Blockchain Trilemma - Crypto Academy / S5W2 - Homework Post for @nane15 /
While blockchain is becoming more widely recognized as a foundation of next-generation technology, the Blockchain Trilemma is a particular problem that it faces.
The blockchain trilemma refers to the three fundamental issues that a blockchain seeks to address: decentralization, security, and scalability. When constructing blockchains, developers run across these challenges, forcing them to compromise one component in order to support the other two. The blockchain trilemma refers to the inability of blockchains to strike a balance between security, decentralization, and scalability.
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• Decentralization: Instead of being controlled by a single entity, blockchains share network control to all members equally. The capacity of blockchains to spread data and processing power among their network's numerous machines is known as decentralization. It is what ensures that data is always safe and that no one entity can hack a blockchain network in order to gain access to the data hidden inside it. Decentralization is, in a way, the foundation upon which blockchain is based.
• Security: Malicious entities should be prevented from gaining control of blockchain networks. The notion of security isn't new. It refers to all of a blockchain network's security systems against threats and bad actors who could try to exploit other machines on the network in some way. In today's competitive sector, security, along with decentralization, is a must-have for blockchains.
• Scalability: Blockchains should be able to handle a large number of transactions and users without slowing down or increasing costs. A blockchain, like any other computer network, must be scalable. It must be able to handle large transaction volumes and accommodate the rush of users that occurs when it becomes popular.
While it may not appear to be as vital as security and decentralization, scalability is crucial since it is the only way for blockchains to compete with existing networks. Because of their scalability, blockchains can accommodate many transactions and are better suited for today's fast-paced financial sector.
It's worth noting that, while the blockchain trilemma poses a difficulty to the technology's general adoption, there is no legal need that all three components be met at the same time.
Instead, the blockchain trilemma was created as a tool to visualize and better understand the obstacles that face blockchain technology development and adoption, as well as how they interact.
Despite, developers are working hard to find solutions to the blockchain trilemma, and several suggestions and ideas for dealing with the "trilemma" have already shown to be successful. However, despite advances, the trilemma remains a difficult problem to solve; this is not to suggest that it cannot be solved.
(A) Decentralization. (B) scalability (C) Blockchain Security
Decentralization refers to how power is distributed across smaller organizations to administer something rather than being concentrated in one central institution, corporation, or government. Decentralization in blockchain empowers individuals all over the globe to rule using their computers (nodes), rather than having a single person or entity run the network.
Although blockchain is fundamentally safe, it is not without risk of being hacked. A hacker can manipulate transactions to steal from the network if they get control of more than half of the network (51 percent). The more nodes in a blockchain, the more secure it is.
In blockchain, scalability is similar to scalability in business; it refers to how large a network may expand in the future while keeping the current level of transaction speed and output.
When scalability and decentralization operate together, security suffers, since security prevents innovations that would allow the decentralized network to grow. Why? Decentralized networks are difficult to scale because they need a significant amount of effort to function.
To my understanding the two viable solutions to the three challenges that a Blockchain faces can be categorised in to level which are the layer 1 and 2. You need be familiar with layer-one solutions in order to comprehend layer-two solutions.
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The fundamental layer is the first layer. This layer is in charge of consensus, blockchain time, programming, and dispute resolution all of which guarantee that the blockchain's basic functioning is maintained.
Then there are solutions for layer two. These are networks that are constructed on the foundation of the primary later. It's their role to improve scalability by removing some of the interactions that must be handled at the base layer. As a consequence, only withdrawals and deposits will be handled by the blockchain smart contract, guaranteeing that all transactions are legal.
In my opinion, this class has been useful. Now I have a good understanding about the Blockchain Trilemma. it is a challenge that I am sure, it will be solved very soon, because that would make the difference between the efficiency and effectiveness of the Blockchain network.
Thank your prof. @nane15