Blockchain Trilemma - Crypto Academy / S5W2 - Homework post for Prof. nane15.

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1. Explain in your own words what the Blockchain Trilemma is.

It will be shallow to straightforwardly explain Blockchain Trilemma without pondering on what a Trilemma is. In simple terms, a Trilemma is the situation whereby a choice must be made between three options which are of equal importance, whereby only two choices can possibly be made out of the three at the same time.

The invention of blockchain technology has brought many improvements in the financial sector in terms of efficiency and eradicating issues related to intermediaries when accessing financial services but upon the advantages there are some few challenges that are associated with the technology which has led to the formulation of the concept Blockchain Trilemma in order to address those issues.


The concept of Blockchain Trilemma was propounded by the Ethereum developer Vitalik Buterin, and it seeks to address three key issues with regard to decentralization, security, and scalability that blockchain developers come across when building blockchains which pushes them to sacrifice one of the three components as a trade-off in order to accommodate the other two.

There is a general view that decentralized networks can only achieve two of the three components simultaneously at any given period, but people (architects) such as CertiK believe that it is possible to build a blockchain project that can simultaneously achieve all three aspects. Thus, a blockchain that is scalable, decentralized, and secure at the same time.
Whether the Blockchain Trilemma is really a Trilemma or not is open for debate, and I will express my view in the next question.


2. Is the Blockchain Trilemma Really a Trilemma?

It is of essence for us to take note that the term Trilemma is just a model that is created to conceptualize the various challenges that are associated with the blockchain technology because there is no law or fact that states that all the three aspects can't be achieved simultaneously and that is the reason why various blockchain developers are working very hard to improve the blockchain technology in order to eliminate its infant challenges and make it function more efficient and effectively.

Although there is no law that confirms Blockchain Trilemma, but it is generally agreed that it is difficult for any blockchain system to effectively achieve all the three components (decentralization, scalability, and security) concurrently.

Decentralization seems to be a constant aspect of many blockchains, but there are some challenges associated with their security and scalability aspect.

There have been instances where hackers have succeeded in attacking blockchains and as well as instances where blockchains execute or validate transactions at a lower speed due to low scalability.

A practical example of a blockchain low scalability is Bitcoin, Bitcoin process approximately 6 transactions per second and validate a single block in 10 minutes whiles a centralized company like VISA handles approximately 1800 per second.

An example of blockchain insecurity is the D.A.O attack that took place as a result of improper source code security.

Upon the aforementioned critiques, I still believe that the Blockchain Trilemma is not really a Trilemma as it is conceived by some people, simply because Blockchain Trilemma is just a concept with no concrete proof and also there have been the emergence of new blockchains and solutions that have effectively address the alleged Blockchain Trilemma.

There are challenges associated with the beginning of everything and blockchain is of no exclusion and that is the reason why developers have worked hard to bring effective solutions to the supposed Blockchain Trilemma together with the invention of new blockchains such as Cardano, Polkadot, Solana and Algorand that are built to effectively achieve all the three components concurrently without any setbacks.

Therefore, the possibility and solution of achieving all the three aspects simultaneously (decentralization, security and scalability) through improved technology disqualifies the Blockchain technology from being a true Trilemma.

The unexistence of universal proof of Blockchain Trilemma serves as a backup to my argument.


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

A. Decentralization

Decentralization is the process whereby power or authority is transferred from a central body to the subunits.
Decentralization is the core component of blockchain technology because the main aim of blockchain is to eliminate intermediaries and the challenges associated with them in terms of accessing financial services.

The Idea of decentralization evolves around the number of nodes that operates a blockchain.

The decentralized goal of blockchain is achieved with the help of P2P transactions and smart contracts

With decentralization power is delegated to the users from the central body of which they are free from external control unlike that of centralization whereby there is a central body that takes total control of affairs.

B. Scalability

Scalability is the ability or rate at which a blockchain network is able to handle an increasing amount of transactions within a period of time. Thus, the capacity to process and validate transactions within a period of time.

Scalability is about how a blockchain system can sustain and operate smoothly as its users or demand increases, and it is the main challenge many blockchains encounter.

The scalability of a blockchain depends on the consensus mechanism it is operating on.

