Hello everyone!
This is the 2nd week in the 5th season at cryptoacademy. This week's lecture "Blockchain Trilemma" as titled by professor @nane15 presented an opportunity to learn more about the decision making challenges faced when building Cryptocurrencies on a blockchain.
Therefore, in response to the lecture's homework task, here is my homework post.
Question 1
Explain in your own words what the Blockchain Trilemma is.
source : klusster
In order to build a good house, a great foundation is needed first. Therefore, to explain Blockchain Trilemma, I will first define the term Trilemma.
Trilemma is a word used to describe a situation whereby a fundamental decision needs to be made between three different equal and necessary alternatives. For example, if I wanted to create a concrete block, I will need sand, water and cement. However, each of them cost $2 each which is a sum of $6 dollars needed to make the perfect concrete block. Although, I have only $5 to spend, hence I will be in a state of Trilemma where I will have to decide which of the material will have to sacrifice for the other.
A "Trilemma" is a very difficult situation and no one ever wants to be in one.
Unfortunately, there is a Trilemma situation within the blockchain ecosystem system .When developers build a blockchain, there are three main features which they have to put into consideration if they are to develop the perfect blockchain. These features include decentralization, scalability and security.
Vitalik Buterin (Co-founder of Ethereum blockchain) first termed this situation as the Blockchain Trilemma.
When developers build a blockchain, there are three main features which they have to put into consideration if they are to develop the perfect blockchain. These features include decentralization, scalability and security.
At most times, developers tend to successfully achieved perfection in two of the three features mentioned above and have to sacrifice one.
For example, bitcoin's blockchain network was built to be well decentralized and very secure but it is not even scalable enough to compete with any fiat currency. This is because the bitcoin blockchain is only able to complete a maximum of 6 transactions in a second.
Therefore, it is safe to say that due to the blockchain Trilemma, bitcoin's blockchain chose decentralization and security over scalability.
Question 2
Is the Blockchain Trilemma Really a Trilemma?
source : pixabay
Before I answer this question, I will like to gently draw your attention to the definition of Trilemma in question 1
Trilemma is a word used to describe a situation whereby a fundamental decision needs to be made between three different, equal and necessary alternatives.
According to the definition above, the Blockchain chain Trilemma can really be said to be an actual Trilemma because decentralization, scalability and security are necessary alternatives which make up the core of the blockchain and each of them in so many ways can be ranked as equals within the blockchain ecosystem.
Although, blockchains like CertiK Chain and EOS blockchain may contest the equality status of decentralization scalability and security. The CertiK Chain prioritizes security above all while the EOS blockchain prioritizes scalability over others.
Nevertheless, in the future the blockchain Trilemma can seize to exist and many blockchain developers are working hard to find a solution to this difficult problem.
Question 3
Define the following concepts in your own words:
A. Decentralization
B. Scalability
C. Blockchain Security
Decentralization
Decentralization is one of the core features of the Blockchain and I define it simply as the transfer of authority and decision-making from a centralized entity to various individuals , pools or organizations thereby forming a transparent and functioning network.
One of the reasons why Cryptocurrencies came into existence is because it wanted to grant individuals a degree of financial freedom from traditional financial institutions like the central banks of different countries. This feat was achieved through the creation of the Blockchain.
The Blockchain is decentralized ,hence, it does not store any of its information in a central location ,rather, the blockchain is copied and spread across a network of computers. This is why decentralization is greatly considered when building a blockchain
Scalability
source : pixabay
Scalability is also another very important feature of the blockchain as it signifies the ability of the blockchain to scale above various limitations that would to the failure of the blockchain network.
Revolving around the subject matter of the Blockchain, I will define scalability as the problems faced with the capability of a blockchain to handle a large amount of transactions within a short time.
Ideally, blockchains are built to be self-sufficient, however, if it does not have the load bearing capacity to sustain the growth of transactions within the blockchain, failure will be inevitable and this is why considering scalability when building a blockchain is so important.
Blockchain Security
It is common sense that anyone who has an asset would want to keep it safe. Within the blockchain both tokens and data are considered as assets and in order to keep them safe , we all have to rely on The Blockchain's security.
Therefore, in this context I will define blockchain security as state where transactions, data and crypto assets of an individual, pool or organization is free from malicious attacks , tracking and leakages.
Although, the blockchain is crypto graphic in nature. The security within a blockchain can never be over emphasized, hence it is greatly considered when developing a blockchain.
Question 4
Based on your knowledge, explain at least two viable solutions to the challenges posed in the Blockchain Trilemma.
Based on my knowledge, the blockchain Trilemma can be solved using various means, however, solution patterns have been grouped into two layers.
First layer solution
The first layer tries to gain solution to the blockchain Trilemma from within the blockchain directly and one of the most popular method classified under the first layer is the improvement of the consensus protocol which governs the blockchain network.
Improving the consensus protocol governing the blockchain network will simultaneously increases how fast, transparent and secure the Blockchain becomes.
A proper example is the transition from the Proof of work (POW) which the Bitcoin uses to the Proof of stake (POS) which Ethereum blockchain uses.
The POW is very decentralized and secure but it is not very scalable because it take too long to complete transactions which results in the blockchain being able to handle a maximum of 7 transactions per second. Scalability was greatly improved with Ethereum's (POS) which enabled it handle up to 45 transactions per sec.
In recent times, the Tron blockchain introduced the delegated proof of stake (DPOS) which has further increase bot scalability, decentralization and security.
I believe that there are even more efficient consensus algorithms to come in future.
Second layer solution
The second layer solution attacks the blockchain Trilemma from a very different angle. Here, the solution to the blockchain Trilemma is very indirect and sometimes it does not have anything to do with the blockchain. One of the popular methods used in this layer is the building of side chains.
A side-chain refers to a blockchain-adjacent transactional chain used for large batch transactions.
Side-chains are used to optimize the scalability of the main-chain by acting as a channel through which transactions can be executed with greater speed.
Side chains might have a use a different consensus protocol to achieve this feat while a utility token is usually used as a part of mechanism for transfer between side and main chains.
Furthermore, security Main-chain is even improved as the sidechain security breaches do not affect the main-chain or other side-chains.
Examples of side chains include Plasma, Alpha, Liquid network, Loom Network and many others
Conclusion
The Blockchain Trilemma is one of the greatest Trilemmas of all time. I say this because a perfect solution to the Blockchain Trilemma will inevitably stamp the superiority of cryptocurrencies over fiat currencies.
The ability for a currency to be totally Decentralized, scalable and secured will bring absolute financial freedom to the individuals all over the world. I really do hope that the perfect solution to the Blockchain Trilemma is discovered soon.
This week's lecture was wonderful and I want to thank both professor @nane15 and the whole of crypto academy for being part of this experience.
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