Blockchain Trilemma - Steemit Crypto Academy - S5W2 - Homework Post for @ nane15

Hello friends. I welcome you all to the my. I will be participating in this weeks' lessons by Prof @nane15 with the topic on Blockchain Trilemma

Explain in your own words what the Blockchain Trilemma is

The Blockchain Trilemma is a household name in the cryptocurrency space that entails that the decentralized ecosystem is saddled with the task of the three (3) essential components that make up its system. These essential components which include Decentralization, Security, and Scalability all fall into the path of Trilemma which gives the system an option of three choices but it is rather faced with the inability to achieve these three paths at once. The system is only able to achieve two (2) out of the three (3) available choices.

From the listed choices we can see that decentralized networks whose emergence came onboard in 2009 by the lead coin Bitcoin were unable to handle all of these choices as they to date remained strong in Security and Decentralization choices and hence have less leverage in the scalability. However, despite this Trilemma or limitations observed in the execution of all three options, there are ongoing innovations tailored towards achieving all the choices the Trilemma has highlighted with the belief of being impossible.

Yes, there is this belief that the decentralized systems which are deviant from the centralized systems cannot achieve all the parameters but rather make do with two out of the three elements that build up the infrastructure. Just unlike the centralized systems that use the client-server base protocol, the public blockchain uses the decentralized consensus mechanism which in its entire protocol would want to attend to decentralization, security, and scalability of the end-to-end process. However, given the wide involvement of nodes in validation processes, scalability has remained an issue as this ecosystem would want to attend to the security of assets in the system vis-a-vis maintaining the decentralized nature of the public blockchain feature and hence lacking in scalability.

This is why Bitcoin is completely decentralized and secured but has a transaction per second speed of 7TPS, making it deficient in its cadre. This is also observed in some Enterprise blockchains where they have high TPS (scalability) and are secured but are centralized in nature due to the limited number of nodes needed to reach a consensus in its protocol. When a system is decentralized and fast, security is thrown into the open and vulnerable to hacks.

This inefficiency observed the workability of the blockchain space vis-a-vis achieving the trinity required for a complete ecosystem in the Blockchain Trilemma. But over the recent years, there have been plans in achieving the all-in-one feature to break the jinx of blockchain Trilemma which is the evolvement of layer-1 and layer-2 solutions in the blockchain process. Layer-1 comes with the composure of these three features whereas layer-2 comes with the integration of existing blockchain networks. A combination of these two layers is the required catalyst required to resolve the Blockchain Trilemma.

Highlights of Blockchain Trilemma

• The Blockchain development consists of three major components which include Decentralization, Security, and Scalability
• That these tripod features are not fully integrated into the blockchain with full functionality
• Developers of blockchain have to sacrifice one of the core features for the strong efficiency of the other two. Just as seen, scalability is mostly sacrificed for decentralization and security to be effective.

Is the Blockchain Trilemma Really a Trilemma?

I think Blockchain Trilemma is indeed a Trilemma in the existence of Blockchain technology since the emergency of the cryptocurrency mechanism. Bitcoin's launch in 2009 brought about the revitalization of the Blockchain space as it is the main rider for all decentralized networks.

When it comes to the practical application of protocols and theory, developers who are the main creators of this system are faced with the integration of the three main and fundamental features that make up the build of decentralized networks which are Decentralization, Security, and Scalability. So I think this is a Trilemma in the Blockchain space.

Retaining and the integration of these three core features are extremely inefficient as a pair has to be actively activated to the detriment of one. That is to say, we have a Dilemma of feature efficiency but a Trilemma remains a mirage in its complete accomplishment.

The first and second generation Blockchain applications in the Cryptocurrency space which include Bitcoin and Ethereum with dominance in Decentralization and Security are still lagging whenever we mention Scalability or Transaction per second (TPS) speed which is typical of the Blockchain Trilemma.

