Jun 24, 2023

Exploring the Blockchain Trilemma

The blockchain trilemma is the problem of balancing decentralization, scalability, and security. This blog explores the concept of a trilemma and how it applies to blockchain technology.

AI BLOCKCHAIN CRYPTOCURRENCY

Francesco

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What is the Blockchain Trilemma for Ethereum?

A thread with visuals

↓ pic.twitter.com/xP3aaLmr8g
— Francesco (@FrancescoCiull4) June 24, 2023
What is a Trilemma

A Trilemma, in general, is a difficult choice between 3 options.

It can be graphically represented with a triangle, where the choice of a side (2 options) disadvantages the third one.

An analogy with software:
- Fast
- Good
- Cheap
You can have 2, not 3
— Francesco (@FrancescoCiull4) June 24, 2023
The Blockchain Trilemma

The blockchain trilemma is the problem of being very hard, if not impossible, to balance between:
- decentralization
- scalability
- security

↓ pic.twitter.com/waxYILyw88
— Francesco (@FrancescoCiull4) June 24, 2023
Decentralization

A blockchain should not rely on a central authority.

Trade-off: SPEED.

It would take longer if a transaction requires many confirmations instead of 1 before reaching a consensus.

Bitcoin is an example of a secure and decentralized but slow blockchain.
— Francesco (@FrancescoCiull4) June 24, 2023
Scalability

A blockchain should be scalable to be used
from as many people as possible.

The problem is understanding the limits and how much this is sustainable for the blockchain.

Trade-off: CENTRALIZATION. To make things faster, an easy way is to centralize the power.
— Francesco (@FrancescoCiull4) June 24, 2023
Security

A blockchain has to be secure. Otherwise, everything else collapses.

Trade-off: SCALABILITY and DECENTRALIZATION. To make a blockchain secure, many resources are needed (and there is no 100% guarantee that it will work forever)
— Francesco (@FrancescoCiull4) June 24, 2023
So there are actually 3 options.
- Secure and decentralized
- Decentralized and scalable
- Scalable and secure
— Francesco (@FrancescoCiull4) June 24, 2023
Secure and decentralized

This is how Ethereum looks now.

Secure + decentralized blockchain networks require every node to verify every transaction processed by the chain.

This amount of work limits the number of transactions that can happen at any one given time. pic.twitter.com/ct3S4fl3zN
— Francesco (@FrancescoCiull4) June 24, 2023
Decentralized and scalable

Decentralized networks work by sending info about transactions across nodes.

Scaling transactions per second across a network poses security risks:

More transactions > longer delay > higher chances of attack while the info is in flight.
— Francesco (@FrancescoCiull4) June 24, 2023
Scalable and secure

Increasing the size and power of nodes could securely increase transactions per second.

But the hardware requirement would restrict who could do it.

Hopefully, Ethereum will increase the number of nodes with:
- sharding
- Proof-of-stake pic.twitter.com/uHbdR7ZrEx
— Francesco (@FrancescoCiull4) June 24, 2023
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— Francesco (@FrancescoCiull4) June 24, 2023