The idea is that decentralized and secure blockchains allow for a world where we don’t need intermediaries to function.
In basic terms, a blockchain is a distributed digital ledger. Blocks of data are organized in chronological order secured by cryptographic proofs. The implementation of this technology across different industries is already changing how we work and live.
The idea is that decentralized and secure blockchains allow for a world where we don’t need intermediaries to function. However, for more adoption of blockchain, there’s a core problem that needs to be solved called the “blockchain trilemma”.
For the term to make sense, you need to be aware of three different elements that are desirable in a blockchain: decentralization, security, and scalability. The blockchain trilemma refers to the idea that it’s hard for blockchains to achieve optimal levels of all three properties simultaneously. Increasing one usually leads to a weakening of another.
In today’s article, we will examine all three elements in the trilemma and explain what each one is in more detail.
What is decentralization?
Bitcoin and similar blockchain networks are decentralized by design. The whole structure is such that there is no one person or organization in charge removing the central point of failure. Rather, the control is spread among a lot of participants. The network layer is open to anyone who wants to participate. As a result, control is fully distributed rather than held by one single entity. Everyone has access to the same data. If anyone tries to cheat the system by changing the records in their favor, then the rest of the participants will dismiss the incorrect data.
What is blockchain security?
To increase network throughput on a blockchain network, there’s an incentive to reduce the distribution of blockchain nodes either geographically, in number, or both. However, this pivot toward greater centralization reduces security on PoW networks. When consensus is achieved on an open network with limited nodal distribution, a 51% attack is more probable as hackers can gather the required hashing power with greater ease. By overwhelming a network, hackers can hijack the network and manipulate transactions for financial gain. Blockchain security is a critical network aspect that cannot be compromised. Overall, security is a fundamental requirement for a blockchain to be successful because, without it, attackers can take control of the chain.
What is scalability?
Scalability refers to the goal of building a blockchain that can support more transactions per second. Scale is required if blockchain tech is to serve possibly billions of users. But this is where a lot of blockchains still struggle.
This is because decentralization and security are so fundamental to blockchain that they tend to be focused on first. Decentralization is so central to the ethos and goals of blockchain that it lies at the very heart of most recognized blockchains. Security, as we’ve discussed, is a core requirement for a blockchain to be successful and useful.
Why does the blockchain trilemma exist?
The most obvious and basic solution to the problem outlined above is to reduce the number of participants confirming and adding to the network data in exchange for greater scale and speed. But doing so would lead to a weakening of decentralization. And it would also lead to a weakening of security as fewer players means a higher chance of attacks.
So here lies the trilemma: given the connection between the desired properties of decentralization and security, the fundamental design of how blockchain works makes it hard to scale.
We have launched Cryptogram, an India-focused free weekly newsletter on blockchain tech, global crypto markets, and Web 3.0 technologies which promise to change our future. If you would like to subscribe to this newsletter, click here. You can read our past editions here. Also, check out our website here.
Use promocode TNM51 at www.giottus.com/profile#promo after registration to get Rs.51 worth free Bitcoin.
Disclaimer: This article was authored by Giottus Crypto Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.
