The Blockchain Trilemma

The concept of the blockchain trilemma was coined by Vitalik Buterin to offer a mental model to understand some factors involved in the decision-making process of developing blockchain technological improvements.

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The blockchain trilemma is a concept that refers to the trade-offs that must be made when designing a blockchain network. The trilemma states that it is impossible for a blockchain network to simultaneously achieve all three of the following properties:

1. Decentralization: This refers to the degree to which power and control are distributed among the participants in a network. A highly decentralized network has no central point of control or decision-making, while a centralized network is controlled by a small group of entities.
2. Scalability: This refers to a network’s ability to handle a large number of transactions and users. A highly scalable network can handle a large volume of transactions and data, while a less scalable network may struggle to keep up with demand.
3. Security: This refers to the degree to which a network is resistant to malicious attacks and other forms of tampering. A highly secure network is resistant to hacking and fraud, while a less secure network is more vulnerable to these threats.

The idea of the trilemma is that a blockchain network can only achieve two of these properties at a time, and any improvement in one property will come at the expense of the other two. For example, a network that is highly decentralized will be less scalable and secure, and a network that is highly scalable will be less decentralized and secure.

This is why blockchain projects are continually trying to find a balance between these three properties and trying to achieve a trade-off that will best suit their use-case.