Glossary
The Blockchain Trilemma
The blockchain trilemma, coined by Ethereum’s creator, Vitalik Buterin, suggests that a blockchain protocol cannot simultaneously achieve three fundamental attributes: scalability, decentralization, and security. Instead, each protocol must choose to prioritize two out of these three features. Let’s understand the premises that led Vitalik to propose this concept. Let’s start by studying the Bitcoin protocol.
Bitcoin’s protocol prioritizes security and decentralization, yet it faces scalability challenges. This stems from the inclusive user participation and the requirement for all users to process all transactions. To prevent latency problems and forks, Bitcoin was coded to handle only a limited number of transactions per second.
Bitcoin’s capacity for handling transactions could be expanded. This can be done by either enlarging block sizes or shortening the time between creating new blocks. However, this would bolster scalability while compromising security and decentralization. Bigger blocks demand greater computational and storage resources from network nodes, potentially discouraging new participants and promoting centralization.
A similar rationale applies against reducing block intervals. Since all nodes need to receive every new block, processing more transactions would burden each node. Additionally, due to the network’s asynchronous nature, a shorter block interval would actually diminish network security.
Several approaches exist to address the scalability challenge. Opting for scalability at the expense of decentralization and security is one avenue. Neo’s network, for instance, employs a select group of consensus nodes to enable tens of thousands of transactions per second. Alternatively, transaction execution could be outsourced to a secondary blockchain through a layer two mechanism. In this setup, layer one emphasizes security while layer two focuses on enhancing scalability.
Another explored method is sharding, which involves dividing the extensive database into multiple segments. Presently, validators are tasked with validating the complete ledger. However, through sharding, they would be responsible for validating specific portions. This concept is still under experimentation, and solutions involving sharding are expected to become operational in the coming years.
It’s crucial to emphasize that the blockchain trilemma is a concept lacking concrete mathematical proof. Several blockchain protocols assert that the trilemma doesn’t hold true for them, as they purportedly attain elevated levels of security, scalability, and decentralization simultaneously. However, this assertion also lacks definitive verification, and these protocols are still in the process of maturation.