Proof-of-Work has low scalability, which led to the introduction of Proof-of-Stake and other consensus mechanisms that aim to facilitate the transaction speed of blockchains.

An example of scalability is that of the execution of 6 transactions per second on the part of Bitcoin whiles a blockchain project that focuses much on scalability like EOS currently has a maximum throughput of 4,000 transactions per second with a potential future increment.

C. Blockchain Security

Blockchain security is the ability of a blockchain system to withstand any form of attack or threat in order to be safe and operate as expected.

In other words, blockchain security is whereby a blockchain is free from threats, thus being secured as the concept suggests.

Blockchain Security is the most essential and basic component of the blockchain technology.

Blockchain security is insured through coding and consensus mechanisms.

As I said earlier, the blockchain security is somehow questionable due to some successful attacks.


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

Based on the knowledge I have gained from the lesson and my research, I have noticed that so far there are two possible layers of solutions by developers to address the challenges that are associated to the Blockchain Trilemma. I will take the layers one after the other and explain some of their suggested solutions based on my knowledge.

Layer-1 Solutions

Layer-1 solutions have to do with direct modifications to the Blockchain system. An example is the switch of Proof-of-Work to Proof-of-Stake consensus mechanism by Ethereum 2.0.

Below are some Layer-1 solutions:

  • The Improvement of consensus mechanisms; Bitcoin is a populous blockchain that uses Proof-of-Work as its consensus protocol and does not support smart contracts. Although it is decentralized and secure, it lacks high transaction speed due to the problems confronting its scalability level. For instance, It can only achieve 6 transactions per second which is somehow bad and that has led to the introduction of Proof-of-Stake. Proof-of-Stake determines a node’s status based on its stake in the blockchain, instead of requiring nodes to use computing power to solve complicated cryptographic algorithms. Meaning blockchains which have low or poor scalability like Bitcoin can switch from PoW to either PoS or any better consensus mechanism in order to overcome the challenges of scalability, just like what Ethereum 2.0 did.

  • Blockchain Trilemma can be solved through Sharding; This solution is about splitting or dividing transactions into smaller “shards”. The shards are then processed simultaneously in parallel to each other by the blockchain, enabling it to work on several transactions at the same time. When it comes to Sharding, nodes don’t necessarily need to hold a copy of every block from genesis, but instead, the information or data is split and stored by different nodes.

Layer-2 Solutions

These solutions have to do with operating other networks on top of the main Blockchain. The introduction of the Bitcoin Lightning Network is a practical example of the Layer-2 solutions.

Below are some Layer-2 solutions:

  • The adoption of Nested blockchains; with a nested blockchain, the main chain dictates the rules for the entire chain, whiles it does not take part in any operation unless when an issue arises and there is the need to resolve it. Nested blockchain is a parent-child like connection whereby the parent chain delegates most of the work to its children. The children chain send their operation results to the parent chain, which helps to reduce its workload and increase scalability.

  • The employment of State Channels; state channels improve the total transaction capacity and speed of a blockchain through the establishment of two-way communication between a blockchain and off-chain transactional channels, and they don’t need node verification to validate transactions, but instead, the off-chain resource validates transactions by using smart contracts. Whenever a transaction is completed on a state channel, the final state of the channel and all of its transactions are added to the underlying blockchain. Examples of State channels are: the Liquid Network, Bitcoin Lightning, Celer, and Ethereum’s Raiden Network


5. Conclusion

There are challenges that are associated with every new invention and mostly these challenges are later curbed through improvement or development and I believe the same thing is happening with the issue of blockchain Trilemma. Although the blockchain (Bitcoin) technology has experienced some setbacks from the unset but with the creation and availability of better solutions to those challenges together with my research, I don't consider blockchain as a Trilemma but rather a technology that is at its infancy and having a better future. Most of the issues or challenges attached to blockchain are being fixed and others that have not been fixed yet are being worked upon, which gives a positive sign that Blockchain has a better future regardless of the initial setbacks.

Blockchain Trilemma is just a concept without proof therefore Blockchain Trilemma is not really a Trilemma, and thanks to Vitalik Buterin for drawing the attention of the world to such issues related to blockchains of which developers are working towards to eradicate.

Thank you Prof. @nane15 for such an interesting topic.

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