Crypto Academy Season 5 Week 2- Blockchain Trilemma - Homework Post for @nane15

Welcome everyone to the 2nd week of Steemit Crypto Academy. Professor @nane15 has provided us with a detailed lecture on Blockchain Trilemma, which helps us to understand more about deficiency in this technology and how it can be resolved. A few tasks are required, so I will be answering them according to the knowledge that I have gained from this course.

Trilemma refers to a scenario in which there are a total of 3 options, of which all are of great importance, but only 2 of them can be chosen. Blockchain is also said to face this issue as the developers have to choose 2 characteristics from scalability, decentralization, and security. Thus, this theory is widely referred to as Blockchain Trilemma.

Bitcoin, which is the world's first crypto coin, was invented by Satoshi Nakamoto in 2009. It has changed the way people think about the monetary system as it has several unique features that make it distinguished. It uses Proof-of-Work consensus mechanisms which means that it is highly secured and decentralized. But scalability is not as much it should be because it can support around 6 transactions per second while VISA can support more than 1800 transactions per second. It means that the founder had to let go of scalability and choose security and decentralization.

That’s why the Ethereum founder Vitalik Buterin comes up with the theory of Blockchain Trilemma. But since the years have passed, many blockchains’ developers say that they have solved the trilemma as their blockchain can support a great number of transactions while being secured and decentralized. That’s not the case, as they also end up eliminating one of the characteristics at some stage.

In my opinion, Blockchain Trilemma is a real issue for developers as all three characteristics are very important for cryptocurrency; otherwise, it would be difficult for people to adopt it globally. If we carefully observe Bitcoin and other altcoins, we can easily observe that trilemma plays out at some point. A lot of developers are indeed working hard to solve this problem, and the result is remarkable to some extent as new consensus mechanisms have been created like Proof of Stake and Proof of Authority.

Still, Blockchain Trilemma is not completely solved as there’s more work that needs to be done. There’s a lot more time, and countless experts are indulged in solving this trilemma. Some of the blockchains that have done remarkable jobs include Algorand, Polkadot, Matic, Ethereum, and Litecoin. I think that in the future, we may see an ultimate solution to the trilemma, which will improve blockchains technology.

There are a lot of factors that make cryptocurrencies so famous, but decentralization is the major one. It is the core foundation on which Bitcoin was built, and that’s what the majority of peoples recommends it for.

Decentralization refers to the act of delegating powers to the users and refraining from a central body. It helps people to make peer-to-peer transactions with ease and with less fees. There are tons of benefits like better control, a trustless environment, fewer conflicts, and much more. Plus, nodes are provided complete power to validate the transactions, and if they find any fishy action or error in the transaction, then they can take action accordingly. Thus, removing the third party has completely created a secure and better environment for everyone.

Scalability is one of the most important characteristics of blockchain. It refers to the number of transactions that a network is capable of supporting. The more transactions it can verify, the more scalable it will be considered. It totally depends on the consensus mechanism that developers choose for the blockchain. Take the example of Proof of Work that bitcoin uses; it can perform around 6 transactions per second and consumes 10 minutes to verify a single block. Contrary to that, we can take Solana, which uses Proof of Stake, and it can perform around 50,000 transactions per second which means that it is more scalable, but it ends up seriously affecting decentralization.

Security is very important for blockchains as it can seriously harm the assets of users. A lot of major blockchains have been hacked in the past by hackers, due to which people have lost their money. That’s why security must be up to the mark. However, it completely depends on consensus mechanism and coding. So, if they are robust, then there are less chances of cyber-attacks.

Let’s take the example of Bitcoin, no one can hack it as it uses cryptography for transactions, and all of them are recorded in the blockchain. If there’s even a single attempt of attack, then nodes who review the network can invalidate it, resulting in failure of hacking attempt. The bottom line is that security is equally important for blockchains as scalability and decentralization.

As I have researched more and more about Blockchain Trilemma, I have come across 2 best solutions that are also explained by professors in the course. So, I will be explaining the 1st layer solution and 2nd layer solution to show how it can solve this challenge:

In this method, the consensus mechanism of the blockchain is improved, which will positively affect scalability. Bitcoin still uses Proof of Work, which consumes a lot of energy, takes time to perform transactions, and requires high-end machines for mining. If it could be upgraded to Proof of Stake, then it will be possible to perform transactions faster, which is a huge improvement in scalability. Plus, the users will be able to get control according to their assets which improve decentralization and security as well.

Another method to solve the Blockchain Trilemma is to move the burden of transactions from the blockchain network to alternative network. That makes the blockchain highly scalable as various networks connected to the main one will be performing a great number of transactions, and the security won’t ever be compromised for a bit. There are various examples of layer 2 solutions like Nested Blockchains, Sidechains, State Channels, Lightning Channels, and others.

After a lot of research and learning about the Blockchain Trilemma, I believe that developers will be able to solve the problem within a short span of time. Many blockchains have already made great progress, and there will be a time when there will be utmost secured, scalable, and decentralized blockchains.

I would also like to thank the professor. I wasn’t familiar with the Blockchain Trilemma, but due to him, I was able to learn about this challenge that the developers are facing and how it can be solved in the future.