Blockchain Trilemma - Crypto Academy / S5W2 - Homework post for @nane15
My pleasure to be part of this second week of season five class, and from this lecture presented by professor @nane15, a comprehensive and meticulous lesson has been given and in this post, I will be submitting the answers in regards to the homework.
EXPLAIN IN YOUR OWN WORDS WHAT THE BLOCKCHAIN TRILEMMA IS
Before we proceed, the trilemma in its literal sense has to do with a choice that is been taken as a decision by a group of individuals under three options made available that will govern and serve as an agreement and possible solution to a rising problem. But then, referring this to the blockchain ecosystem, The creation of bitcoin led to the development of blockchains of which need to be in a decentralized ecosystem for possible termination of a middleman control and for this to be accomplished, three features have to be implemented and this led to the raising matter of blockchain trilemma, what does it mean?
The blockchain trilemma is known to be a laydown of three issues placed aside, that relate and affect the development, operation, and creation of blockchain and its ecosystem. The three issues that require solutions under this trilemma include scalability, security, and decentralization of which has been a huge problem that comes up against the creation and development of blockchains and it is good to know that the personality or developer behind this conception is known as Vitalik Buterin.
HISTORY BEHIND VITALIK BUTERIN
Vitalik Buterin is acknowledged to be the brain and developer behind one of the well-known largest cryptocurrencies in the market popularly known as Ethereum of which was founded in the year 2015 as a blockchain network that operates as a decentralized application. Vitalik Buterin originated in Russia and was under age 20 at the time when he begin the creation of the blockchain.
Also, the blockchain which was invented is programmed to work with smart contracts and offers an ecosystem that goes beyond the normal financial activities thereby accomplishing new features in a decentralized format. Currently, Vitalik Buterinnet's worth is hovering around $500 million, he is presently working on a new blockchain stage which is said to be known as Ethereum 2.0 of which when commenced with the usage, will eliminate the use of proof-of-work to a system of proof-of-stake, and also increase the network security and scalability. MORE ON THE DEVELOPER
Based on blockchain trilemma, developers behind blockchain creations have effortlessly done their best to implement the use of the three aforementioned aspects that are affecting. Algorand is one of the blockchain projects which says to utilize and has solved the three concerned features and even add more to it if possible.
Moreover, during blockchain creation, most developers do take in two of the needful aspect and exclude one among the three for smooth functionality of the decentralized ecosystem of which most of the developers has the aim of creating the blockchain structure that will include the three aspects of been decentralized, secured along with it scalability.
Based on the blockchain trilemma, the developers foster the implementation of one aspect of the trilemma which is decentralization, such decentralized implementation to a blockchain will permit and assign power and authority to users of the network of which will demolish the presence of a one-man control or a control that does come from a particular group of individuals.
The blockchain trilemma also hovers around its scalability, which permits the possibility of an increase in transaction speed and limit, thereby accumulating a high rate of transactions in a matter of seconds. The security level of a blockchain is also another aspect that affects this issue because a blockchain that is created is required to protect and secure its user's funds and information far away from theft or being scammed within the network.
Blockchain trilemma is a problem that's behind the creation and development of a blockchain network that is known to its developers and users. The trilemma consists of three aforementioned aspects which include decentralization, stability, and security although it has been seen to be difficult for the three aspects to simultaneously operate on a blockchain network, blockchain developers must make use that the three aspects are applied since the future depends on it.
Despite the trilemma in a blockchain, developers are currently working out ways in which the three aspects can be resolved without the exclusion of one in the development of a blockchain network. Presently as aforementioned, Algorand is one of the blockchain networks that is working to get to the bottom of utilizing a decentralized, scalable and secured ecosystem.
Algorand has brought out a format that will address and resolve the issue in the trilemma, but then how has it been accomplished? The founder of Algorand - Silvio Micali, said that since the future is getting more digitalized and many individuals are now involved in the blockchain ecosystem, the need to develop a network blockchain that will possess high scalability and security is essential since Algorand already operates as a decentralized ecosystem.
Therefore, Algorand is now operating under the proof-of-stake algorithm of which allows random nomination of validators within the ecosystem of which are privileged with the responsibility of block creation and validation of its transactions. Through this nomination which is done randomly with the possibility of the token holders, a high level of security, scalability, and decentralization is accomplished. Hence, with this and many more, the trilemma in a blockchain can be figured-out.
To illustrate, the presents of banks within us has created a form of intermediary that exists between us (accounts owners), those who work in the bank (bankers), and our funds in the bank's possession. what do I mean? My money is in the bank and for me to gain access to those funds, it is expected that I go to the bank and follow due process before I can get my money and through such means, am offering control over my account to the bank thereby creating a middleman between me and funds.
Meanwhile, in the blockchain ecosystem, most blockchains networks are developed in a decentralized format, the decentralization eliminates the authority assigned to one-man thereby handing over the power to each individual and giving them full access to their wallet.
Decentralization when utilized in a blockchain, does provide a high level of security within the ecosystem because it empowers each user the responsibility to decide over their tokens of which will create a form of transparency over transactions that are been executed. Despite the delay that exists in a decentralized network, it offers unblockable bonds between users in the ecosystem and their funds.
