Blockchain’s Impossible Triangle: Decentralisation, Security, Scalability

If decentralised networks want to take the next big step and consolidate a feasible global alternative to the current financing system, they must ultimately consider and solve the well-known “blockchain trilemma’’ — a paradox highlighted by the Ethereum founder and developer Vitálik Buterin.

Buterin has stated that, as for now, blockchain systems could only offer two out of the three of the following benefits: security, decentralization, and scalability.

The so-called “Blockchain Impossible Triangle” is based on the premise that our current technology and understanding of blockchain are not enough to develop a functional system that combines these three aspects simultaneously. It is believed that a system must inevitably sacrifice one element of the triangle [in order] to achieve two of them.

This has been the most significant brake on blockchain’s ambitions, remaining the main impediment to its potential widespread use. Despite this challenge, Crypto enthusiasts from the whole world are committed to solving this problem, and there are already a series of projects aiming to find solutions to these problems. Against that wider context, it is important to understand in more detail the problems at hand, and through that, how some of these projects are aiming to address them.

Security

It is known that for any system to be functional, it must provide well-designed security protocols. Previous security breaches have plunged the reputation and as a consequence, the value of various cryptocurrencies; which is why if any blockchain-backed project wants to be applicable, it must put security on its highest priorities.

Mainstream media tends to label decentralised platforms as “insecure”. The reality is that the inherent nature of open source solutions make them potentially less resilient and more violatable. The code is public, and every interested person, even the ones with the wrong intentions, can try to devise any weakness that they can take advantage of.The bigger and the more decentralized a network is, the harder it will become to guarantee security on all of its transactions.

Yet, these weaknesses highlighted above tend to be unusual, especially on the more significant crypto projects, such as Bitcoin or Ethereum. In fact, solutions are emerging to find a balance. For instance, Zero-Knowledge proofs are generating excitement and shifting the paradigm.

The newest Bitcoin Lightning Network is also another good example of promising security and scalability solutions from the Bitcoin blockchain aiming to solve the trilemma. The layer solution has extended and improved the capacity of the existing transactions in the chain of blocks, giving investors the certainty that those challenges will eventually be solved.

Decentralisation

Decentralisation resides at the heart of blockchain. The sole mention of blockchain brings to our heads the idea of freedom and decentralization. It is one of its main advantages against centralized systems such as banks and governments. Decentralization guarantees freedom to blockchain developers, and for investors, it is one of the main attractions of our community. Decentralization means no taxes, no tracking, no transaction history, and most important: no central entity to decide for all.

The problem with this approach is that the further a network becomes decentralised, the slower its throughput tends to become, thus slowing transaction speed and making it harder to scale to massive levels. The more miners there are, the safer and more decentralized the network will be, despite making the network as a whole slower.

Avalanche Consensus protocol is worth highlighting, as it is the next big breakthrough in solving this trilemma. The protocol uses a repeated sub-sampled voting, combining the advantages of the Satoshi’s consensus and the Classical consensus. AVAX is probably one of the leading solutions achieving all the three three properties of the scaling trilemma.Traditionally, these two previous factors (Decentralisation and security) have outshone the last one, which is considered by many to be the remaining feature needed if blockchain aims to realise global acceptance.

Scalability

Scalability is a concept borrowed from economics. In blockchain terms, it refers to the capacity that a specific network has to maintain a large and constantly growing transactional throughput.

This is the Holy Grail of blockchain and a determinant criteria when analyzing projects in the sector today. The greater the project’s user base can get without considerably damaging its efficiency, the more scalable the project is. Nonetheless, not even the oldest blockchain projects have managed to scale their networks without inevitably adversely impacting harming the other two factors of this trilemma.

If blockchain networks get to a point where they can perform equally well with a massive user base compared to a small one, then they could finally compete face-to-face with the legacy of the older centralized platforms that dominate our world today.

Possible Solutions

Considering the factors of this trilemma and the difficulties towards solving them, it is important to remember that the future for blockchain networks continues to be robustly optimistic. As we said previously, the best minds of crypto are already working for a “perfect” network that can holistically balance these three aspects.

Some projects are already showing promising results. The encouraging results of projects based on PoS (Proof-of-Stake) algorithms show that this system can be more efficient and provide a higher transaction throughput than the traditional POW (Proof-of-Work) networks. Based on that, Ethereum has announced its plans to change its underlying protocol from the current PoW to PoS on its coming “Ethereum 2.0”.

There are many solutions that are being developed simultaneously to solve the trilemma. Plasma is the latest framework created by Buterin. The layer-2 solution created on the Ethereum blockchain aims to enhance trust and arbitration by allowing the creation of “child blockchains” that use Ethereum as the main chain. Any company could create those plasma child chains on top of the ETH chain, having access to fast and cheap transactions.

Sharding is also one of the most well-known solutions in the space. The database partitioning technique is solving scalability issues by enabling users to process several transactions per second. By splitting a blockchain network into separate shards, it helps to reduce the latency significantly. Zilliqa is one of the public platforms implementing sharding. Other projects looking to make the best use of this concept too are Cardano and QuarkChain.

The trilemma is a problem that many companies are fiercely competing to solve, and the winners are going to be the one reaching mainstream adoption. The Avalanche protocol has been leading the race exceptionally, by addressing the scale of global finance, with near-instant transaction finality.

The final answer to the Trilemma is still unknown, but we can already speculate and have hope for a future where blockchain networks can be secure, decentralized, and scalable at the same time.

This is the only way for blockchain to go from changing the life of our communities to revolutionizing the whole world as we know it.