When issues like these are obvious, adoption of the decentralized networks is widespread due to inefficiency to match the centralized systems which are more scalable as observed and hence dominating the space so far TPS are considered. We can now say it is indeed the Blockchain Trilemma at hand.

There are countless attempts to solve this Trilemma since it is indeed a Trilemma to the Blockchain space. If we watch closely, most or if not all of the existing Blockchains went for the decentralized and Security feature with the Scalability weakened. This is because no developer and investor by extension would be willing to jeopardize issues bothering decentralization since they all want an all-out from the centralized system as well with security given to the safety of their asset at all times. The only weak option and less fatal feature is the Scalability since they can make due and look for alternatives.

Therefore, the Blockchain Trilemma is indeed a Trilemma in the Blockchain space though there are ongoing efforts at different levels and off-chain networks to facilitate these existing Blockchains.

Define the following concepts in your own words:
A. Decentralization
B. Scalability
C. Blockchain Security

Decentralization

This feature is one of the key components that bring about the deviation from a centralized system. In this case, there is no single entity management of protocol in the system rather it has a distributed control of system management over to participants in the network. That is to say that there is no individual owner that controls the affairs of the system rather shared power is given to all who participate in engaging the system.

These are permissionless networks that make use of the miners who are saddled with the responsibility of validating transactions in the system and thereafter earn rewards from this. Just as we know, no single node or miner can determine the direction of trade but rather it is in the hands of all other nodes as all nodes available in the system share the same amount of power.

It has brought about a technological revolution in space as it ensures freedom for all we do without being gagged. This is relative to the fact that it drives different blockchain projects through the ecosystem as well as removes in its entirety the activities of middlemen and intermediaries. We ought to know that despite attending decentralization as the way to go, optimizing the decentralization of a given system also reduces the transaction throughput given that the number of miners in the system increases.

Some of the Highlights of Decentralization

• It is a permissionless Network
• There is freedom of participation in the system
• It brings about a trustless system where participants only need to engage the system protocols and do not necessarily have to trust any user before participating.
• Removes activities of intermediaries and middlemen during the transaction
• Involvement of Miners in its system who are in charge of validating and verifying transactions
• Expensive or capital-intensive in setting up blockchain equipment for mining

Scalability

This happens to be one of the sacrificial features for the other two features in the blockchain core feature implementation mechanism. It measures the capacity of a system to support a very high transaction throughput relative to future growth. Just as the Blockchain Trilemma is known, scalability should not be an issue if we intend to compromise either the Security or decentralization of a blockchain.

For Blockchain to have a super legacy over the existing Centralized systems that are still up the date and far scalable, the decentralized systems would have to increase their scalability index ratio. But looking at blockchain protocol with a lower user base, the performance of its system scalability will not suffer but whereas in some given situations where we have more adoption and user-base presence, blockchain scalability tends to be lagging or suffer.

Bitcoin which is the lead coin as of today is at its peak of scalability with about 20 million monthly adoption users in its system and a $25 per transaction fee charged. This is a far-limited adoption oven to the performances observed in its counterparts Facebook with about 2.8 Billion active users and Twitter with 330 Million active users relative to superlative scalability therein.

No doubt that scalability remains an urgent problem in the blockchain advancement given the expected global adoption required in the cryptocurrency space and if not specifically resolved may continue to receive rejection and uncertainty of adoption of this future technology.

Some of the Highlights in Scalability

• This is one of the three features that has been lagging for the other two to sufficiently be in play
• It is the ability of the blockchain mechanism to support high transaction throughput in its ecosystem
• Higher transaction Throughput does not necessarily mean higher charges but rather brings efficiency to the mechanism

Blockchain Security

This is another strong fit of the blockchain system as, without it, the concept of blockchain would have been a sham as there would be countless disruptions and manipulation of Ledgers. Since the blockchain runs an open source which brings about transparency and trust in system use, a school of thought also believes that this is the weakest link of the blockchain as hackers who read and decode some of its built codes have the luxury of time to get it to compromise.

