Security. Decentralization. Scalability. Three pillars of cryptocurrencies that all appear to be striving to coexist but finding it difficult to live in harmony.
This concept is known as the "blockchain trilemma," which was named after Vitalik Buterin. It is inspiring some intriguing methods that initiatives and networks are attempting to find a permanent solution. But what is the blockchain trilemma exactly, and why can't it be resolved quickly? Let's get started!
The three combating elements
You know how it's hard for you to manage your social life, work, and sleep? It's comparable to the blockchain trilemma. The consensus in the bitcoin industry is that in order to be genuinely decentralized, scalability and security must be compromised. Before we start, let's take a short look at them.
Decentralization: what is it?
Decentralization is the process of spreading control over a larger area away from a single central organization, business, or government. Decentralization in blockchain allows users to operate the network using their computers (called "nodes") rather than having the network's control reside with a single company or individual.
What does blockchain security entail?
Although blockchain is naturally safe, it is not completely impervious to hackers. A hacker can change a blockchain and manipulate transactions to steal from the network if they can gain control of more than half (51%) of the network. In blockchain, security increases with the number of nodes.
How does scalability work?
Like in business, scalability in blockchain refers to how big a network can go while still keeping the same level of output and transaction speed.
When decentralization and scalability operate together, security often suffers, while scalability-enabling innovations are constrained by security. Why? Basically because scaling decentralized networks is challenging and requires some additional work.
Security and decentralization are great friends in the blockchain
The fundamental element of blockchain and cryptocurrencies is decentralization. It means that there is no central authority or body leading the project and does away with the requirement for external parties to grant industries operating permission. Banks are one illustration of conventional finance. They are centrally located and serve as a mediator between you and your money. We expect money to get where we send it, and in exchange for protection, we give up some control of our money, thus this is typically accepted. Banks take responsibility for providing a mechanism for us to store and move money safely.
Blockchain gives individuals direct access to their money and decentralized networks hand them the keys
It achieves this by relying on blockchain technology rather than corporations and through community control. Blockchain provides an alternative to a middleman technique through a set of self-executing rules. Because each transaction must be verified by more than 50% of the network's nodes, the network maintains its security (and remember: the more nodes that are part of the network, the more the blockchain becomes decentralized, enhancing the security that the network offers).
This is fantastic because no one is in charge, but it has one major drawback: transaction times can be long because of the volume of information required to maintain the shared system, and the system is more difficult to scale.
Scalability is also mentioned, along with the security risk it poses
You can conceive of each piece of information on a blockchain as having weight. The data gets heavier and moves more slowly as more information is supplied. To reduce the burdensome quantity of information that needs to be moved around, it is crucial to maintain the information current. One method to achieve it is by limiting the blockchain's distribution.
However, by restricting the network's dispersion, attackers who wish to take control of the system have fewer obstacles. This increases the likelihood of an attack since hackers will find it simpler to control a sizable enough portion of the network and the blockchain. It's not ideal, and it demonstrates the cost of bringing scalability to the blockchain trinity.
Why, then, must blockchains scale?
You are aware of how miserable waiting in traffic is? Because roadways were not constructed to accommodate all of the cars that would be using them at once, traffic is a result of this. Imagine having to wait in traffic each time you needed to make a transaction for it to be approved and completed. Additionally, when more people transact, the network and validation procedure become more necessary. It presents an unsustainable slow method and generates traffic on an inflexible network.
So, to put it simply, scalability is essential if blockchain technology is to experience any type of widespread acceptance. A network won't be able to compete with existing platforms in terms of ease, transaction speed, and throughput if it can't scale.
Therefore, in order to scale, a project must either invest in security or decentralization, correct? Okay, no.
The lookout for a remedy
The issue, which is difficult to fix, has given rise to some intriguing solutions in the blockchain sector. It's interesting to see how different concepts might affect the network in the future, depending on the project's basis and whether it depends on another project to function (like a dApp needs Ethereum, for example).
Without becoming too technical, there are a few cool approaches that projects have tried, including the following:
Ethereum 2.0: Rollups and sharding
Sharding has gained popularity as a scaling method for decentralized projects like Ethereum. In essence, when a network "shards," it divides the blockchain transactions into simpler data sets that the network can handle more quickly. As a result, more transactions can happen concurrently without causing congestion. The interaction between the several shards and the transmission of information to the main blockchain ensures information security.
Networks can "roll up" several transactions onto a single off-chain (with validated proof) using rollups on the Ethereum blockchain trilemma before submitting the rolled-up data to the main chain. It resembles carpooling somewhat. Rollups are clever because they lessen the amount of data required for a transaction, which improves speed and decreases traffic.
The State Channels of The Lightning Network
The Lightning Network provides an additional layer that sits over the primary network, which is why it is referred to as a layer 2 solution. Our main example, Bitcoin, "suffers from success" and has issues with transaction costs and speed. You can conduct transactions over the Lightning Network without having to deal directly with the main Bitcoin chain.
You create "channels" with others to conduct transactions with instead of using the main blockchain. You can transact directly, instantaneously, and much more cheaply inside the channels, which are controlled by smart contracts, than on the main blockchain. You can open a channel with a status channel that is recorded on the main blockchain trilemma (kind of like opening a tab). From that point until the channel is closed, all transactions will happen "off-channel" (not on the main chain). When a transaction is complete, only the opening and closing information is sent to the main blockchain. Security is ensured because governmental channels work with smart contracts.
Relay chains and parachains are polka-dotted
Polkadot prefers the idea of blockchains working together with other blockchains as opposed to providing a single blockchain solution (interoperability). In order to provide a network that is extremely scalable, the network is built with "a relay chain" as the backbone. It achieves this by utilizing "parachains," which are standalone blockchains connected to the primary relay chain.
It entails that the chains cooperate overall for increased security while yet managing their governance independently to allow the network to grow.
What the trilemma's resolution means for blockchain's future
Despite the fact that the majority of people may not be aware of the blockchain trilemma, they are aware of the issues it raises (such as Bitcoin's slower transaction speed). If initiatives are successful in resolving the trilemma, blockchain trilemma adoption may reach unprecedented heights.
We are looking at a scalable blockchain future where people from many industries (from money to logistics, from legalities to property) can benefit if there is a successful solution to check the "decentralized" box without worrying about security and the inconvenience from a lack of scalability. Fundamentally, blockchain trilemma provides a more level playing field for people to prosper rather than relying on a conventional, centralized, and controlled system.
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