several other methodologies have given up interesting findings in recent times. In this section, we'll take a look at some of the most common ways.
1. Fragmentation
The term "sharking" refers to the process of dividing a blockchain into multiple smaller, independent blockchains that each maintain a distinct portion of the overall data set. This removes the accumulated burden from a single chain that is responsible for processing all the transactions on a network. An improvement in Layer 1 scalability can be achieved as a result of these shards' ability to conduct transactions.
2. Varieties of consensus-building mechanisms
To find a solution to the trilemma, it is necessary for developers to devise an alternative method of securing consensus. The Proof-of-Work mechanism that is present on a blockchain network is the root cause of the trilemma that has arisen as a result of it. One of the motivations driving Ethereum's transition from Proof of Work (POW) to Proof of Stake is this very concept (POS). Staking tokens is a method that participants can use to validate transactions in POS systems. In this particular scenario, the process of adding new validators to the network becomes less complicated and more easily accessible.
3. solutions at the Layer-2 level
Layer-1 solutions aim to change the underlying nature of the existing network, therefore they involve sharing as well as a variety of consensus processes. In order for developers to find a solution to the trilemma, they will need to build on top of the existing networks. Solutions that belong to the so-called Layer-2 category. There are also state channels and side chains among them. A side chain is a distinct blockchain trilemma that is connected to the main chain, and state channels provide an additional method for removing transactions from the main chain and lowering the amount of work that needs to be done by layer-1 solutions.
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