Scalability is required in a blockchain ecosystem because a decentralized blockchain does possess a high rate of users and as such a high level of the transaction will be validated, and processed, and without the presence of scalability, the speed rate for transactions will be very slow thereby causing traffic within the ecosystem.
Therefore, scalability when made available will aid to increase the speed limit for a huge number of transactions processed per second within the chain. An example of a blockchain network that is presently implementing this scalability in its network though been centralized is known as EOS, From the blockchain whitepaper, EOS is processing 4,000 transactions per second and plans to increase its speed limit to processing millions of transactions in a matter of seconds.
When a blockchain is widely adopted by users, an improvement must be made to develop a high level of scalability to avoid the low operation that might occur from the increase of transaction rates, and also terminate the opportunity given to hackers who do attack the blockchain network.
Just like I aforementioned about banks, the funds that are kept there are relatively safe and free from theft. Similarly, when a blockchain is been created the security of the network ecosystem is put into consideration to prevent loss of funds and data of which such acts are do committed by hackers.
To maintain good functionality within an ecosystem, a secured level of 51% should be programmed within the network to block attackers who might try to tamper with the blockchain. An example of a blockchain that has experienced such an attack is known as Ethereum Classic. In the year 2020, the blockchain lost huge funds to the hands of hackers who stole and tampered with the Ethereum Classic Network, all this was a result of not fully implementing the network with a secure level of 51%.
Blockchain security should be one of the aspects that should not be excluded during the development and creation of a blockchain because, without it, a blockchain network is completely meaningless and purposeless. Although much is required for this to be accomplished, each transaction done by users within the ecosystem should be examined cautiously.
BASED ON YOUR KNOWLEDGE, EXPLAIN AT LEAST TWO VIABLE SOLUTIONS TO THE CHALLENGES POSED IN THE BLOCKCHAIN TRILEMMA
Some valuable points and ideas can be offered to create a solution that results within the blockchain, based on ht available understanding, the following are some of them:
- SWITCH OF CONSENSUS MECHANISM
Proof-of-work or Proof-of-stake are part of the consensus algorithms that accomplish their purposes in blockchain when used. When a blockchain network works in a proof-of-work mechanism, each user is expected to consume high energy to create a solution to tough cryptographic perplex issues of which then gains the privilege to validate transactions within the blockchain.
A blockchain under the proof-of-stake mechanism deals on the more tokens a user possesses, the more valuable they are. This mechanism has reduced the consumption of energy that is required to operate within the network to the aspect of users who owns a huge amount of tokens of which are staked.
Blockchain networks are recommended to switch over from proof-of-work to proof-of-stake mechanism of which with the above reasons will create a swift ecosystem that permits the random nomination of validators from users who staked their token within the network. An example of a blockchain network that is currently switching over to the Proof-of-stake mechanism is known as Ethereum 2.0, and it is possessing a large number of validators.
- CREATING SIDE-CHAINS
Just as the name implies, sidechains have to do with a blockchain that has been created from its originality. following the originality, those sidechains do operate under the main blockchain mechanism and are been programmed in a format that permits the process of being able to transact tokens or coins from the main to side blockchains or vise-verse.
Through the creation of such chains, the main and side blockchains will improve in their scalability along with their transaction speed per second thereby creating a high level of security and a balance accumulation of users and data in each chain.
Sidechains can be adapted to resolve the issues relating to blockchain and as such, it is required that those chains should be programmed with a depth connection with their main chains for better relation. An example of a sidechain is Ethereum 2.0, which is among the list of chains related to Ethereum Network.
- CREATING STATE CHANNELS
Another solution that can be used is the state channel, the state channel when created is programmed to work under a smart contract in connection with the main blockchain. The state channel is developed to allow users to process transactions at a low fee cost and is supported by a swift and smooth transaction process.
With channels in a blockchain, transactions can be executed without the use of the mainchains but supply the necessary data of all transactions processed to the main blockchain when needed, in other words, it can be said that every transaction in the channel is been noted in the main chains. The state channel is also developed in a system that processes transactions without making it compulsory to be validated before executing.
In most state channels, scalability is maintained but is likely not being in a fully decentralized format. An example of a network blockchain that has the said channels is known as Ethereum's Raiden.
CONCLUSION
Truthfully, the lecture has highlighted the challenges faced in the blockchain trilemma and it is been seen that the future of blockchain is in safe hands since many well-minded developers are currently working out ways to bring solutions to the challenges of having a blockchain been secured, decentralized, and scalable of which will create an avenue of giving the control to each user within an ecosystem.
Just as aforementioned, there are a good number of blockchain networks developing their ecosystem to apply all these three aspects. Thanks to Vitalik Buterin for bringing up the trilemma concept and doing its best to implement it in its blockchain creation and development. Thank you a lot professor @nane15 for the elaborate and all-inclusive discussion in the lecture, I hope to acquire more from you.
cc: Professor @nane15
Congratulations on your new appointment, more wisdom to you for your assignment, I appreciate your work.