Blockchain Trilemma - Crypto Academy / S5W2 - Homework post for nane15
Hello,
It's my pleasure to turn in my home work task on Blockchain Trilemma by Prof. @nane15. The following questions will provide guidance as we navigate our way through my understanding of the subject matter.
During the creation of a Blockchain network, developers are usually faced with the challenge to choose between three (3) options, a situation known as trilemma. They're to choose between decentralization, scalability and security. The challenge involved therein is in the fact that they can not choose all the three options at a given time. They can only choose two in a decentralized network.
The good news is that since the creation of Bitcoin, which tried solving the trilemma, there have been a great improvement in decentralized networks, giving birth to different solutions to the trilemma challenge. Today, developers have Layer 1 and Layer 2 Solutions proposed to provide solution to the above problem as follows:
Decentralization. The management of the network is distributed to all users, not just to the nodes.
Scalability. Increased fees and transaction time by enabling several transactions and users.
Security. Prevent the network such that a node won't have 51% of total shares then begins to bring in activities that undermine decentralization rules.
According to my understanding, I can say it is really a trilemma because developers are faced with the difficulty of choosing between three alternatives, especially those that are highly necessary, but they can not choose all. Decentralization, scalability and security are all important for the smooth functioning of a network, but developers can only choose two out of three. Though, networks like algorand keep promising that it's possible for a network to have all three, but that remains a future project to accomplish.
- A. Decentralization
- B. Scalability
- C. Blockchain Security
Blockchain Decentralization
In a normal sense, decentralization deals with issues of of transfer of power and authority in a governing system. It has to do with transferring power or control of activities to many other people or offices not just a particular individual or centralized office.
In a Blockchain network, it has to do with transferring power from say an individual, or centralized office or selected few (nodes) and allowing all the users to manage the network. Networks engaged in decentralization are trying to reduce the trust users place in one another, and to discourage the ability to exercise control over other users in the network, thereby causing a lost of respect within the system.
Blockchain decentralization can be trace as far back as the creation of Bitcoin network. This means it is not a thing of today. It started since 2009. By allowing users to manage to the affairs of a network, it allows for a greater and fairer service than allowing a central office or selected few.
A decentralized network makes room for self-reliance and self-trust, data compatibility, reduced failures within the system, and making it easy for resources to be distributed.
Blockchain Scalability
In a normal computer sense, scalability has to do with how a network changes it size to accommodate changes in traffic. A computing network will not scale well, if the system, instead of having more computing power, and bandwidth, instead needs more efforts to assist it cope with the work it is to carry.
However, in a Blockchain, Scalability means more than just dealing with the ability of the network to support an increase in transaction made and in the number of nodes. It covers a greater concept than that. It has to do with "any improvement in the perspective of throughput, latency, bootstrap time, or cost per transactions."1
When a blockchain system is named Scalable, it indicates that the system achieves a better transaction per second than some existing systems through modifying its consensus mechanism and/or adjusting some system parameter(s).2
Blockchain networks engaged in PoS are more scalable than those with PoW. This is because scalability increases with decrease in decentralization. For example, when the number of nodes who validate a transaction reduces, scalability and security increases.
Blockchain Security.
The source code, and the consensus protocol system of a Blockchain are it main source of security since it makes it very difficult for fraud-sters to get access to the data system.
With the advent of Bitcoin, we learned of the PoW consensus mechanism which gave users a peer-to-peer payment network that did not depend on a central office, with a highly secured but not scalable system. Other Blockchain networks, in other to increase the security of the network deny the usage of nodes, using a consensus mechanism based solely on the number of Stakes a network users has in his or her wallet.
While Blockchain developers are leaving no stone on turn to solve the trilemma problem, the following are some viable solutions to the the Blockchain Trilemma.
- Layer 1. This is actually the primary layer. In this Layer, developers seek to provide a solution to the Blockchain by maintaining it functionality. They try to achieve this by controlling it's consensus mechanism, Blockchain timing, and it's conflict resolution steps.
- Layer 2. At this Layer, they built scalable networks that takes out some of the transactions to be handled on the based layer. Thus allowing the Blockchain to handle just withdrawals and deposits. This makes for a legitimate transaction deal.
Layer 2 is more effective in providing the solution to the trilemma problem because the Blockchain itself forms the base Layer, thus making layer 2 to function as a third party network with a primary Blockchain.
Blockchain Trilemma as seen above is actually a challenge to many Blockchain network developers. But With the innovation in Blockchain, I believe that it won't remain as a problem forever.
That's for reading.