Blockchain Trilemma - Crypto Academy / S5W2 - Homework post for nane15.
Explain in your own words what the Blockchain Trilemma is. 2) Is the Blockchain Trilemma Really a Trilemma? 3) Define the following concepts in your own words; A. Decentralization, B. Scalability, C. Blockchain Security. 4) Based on your knowledge, explain at least two viable solutions to the challenges posed in the Blockchain Trilemma.
WHAT IS BLOCKCHAIN TRILEMMA?
Blockchain trilemma refers to the extensively held belief that decentralized networks can only give two of three benefits at any given time in terms of decentralization, security, and scalability.
Still, constant invention across the decentralized ecosystem has redounded during a varied diapason of Subcaste-1 and Subcaste-2 results that are prostrating these challenges and ultimately resolving the trilemma.
The blockchain trilemma has been anguishing the assiduity for quite some time. The trilemma occurs as a result of the blockchain's failure to produce a harmonious concurrence of three crucial features security, scalability, and decentralization.
The two most popular cryptocurrencies, Bitcoin and Ethereum, have likewise failed to achieve it. They thrive at decentralization and security, but they fall suddenly when it comes to scalability.
With the emergence of Bitcoin, distributed data stores gained a new use case and evolved into public decentralized checks, and the CAP theorem evolved into what we now know as the blockchain trilemma.
The trilemma asserts that while the ideal blockchain should be decentralized, safe, and scalable, it can only be two of the three. This is maybe the most significant handicap that blockchains must overcome before getting extensively espoused.
IS BLOCKCHAIN TRILEMMA REALLY TRILEMMA?
Although the blockchain trilemma poses an obstacle to the technology's mainstream adoption, there is no legal need that all three criteria be met at the same time.
Instead, the blockchain trilemma was coined as a tool to better describe and comprehend the obstacles that face the development and adoption of blockchain technology, as well as how they interact.
Indeed, developers are hard at work on solutions to the blockchain trilemma, and several proposals and ideas for overcoming the "trilemma" have already proven to be successful.
However, despite advances, the trilemma remains a difficulty; this is not to argue that it cannot be overcome.
DEFINE THE FOLLOWING CONCEPT IN YOUR OWN WORDS
A) DECENTRALIZATION
B) SCALABILITY
C) BLOCKCHAIN SECURITY
• DECENTRALIZATION: This is the characteristic that has ushered in a new era in financial technology. It's the simplest blockchain technology to implement. Power is dispersed evenly across all entities in a decentralized network. The number of nodes (computers) that operate the blockchain is referred to as decentralization.
Because Bitcoin's fundamental accomplishment was overcoming the double-spending problem without a central entity, which is seen as a trivial problem in centralized settings, the decentralized aspect of a blockchain's architecture is critical here.
Although decentralization may appear to be the least important of the three aspects at first glance, it's important to remember that the entire point of inventing a cryptocurrency was to provide a decentralized, more democratic alternative to the present.
Every miner on the blockchain network has the same benefits. Without the consent of the others, no single person can make the network act in a specific way.
• SCALABILITY: Scalability refers to a blockchain's ability to maintain a certain transaction speed even as the network grows and the number of transactions per second increases.
The issue emerges at this point. Satoshi Nakamoto was obliged to give up Bitcoin's potential to scale efficiently in the name of decentralization and security when it was first established.
The only way to compete with the far quicker centralized networks is to build a scalable blockchain.
The most difficult aspect to include in modern blockchain networks is scalability. Despite the fact that numerous projects claim to have reached this point, none of them can maintain a big user base.
Simply said, scalability refers to the ability to process more transactions at a faster rate while also lowering fees.
With 5 transactions per second (tps) and 7 tps, respectively, Bitcoin and Ethereum have been unable to achieve it thus far.
To keep up with the expanding number of users, scalability is a must-have feature of blockchain technology. It boosts workload efficiency while lowering transaction costs.
• BLOCKCHAIN SECURITY: This is the most important component that prevents malicious assaults from disrupting the blockchain network. Without security, blockchains would become untrustworthy and infected with viruses.
Coding and, most significantly, consensus procedures are involved in security (proof of work vs. proof of stake). The number of network nodes that must affirm a transaction before it is finalized, as well as how these nodes are paid, are referred to as consensus methods.
For all of its benefits, blockchain ecosystems rely on the robustness of the underlying source code, which, like anything else, must be thoroughly scrutinized.
Blockchains have become attractive targets for hackers due to the open nature of the source code and the potentially significant rewards that can be obtained from a successful attack.
Despite the fact that the majority of decentralized blockchains are secure, their open-source nature makes them vulnerable to hackers. Currently, quick, no-collateral loans are the most convenient way to defraud users and gain access to a network.
EXPLAIN AT LEAST TWO VIABLE SOLUTIONS POSED IN THE BLOCKCHAIN TRILEMMA
Developers have attempted a variety of techniques to fixing the problem, with some preferring to make direct changes to the blockchain network (layer-1 solutions), while others prefer to run a secondary blockchain on top of the main blockchain (layer-2 solutions).
Proof-of-Stake was introduced as a layer-1 solution by Ethereum, while Lightning Network was introduced as a layer-2 solution by Bitcoin.
i) Solutions for the first layer;
Increasing the effectiveness of consensus mechanisms: Since its inception, Bitcoin, one of the most prominent blockchains, has used Proof-of-Work as its consensus system.
It's also slow, while being secure and decentralized; Bitcoin, for example, has a transaction throughput of only 7 TPS. Some blockchains, like as Ethereum 2.0, are transitioning to a Proof-of-Stake consensus method to break through this barrier. Instead of forcing nodes to spend computational power to solve cryptographic algorithms, PoS establishes a node's status based on their stake in the blockchain.
Sharding: This approach divides transactions into smaller "shards." The blockchain then processes each of these transactions in parallel, allowing it to operate on multiple transactions at once. Nodes also don't need to keep a duplicate of every block from the beginning; instead, this data is separated and held by different nodes.
ii) Solutions for the second layer;
Nested blockchains:In a nested blockchain system, the main blockchain, or mainchain, establishes the rules for the whole network, but it isn't intended to share in any operations unless a disagreement develops.
There exists many levels of blockchains that are created in hierarchical order and connected by a main chain, called the parent chain. The parent chain delegated work to its children, who then carried out the operations and returned the results to the mainchain, lowering workload and enhancing scalability.
State channels: allow a blockchain and off-chain transactional channels to communicate in both directions.
State channels don't rely on node verification to validate transactions; instead, smart contracts are used to seal transactions off. The final state of the "channel" and all of its transactions are added to the underlying blockchain after transactions on a state channel are completed. A state channel is demonstrated by Bitcoin's Lightning Network.
CONCLUSION
The issues faced by distributed data storage, from which blockchains originated, were inherited by blockchains. In order to better comprehend these difficulties and how they are related, the phrase "blockchain trilemma" was coined.
As far as the concept of "trilemma" still exists, the blockchain trilemma is merely an opinion; a guess work that is suspected to be right as a result of previous information, as no one has been able to come up with a different proof.
This indicates that there is still much study to be done, despite the fact that layer-1 and layer-2 solutions have had considerable success.
Cc;
@nane15