Reports show recently that attacks on the Bitcoin blockchain are rare given the absence of smart contracts in its domain unlike what is found in most blockchains with smart contract drive. They are seemingly prone to attacks via its smart contract features, especially through the DeFi component which is a non-collaterized loan concept.

This is why we see the use of cryptographic representation of deception and encryption modules in the cryptocurrency which is an addition to the security of an end-to-end use of its mechanism. Decentralization has a supporting link with security as its consensus mechanism required to validate and verify transactions in the system is also another way to improve system resilience.

It may require a large number of resources to maintain the security of blockchain but the truth remains that no investor would want to put its assets where there is no certainty in maintaining the safety of its asset.

Based on your knowledge, explain at least two viable solutions to the challenges posed in the Blockchain Trilemma.

The main challenges observed in the Blockchain have greatly been centered on issues affecting blockchain scalability. The great developer and Founder of Ethereum believes that the coming together of great minds in harnessing some of the existing and new modules would help resolve this and launch what a perfect blockchain should look like.

In continuation to this, the Advance solutions on PoS, Sharding, and introduction of SideChains are possible ways to break even from these challenges. He believes that Ethereum 2.0 should be able to deliver the most needed Decentralization, Security, and Scalability needed in the blockchain by hence providing, in addition, Ethereum 2.0's 64 sidechains. But let us look for other detailed solutions by using Layer 1 and Layer 2 as earlier mentioned above.

Improvement in Consensus Mechanisms (Layer 1)

We already know what consensus mechanisms are in the cryptocurrency space and how far they have gone to help improve the validation of processes as well as maintain the decentralized feature and security architecture of the system. Originally what we have from the first generation of blockchains is the PoW consensus mechanism where security and decentralization are paramount but with low scalability. But we could also observe an enhancement with the PoS in Ethereum as a well subsequent new generation of blockchains.

Therefore improvements made in the enhancement of the existing blockchain may not greatly resolve these challenges but would improve the scalability observed in the existing blockchain.

Sharding (Layer 1)

This is a concept that allows transactions to be broken into shards (pieces) which are processed simultaneously in parallel patterns in the network and hence allow for a greater number of transactions at a given time. It is that concept that allows network nodes to have splits of information in it rather than have every copy of information right from the genesis block but still maintains consistency with itself.

It allows outright provision of proofs while interacting with the Mainnet/Mainchain for details like the addresses, balances, etc by the use of Cross-Hard Communication Mechanism. This is some layer-1 protocol in use by the Ethereum 2.0, Tezos, Qtum, and Zilliqa.

The next solution created is layer-2 which is primarily the technology developed on top of existing blockchain protocol to improve stability and overall efficiency. For instance, we have the Lightning Network which is built on Bitcoin to improve the scalability inefficiency. Other Layer-2 protocols built to boost scalability in blockchain systems include;

Sidechains

They are regarded as blockchain transactional offline chain that mostly uses independent consensus mechanisms outside of the main chain. This makes speed and scalability reliable with this additional and dedicated consensus mechanism available in the sidechain as well as the presence of a utility token as a means of data transferral mechanism between both chains.

They are not private amongst participants while in use as they are publicly recorded in a ledger. Good enough, observed security breaches do not in any way impact that if the mainchain

State Channels

This is mostly a direct two-way communication between an on-chain and off-chain while using mechanisms to improve the scalability and TPS speed of its protocol. Though there is a degree of decentralization it sacrifices to attain the required scalability match, all inherent transactions are observed to be recorded in the underlying blockchain in which it derives its functions.

We have examples of protocols that use the state channel which include the Bitcoin Lightning Network, the Ethereum Raiden, Celer, etc.

Conclusion

The Blockchain Trilemma has over time put developers on their heels as the quest to develop a more perfect blockchain with the basic three features keep arising. Though there are solutions on the ground which include the application of Sharding, improvements of consensus mechanism, and the buildup of Sidechains and State channels, the drive for a more yielding breakthrough is still in view.

Thank you respected Prof @nane15 for this lesson.