Blockchain Trilemma - Crypto Academy / S5W2 - Homework post for nane15.
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Explain in your own words what the Blockchain Trilemma is.
As we maybe all be aware of what a blockchain is, blockchain technology has been in existence since Satoshi Nakamoto gave birth to Bitcoin. The blockchain had its own challenges. After the success of Bitcoin we have seen a whole lot of blockchains been developed by different programmers or teams. It is important to note that every blockchain is assessed based on three core principles or concepts, these core concepts are; Security, Scalability and Decentralization. Every blockchain has its main targets or ambition. Building a blockchain project that fully achieves all the aspects listed above seems to be a very difficult task to achieve. I will therefore define Blockchain Trilemma to be a situation where blockchain developers face the challenge of making sure that a fully functional blockchain project is developed in such a manner that the three aspects are all present in the project even though these three can’t all be fully achieved unless a lot of hard work and deep thinking goes into it. I will continue by giving an example of blockchain trilemma. A blockchain that uses a proof of work consensus mechanism would fully achieve security and decentralization but the aspect of scalability will be compromised. The same way a blockchain using the proof of stake will fully achieve scalability and decentralization but security might also be compromised.
Is the Blockchain Trilemma Really a Trilemma?
From my personal point of view I will say that blockchain Trilemma is not really a Trilemma. I am of that view because of the following reasons.
Depending on the aims and approach of the developers or team of developers all three can be achieved. Lets tackle it from this point; the blockchain technology is still in the early stages of development and hence its improving as days go by. I personally think that with the different approaches been used by developers this Trilemma can be solved very soon. The blockchain technology is rapidly growing because of its decentralized nature and security offered. These two can be achieved at the same time but the issue comes in scalability and from the development in the blockchain world it has been proven that scalability is been improved continuously. So it is only a matter of time and the blockchain Trilemma will be proven not to be really a Trilemma.
Define the following concepts in your own words:
• A. Decentralization
• B. scalability
• C. Blockchain Security
This is the core or the building rock of blockchain. Decentralization is a system of governance where every individual is given the right to participate in decision making. Decentralization system doesn’t have a single body or entity governing or controlling the system. This is one of the major reasons that gave birth to blockchain because the then banking system was operating on a centralized system. Even though no single entity governing a blockchain transactions on the blockchain are verified and validated. Blockchain uses different types of consensus mechanisms to achieve this. Being decentralized gives a lot of transparency and a lot of security which gives it the advantage over the centralized system. All blockchains are decentralized.
Blockchain technology is been adopted rapidly by the general public. This means that the workload on the blockchain increases. So the ability of a blockchain to run smoothly and efficiently as demand increases. This is a very big challenge to blockchains because of the fact that they run on a decentralized system. Verification and validation on a decentralized system is sometimes takes long because different nodes will have to verify before it will be effected as compared to centralized banks. Decentralized blockchains have proven that the scalability can be improved because EOS blockchain has a scalability of 4,000 transactions per second. When scalability of a blockchain is increased most at times security is compromised.
Transactions on a blockchain are transparent and imutable this makes it impossible for transactions to be altered or changed. This gives maximum security to its users. The security offered by blockchain is very high such that it is nearly impossible for the system to corrupt. With blockchain security can’t fully be achieved without the other two pillars being compromised. Blockchain security is a very important factor because it guarantees its users that their assets and transactions are very secured and save from attack. A blockchain that decides to have a gamble with its security is susceptible to cyber-attacks.
Based on your knowledge, explain at least two viable solutions to the challenges posed in the Blockchain Trilemma.
From what I have learnt I will like to state that blockchain Trilemma can be solved in various ways. These ways can be classified into 2 namely layer 1 and layer 2.
Layer-1 Solutions -
- Proof of Stake — a lot of Blockchains in the system now use a consensus mechanism called Proof of Work (PoW), this is the first consensus mechanism to be used because it was used by bitcoin, the PoW is an algorithm that demands computers with very high computational power to solve puzzles and verify blocks. PoW is very secured however it is very slow because validating a block demands a lot of computational power and time. This consensus mechanism should be replaced with Proof of Stake (PoS), which chooses its validators based on their stake or holding on the network, this reduces the computation required and also increases Scalability without compromising the other two. In proof of stake when a validator validates a bad block he or she loses a percentage of his or her stake so this helps in making the blockchain secured.
Layer-2 solution
- Sidechains — per my understanding, blockchains have low scalability because of the workload on it so if you want to increase scalability you need to find a way of reducing the workload on the network. This can be done through the implementation of Sidechains. Sidechains are the alternative technologies or chains that are created with the aim of improving the scalability of a blockchains by serving as a place where transactions are carried out on then is later sent to the main chain or blockchain for verification and storage. This maintains the security of the blockchain and at the same time increasing scalability.
CONCLUSION
In recent years blockchain has shown its great potential it posseses. It has attracted a lot of interest from the general public since its introduction in 2009. Every blockchain is built on three core principles or concepts: 1. Decentralization, 2. Security and 3. Scalability. The fundamental concept on which every blockchain is built on is decentralization. The other two concepts appear to be directly inversely proportional. This means that as the scalability of a blockchain is been increased then its security is also been compromised. This creates a scenario called a blockchain Trilemma where developers will be torn between which concept to compromise. However with the right approach like the use of proof of stake mechanism and the use of Sidechains this Trilemma will be solved with ease. Thanks to professor @nane15 for such a wonderful lecture.