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In decentralization, security, and scalability, the Blockchain Trilemma refers to the generally held notion that decentralized networks can only deliver two benefits at any given moment.
This article looks more closely into the matter, assessing all the most relevant aspects of the blockchain scalability trilemma.
Vitalik Buterin invented the term “blockchain trilemma,” which refers to a problem that blockchain engineers face while balancing three competing demands: decentralization, security, and scalability.
According to a common conception, decentralization, security, and scalability can only deliver two benefits at any moment.
The trilemma may find a solution once and for all thanks to many Layer-1 and Layer-2 projects. These potential answers have been under development in the decentralized ecosystem for a long time.
- Security: Malicious actors should be unable to take control of blockchain networks if strong defenses protect them.
- Scalability: Increasing the number of transactions or users on a blockchain should not result in higher costs or longer transaction times.
- Decentralization: As opposed to a single owner, blockchains share network control with all members.
There is an incentive to limit the spread of blockchain nodes geographically, in quantity, or both to maximize the network performance. PoW networks need to be more secure due to this shift toward more centralization.
In an open network with few nodes, a 51% assault is more likely since hackers may gather the necessary hashing power more efficiently. Hackers can seize control of a network and alter transactions to make money.
The Ethereum Classic (ETC) network, a fork of Ethereum (ETH), underwent three 51% assaults in August 2020, reorganizing over 4,000 blocks, for example.
As a result, the network lost millions of dollars in value due to manipulating data and duplicate spending of ETC currency. Therefore, the security of the blockchain is a vital component of the network and cannot be ignored.
It is possible to have high transactional throughput on a blockchain, but only if it can handle it in the long term. Because of this, the blockchain’s performance will not react negatively when more use cases and adoption occur.
Scalability refers to the ability of a blockchain to handle increased usage. Blockchain Trilemma states that scalability is conceivable, but security or decentralization will be compromised.
At this point, blockchain networks can only compete with the network settlement and usability of older, centralized systems.
Scaling remains a great difficulty for today’s top decentralized networks. Nevertheless, many blockchain platforms have already established decentralization and security as core features.
Blockchain functions on the principle of decentralization, which is at the heart of many initiatives in the ecosystem. For example, using decentralized methods and technology, dispensing with intermediaries in all sectors is possible.
Decentralized finance (DeFi) platforms, rather than intermediaries, may share profits and governance with users and the larger community by eliminating banking institutions from financial products.
They are fundamental to how the internet functions. No single entity controls or censors the data flowing across decentralized networks. Optimizing decentralization, on the other hand, tends to reduce network throughput.
Transaction speeds may slow as more miners establish a Proof-of-Work (PoW) network through consensus, which is seen as a barrier to mainstream adoption.
The Ethereum 2.0 and Polkadot Solutions
Sharding has become a popular alternative for initiatives like Ethereum, which doesn’t depend on another network. Another way is when a network “shards,” it divides the blockchain’s transactions into smaller bits. This way, the network can process more manageable data chunks faster.
As a result, the network could process additional transactions simultaneously without delays. Also, the many chain shards communicate and submit data to the blockchain to keep data safe.
An off-chain (verified) proof of the roll-up reaches the main Ethereum blockchain, which processes the rollup and returns it to the main chain. It’s a lot like riding with a friend in a car. Due to their ability to decrease the amount of data required for a transaction, rollups are efficient.
Polkadot prefers the notion of several blockchains working together rather than a one-blockchain solution (interoperability). A “relay chain” is the network’s backbone, allowing for a highly scalable network. As separate chains that link to the main relay chain, parachains are used. Therefore, the chains can grow independently, but the network is more secure.
Emerging solutions can overcome the blockchain trilemma, which offers substantial obstacles to blockchain adoption.
Network security, decentralization, and scalability must all go through a laborious optimization process. Considering the importance of this issue, it’s not surprising that so many teams of experts have devoted themselves to it.