Repost - Crypto Academy S5W2- Homework Post for @nane15

Hello Everyone…!!!

I much grateful to participate in this week homework post by prof @nane15. The detailed lesson provided on Blockchain Trilemma was very comprehensive.

Explain in your own words what the Blockchain Trilemma is?

The term Blockchain Trilemma can be understood better if we can explain the individual words separately.

Let’s begin with Blockchain: it is a distributed ledger of interconnected node for securely storing of transactions. The idea of blockchain was introduced in 2009 when Satoshi initiated the first cryptocurrency Bitcoin. Till date, there have been several cryptocurrencies like Ethereum, Steem, etc. in the crypto world of which all run on blockchain networks.

Trilemma is a term used to quantify the idea of selecting two out of three possibilities. Any two combination of three possibilities will be a good policy for the agenda. These three possibilities can’t all be selected but only two due to difficulties in handling.

Blockchain technology focuses on three main features , Decentralization, Scalability and Security. These three possibilities are what we termed as Blockchain Trilemma. The term was proposed by the Ethereum network developer, Vitalik Buterin of which blockchain inventors focuses on two possibilities out of three.

For instance, Bitcoin and Ethereum blockchain networks uses the Proof of Work Consensus algorithms which solved the problem of decentralization and security by solving complex algorithms. The idea of scalability is ignored here making the process of transactions very slow. Bitcoin network uses the 51% attack to secure the blockchain from hackers.

Monera blockchain network focuses on anonymity and security. The network is protected by hash cryptography technology which make the network very secure and reliable. A side security, the network can process millions of transactions within a second making it more scalable. The anonymity nature of the network violates transparency of decentralization.

Most blockchain networks like Cardano, Polkadot and Solana employs the Proof of Stake consensus algorithms which solve the issue of scalability enabling several transactions to be process within a second. As to the issue of double spending, these networks haven’t explained how they solve it.

All these newly blockchain networks who are out to solve the issue of blockchain trilemma end up sacrificing one of the three features of blockchain for the other two. Most blockchain experts and developers believe that blockchain exhibits certain features that limits developers from achieving all these features, but with time I hope we will finally find a network that exhibits these features.

Is the Blockchain Trilemma Really a Trilemma?

Left onto me for now, I will say it’s really a trilemma. This is because, since the initiation of Bitcoin blockchain network in 2009, there have been several blockchain networks trying to solve the issue of blockchain trilemma but haven’t succeeded since. They always end up sacrificing one of the features for the other two. Though there haven’t been any prove to the fact that blockchain trilemma is really a trilemma but no developer has solve that yet.

For the past years, the Solana, Cardano and Polkadot blockchain networks have come close in solving this problem by the PoS algorithms, which enables the process of millions of transactions in seconds and also employs the cryptography technology in securing the network, but the decentralized nature of the platform is questioned several times. This is because, the selection of validators always favors users who stake higher portions of their assets.

There are several innovative technologies by developers in recent years which has possibilities of solving the issue of blockchain trilemma, but until we have develop a network that has all the three features, I still believe that the blockchain trilemma is a trilemma.

Algorand has developed a special PoS called, the Pure Proof of Stake algorithm. This consensus claimed to solve the issue of blockchain trilemma by random given out tickets to users to be validators in adding the next block to the blockchain. All these other PoS networks started this way until they brought favoritism in selecting validators. With time we will get to see if Algorand really solved this trilemma.

Define the following concepts in your own words: A. Decentralization B. Scalability C. Blockchain Security

Decentralization

Decentralization is the primary feature of blockchain network. It is a concept used to defined a situation in which the affairs and management of an organization or system is not controlled by a central authority. Every user on decentralized systems has equal opportunity in making decisions and enjoy equal privileges. For instance, with the blockchain technology, all nodes has equal opportunities in verifying and validating transactions before it’s being stored on blocks without any central influence , and all transactions are being distributed across all nodes which proved the transparency nature of decentralization.

Any attempt on a node to manipulate the details of transactions stored on the block will make that particular block and the preceding blocks invalid and should be reminded. This brings immutability as a sub-feature of decentralization. A decentralized system should be transparent and immutable.

Scalability

This is the ability of a system to process multiple transactions within a second. The rate of transactions per second determines the scalability of a blockchain network. As blockchain network is raiding off the centralized system, several users adopt the blockchain system which brings significant growth and millions of transactions. To handle such overload, blockchain network should be more scalable to verify and validate transactions within seconds to work efficiently and smoothly.

Several blockchain networks has achieved the level of scalability by adopting the PoS consensus algorithm in the validation of blocks. The PoS give room for several nodes (validators) in the validation process of transactions which makes it possible to verify and validate thousands of transactions within a second.

For instance, the Solana network process about 50,000 transactions within a second. This is as a result of it ignoring the decentralization feature and focuses more on scalability. Bitcoin network processes 6 transactions within a second with its PoB consensus mechanism, as a result focusing more on decentralized and security while sacrificing scalability.

Blockchain Security

The security of a blockchain is how exposed the network is to cyber attacks. Users have their assets worth billions and so there is the need for blockchain networks to provide strong security to secure users assets.

There are a lot of cyber attacks on several blockchain networks as a result of lack of security. The Solana network which focuses more on scalability experienced
nearly total closed down some months ago, which was as a result of a bot used to manipulate the number of transactions per seconds to almost hit 400,000. This all happened due to lack of security in the system.

Most blockchain networks uses the Asymmetric Cryptography technology in securing transactions. This require the use of Public and Private keys in encrypting and decrypting transactions between users.
With that, any attempt to to produce similar hash will invalidate all blocks.

Based on your knowledge, explain at least two viable solutions to the challenges posed by the Blockchain Trilemma

Pure Proof of Stake

This is a consensus mechanism employed by the Algorand network in validating and verifying of transactions. This mechanism is same way as the PoS but in choosing of validators, a designed algorithm is used to randomly select token holders to add the next block to the network. This ideology kills two birds at the same time, because several validators are chosen to facilitate the process of of validating transactions there by solving the issue of scalability. Again, the randomness selection of validators will solve the issue of decentralization.

SideChains

Low scalability in blockchain networks is as a result of overload on the system as several transactions are required to be validated by limited nodes. To improve upon this there is the need to find a way to reduce the workload on the processing nodes by creating sidechains which verifies transactions and later sent to the main chain for validation and storage. With that, the workload on the system will reduce allowing nodes to perform more efficiently and scalability is maintained.

Sharding

This help to solve blockchain trilemma in a way that, the blockchain is divided into parts call shards. Every shard will handle several transactions separately reducing the pressure on the system. Every transaction will still be distributed across all node and any node get to access the details of any transaction. This will improve scalability in the system.

CONCLUSION

Several organizations have adopted to the blockchain network since its initiation in 2009. It has provided its users with security and decentralization and also facilitate the Peer-to-peer method of transactions eliminate intermediaries and providing low transaction fees.

Though blockchain trilemma hasn’t been solved for the past years, several technological ideas by developers has given a hint that this issue will be addressed one day. The PPoS consensus algorithm of the Algorand network seems to have solve the issue of decentralization faced by the PoS mechanism, and when adopted with several technological ideas, blockchain trilemma will be solved in no time.

Thanks For Your Attention