A pioneer in innovation, blockchain is one of the most exciting industries in the world that drives the growth of tech iteration and shifts the paradigm constantly. Developers and creators in the crypto world have been making vigorous efforts to overcome daunting challenges during the development of the industry, and one of the most well-known challenges is blockchain trilemma.
What is the Blockchain Trilemma?
To figure out what the blockchain trilemma is, we have to go through the definition of blockchain first. Blockchain is an open, shared, immutable ledger or database where transactions recorded are impossible to tamper with. Decentralisation, scalability, and security are usually considered the most fundamental features of blockchain.
Decentralisation of blockchain means that everyone is equally allowed to participate in the production and validation of a blockchain. Instead of being controlled by one single entity, blockchain’s management is distributed to participants all over the whole network, hence more decentralised and safe. Different from the traditional Internet, the decentralised network is considered much more open and free.
Security of blockchain means it should be able to prevent itself from being taken over by malicious attempts. Security usually is measured by the cost of controlling the whole blockchain system. If it takes a higher cost to control the blockchain, then the blockchain is considered more secure.
Scalability refers to the blockchain’s ability and speed to process transactions. Scalability is the core performance of blockchain and Transaction Per Second (TPS) is the most important metric when evaluating the scalability of a blockchain. It is generally agreed that a relatively low TPS is one of the reasons why blockchains like Bitcoin have not been massively adopted in the first place, hence it is crucial to increase the TPS and improve the scalability of blockchain.
The above three features (security, decentralisation, and scalability) are considered to be the very essence of blockchain. Despite constant changes in technology, it is unanimously agreed that a “perfect” blockchain should meet the requirements of being decentralised, secure and scalable simultaneously. Yet developers and creators of the industry often find that it is very difficult to solve the three issues at the same time. It is common to see that one feature has to be sacrificed for the sake of the other two when creating a blockchain, this is what we know as the blockchain trilemma.
There Is No Perfect Blockchain, Not Just Yet
First coined in an article called “On Sharding Blockchains” by Vitalik Buterin, the founder of the world’s second-largest blockchain Ethereum, the blockchain trilemma is drawing attention from developers of different communities. It is just impossible to prioritise the importance of the three aspects as they are equally significant, and different blockchains each have their own issues when it comes to these three features.
Take Bitcoin, for example, critics in the industry have been attacking the biggest cryptocurrency in the world for being less decentralised. Powered by Proof-of-Work (PoW) consensus, Bitcoins used to be mined by small miners who could help to validate the network on a laptop or personal computer. Yet the invention of ASIC mining rigs changed everything. The ASIC miner was designed to mine Bitcoin and its powerful hashrate has driven small miners out of the ecosystem. The lucrative business of rig manufacturing has prevented small miners from participating in Bitcoin, thus centralising the network by big miners. Though proud to be secure, Bitcoin is said to be less decentralised or scalable than other chains.
From the perspective of the crypto market, however, increasing scalability seems to be the most urgent task and competition between different chains has made developers weigh in scalability when creating blockchains. Outperforming Bitcoin in TPS, Ethereum is still not fast enough when processing transactions in a sudden surge and the cost of transfer is far from being healthy to sustain the whole network. Competitors including Solana, Avalanche or Fantom have been eating a fair share of Ethereum’s market pie in the past few months due to its limited scalability.
But scalability is not everything, security issues are worth attention, and hacking incidents are not new in the crypto world. Public chain Solana, for instance, has a relatively higher TPS than Ethereum, but its performance in September was far from satisfying. On Sep 14th, Solana confirmed that it had an “intermittent instability” due to a denial-of-service attack and the outage of the whole network went on for an astounding 17 hours, risking liquidation of every crypto financial product on it and even endangering the whole crypto market. Though Solana restarted the network to continue, there is no guarantee that it will not be halted again by future possible attacks or it is safe enough to prevent the same attacks.
To build a decentralised, secure and scalable blockchain, therefore, is never easy and blockchain trilemma is a thorny issue for developers and creators from different crypto communities. Numerous measures are being taken to improve the existing blockchains in the market and perhaps a new blockchain solution that fits all three features perfectly will arise during the process.
What Has Been Done to Solve the Trilemma
Quite a few solutions have been proposed to improve the scalability of Bitcoin. One of those suggestions was to change Bitcoin’s block size from 1MB to 32MB permanently, which unfortunately failed to reach a consensus of the global community and lead to a hard fork of Bitcoin Cash in 2017. A more seemingly viable solution for improving scalability for Bitcoin is SegWit, namely Segregated Witness. SegWit will segregate signature and transaction information before recording them on different places on the chain, thus increasing scalability through fixing transaction malleability and enabling lightning network. Taproot soft fork of Bitcoin weeks ago will make complicated transactions on Bitcoin easier, and it will improve privacy and decrease transaction fees. Up till now, those efforts have made Bitcoin even closer to perfection as the latest transactions on the chain have seen faster speed and less fees than before.
The Ethereum community chose to change the entire consensus from PoW to Proof-of-Stake (PoS) in order to solve the blockchain trilemma. Different from Bitcoin, Ethereum is known for its creator-friendly nature and higher interoperability. The explosive development of dApps on Ethereum network has helped the massive growth of blockchain adoption in a wider range. Consequently, the issue of low scalability stands out in the crypto business narrative and its competitors have been trying to take over by providing higher TPS as mentioned above.
Vitalik Buterin firmly believes that Layer2 is the only solution for Ethereum to reach perfection. Continuous progress in technology has been made in the growth of Layer2, and developers are exploring tech like Plasma, Channels, and Rollups to get better performance. Vitalik highly recommends using rollup technology for developers: “Rollups are much easier to build and the technology is less complex than channels and plasma. Additionally, they can easily handle not just simple applications like transferring tokens but also general-purpose smart contracts.”
Rollups have been adopted by solutions like Arbitrum and Optimism, and experiments have proved that transactions on those layers are indeed cheaper and faster. Two mainstream rollups in the market today are Optimistic Rollups and ZK Rollups. Optimistic Rollups are expected to enable migrating all the existing dApps and Services on the mainnet of Ethereum while balancing security and scalability. It is quite promising as it will facilitate developers to scale up the general development of smart contracts in a foreseeable future. ZK Rollups, built on Zero-Knowledge proof, is a little bit more complicated than optimistic rollups and has not been adopted for general purpose smart contracts yet. It takes more research to learn how to roll up Ethereum virtual machine (EVM) pieces into zero-knowledge proof effectively, and ZK Rollups will play an important role in the long run of Ethereum’s ecosystem growth.
To err is human, and to create is making improvements constantly to become perfect. As one of the fastest-growing technologies in the world, blockchain is built through countless efforts by the whole crypto community, yet improvement proposals are not always supported. Bitcoin’s taproot upgrade, for example, is condemned by some people as they believe that taproot will lead to fragmentation of address and space, thus making Bitcoin less secure and more susceptible to future attacks despite increasing scalability. Ethereum’s upgrade is ideologically challenging as well as technically challenging. Whether PoS will solve the blockchain trilemma for Ethereum remains a hot debate as critics believe that only PoW is the ultimate solution for decentralisation, efforts made to strike a perfect balance between those features will always be part of the industry innovation because it, at least, will help people in the crypto world better understand how to solve the blockchain trilemma, or how to create a perfect blockchain in the future.
