The difficulty faced by developers when attempting to accomplish decentralization, security, and scalability in a blockchain is known as the “blockchain trilemma”, because increasing scalability typically entails more streamlining, leading to an increase in security risk.
Most blockchains can appear to have all three characteristics to an outsider. But when we look closely at each cryptocurrency, we discover that the majority only has two or three of these qualities.
For instance, while Bitcoin (BTC) is secure and decentralized, it isn’t really scalable—at least not by itself.
The phrase was first used in 2014 by the creator of Ethereum, Vitalik Buterin, who was also blogging at the time on blockchain technology.
The CAP theory developed by computer scientists in the early 1980s is comparable to the blockchain trilemma Buterin created.
A decentralized ledger must be consistent, available, and able to withstand stress testing, according to the CAP (Consistency, Availability, and Tolerance) theory.
He claimed that Ethereum was intended to be the perfect blockchain, resolving the trilemma’s three primary problems.
Despite this, during the 2020 DeFi frenzy, when more than 300,000 ERC-20 coins were released on the network and non-fungible tokens (NFTs) put a significant load on the network, the Ethereum network experienced its peak congestion. Gas prices increased as a result of this.
Reducing the number of participants who affirm and add to the network data in exchange for greater scalability and speed is the most straightforward and fundamental solution to the challenge described above.
However, doing so would erode decentralization and provide control to a smaller group of players. Additionally, it would impair security because assaults are more likely to occur when there are fewer players.
So here’s the dilemma: because of the link between the intended characteristics of decentralization and security, blockchain technology is difficult to scale.
When you strengthen one, you weaken another. How can scalability be advanced without jeopardizing security, decentralization, or both?
There isn’t a single perfect answer to the trilemma. Given the significance of finding a solution to this issue, a variety of approaches have been taken by the community, and the outcomes have been interesting.
To help you grasp what’s going on in the area, let’s run through an overview of some of the most well-liked developments:
A split blockchain is referred to as a shard, having its own specific ledger. This technique divides larger blockchains (or other kinds of databases) into more manageable, partitioned blockchains.
With this configuration, a single chain is relieved of the burden of managing all network transactions and interactions.
Various consensus mechanisms
The Bitcoin network’s usage of PoW to maintain security is one of the reasons the trilemma occurs. It takes a lot of decentralized processing power, encryption algorithms, and miners to create a secure yet slow system.
One method for resolving the trilemma is to find different means to reach an agreement. This was one of the factors that led to Ethereum switching from Proof of Work to Proof of Stake (PoS).
Sharding and various consensus techniques are examples of Layer-1 solutions. They aim to alter the underlying network’s basic architecture.
However, some programmers are working on solutions that build on top of an existing network structure in an effort to resolve the trilemma.
In other words, they believe Layer 2—the second layer—to contain the solution. State channels and sidechains are two examples of this.
In essence, a sidechain is a different blockchain that is connected to the main chain. Assets can move easily between the two thanks to the setup. Importantly, the sidechain can function according to various rules, enabling increased speed and scale.
The scalability trilemma prevents blockchain from realizing its potential as a technology that can transform the world.
It will be challenging for blockchain technology to gain widespread adoption of blockchain networks can only support a modest number of transactions per second while still maintaining decentralization and security.
The solutions now put out by programmers looking to overcome this issue, however, show that the technological advancements already achieved by blockchain will only improve, and these networks may very well be able to manage considerably more data in the future.
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