Instead Of Solving The ‘Blockchain Trilemma’, Focus On Building A Vibrant Crypto-Economy

Blockchain means different things to different people.

While a lot of money has been invested into different networks to foster a decentralized and secure financial/economic system, many continue to argue about how the issue of the ‘Blockchain Trilemma’ hinders scalability and growth.

Coined by Ethereum founder Vitalik Buterin, the Blockchain Trilemma centralizes around one key question; how to develop blockchain technology that is scalable, decentralized, and secure, without any element being compromised.

Buterin thinks it’s only possible for blockchains to achieve two of these traits at the same time.

While the issue of the Blockchain Trilemma seems like a weighty issue — it might actually not be the right question to ask.

Shifting Away From A Global World Computer

At its core, musing over the intersection of scalability, decentralization, and security through the Trilemma seems legitimate. This is because many people see blockchain as a conduit to build a ‘better world computer’ to save information and host a variety of collaborative applications.

Some think Ethereum’s mesh of cryptographic architecture and Turing completeness could lead to a worldwide digital computer that could spawn entirely new industries.

Dreams of a ‘global computer’ have captured the hearts and minds of many in the technology industry for a while. The idea has gained particular notice in the 21st century as companies really start to focus on machines as the replacement for employees.

Trying to solve the trilemma and use blockchain as a conduit for a world computer has led many to try and do the impossible with blockchain, namely ‘building’ a secure decentralized system while trying to maintain centralized control.

These efforts are trying to aim for a performance level from blockchain’s base/layer 1 that is not realistic.

In a May 2018 Medium article called ‘Why Blockchain Is Hard’ Jimmy Song explained how blockchain should be seen as a tool and not a product.

“Focus on the problems you’re solving and the tools will make themselves readily apparent. Focus on tools that you want to use and you’ll end up making Rube Goldberg machines that don’t do anything particularly well.”

About a month later, Nervos’ Jan Xie affirmed the idea of using blockchain in a more layered way as a tool to specifically solve certain issues.

“From an architectural point of view, layering the overall functionality of a system and spreading it across different functional layers or components is a more sound design pattern than coupling all functions into a single unit. Decoupling is at the heart of all complex system designs. UNIX pipelines, MVC model and Emacs the best operating system are all good examples… Protocols related to identity and encryption, such as PKI (Public Key Infrastructure) and TLS (Transport Layer Security), built the trust backbone of the Internet.”

Solving the Blockchain Trilemma is not necessary because it’s the wrong question.

Instead of aspirations for ‘the world computer’, (which has really already been created through cloud computing), people are actually anticipating something much deeper.

According to Xie, “What people want is not the blockchain, but the crypto economy.”

Matters Of Trust In The Crypto Economy

Blockchain has led to the creation of an entirely new crypto economy that stands apart from other virtual economies.

This crypto economy is vibrant, cross-border, and is able to serve people on a 24/7 basis while continuing to reduce the prices of different crypto-assets.

The basis of the crypto economy is a self-enforcing protocol, a new kind of ‘trust’, that stands alone from classic Internet network protocols.

While the Internet has created a solid and functional trust network through layered and decoupled architecture, it does lack self-protection because there is an inability to implement and customize self-enforcing protocols.

In a March presentation at Princeton University, professor Kevin Werbach expounded on the idea of trust, both in and outside of the blockchain world.

He talked about peer-to-peer trust and the idea of Leviathan trust (between an individual and the state), which gives the state the ability to enforce private agreements.

In his talk, Werbach noted how blockchain actually both expands and reduces the need for trust.

By cutting out a single point of failure, blockchain technology actually lessens the need of trust since the intermediary process is more efficient and the propensity of monopolization is lessened.

He explained how blockchain simultaneously expands trust because records can be publicly audited. Trust is also enhanced since transactions are automatically executed.

This duality is important because it creates an entirely new concept of trust.

The self-enforcing trust protocol of the blockchain gives economic agents the reassurance that contracts and decisions will be honored, all while maintaining ownership rights over market participation and the market stability as a whole.

Since the cultivation of the crypto-economy creates new conditions for economic agents to interact in, it’s reasonable to assume entirely new classes of economic activity will begin to pop up based on the unique aspects of trust and reassurance blockchain can provide.

Shifting focus away from the Blockchain Trilemma to cultivating a vibrant crypto-economy will help streamline the focus and further development of blockchain technology.