Blockchain networks are known for their vision of working without any central authority and offering a variety of features which can be prioritized. A blockchain network is built around three core features: scalability, security, and decentralization. It is easy to grasp the theoretical concept of how blockchain networks operate and what purpose they serve but when it comes to transforming that theory into practice, developers face a tough time enduring these three fundamental features concurrently.
Blockchain Trilemma Explained
The blockchain trilemma states that a blockchain network cannot achieve scalability, security, decentralization at the same time. The trilemma concept was termed by Vitalik Buterin, referring to the fact that at least one attribute must be compromised for the sake of the other two, and all three features cannot be implemented or maximized simultaneously.
Following are the three fundamental facets of blockchain trilemma:
Scalability: This refers to the ability of blockchain networks to support an extensive number of transactions without increasing any gas fees and transaction time.
Security: A firm and unwavering defense system assists blockchain networks to protect themselves from bugs and malicious attacks.
Decentralization: It enables network control to be distributed equally among all users rather than being managed by a central owner.
The interplay among three trilemma attributes
It takes time to validate the transactions made on a blockchain network especially when the system has a large number of participants. Therefore, security parameters clarify that scalability is inversely proportional to decentralization.
Similarly, when we consider “security” as a hashrate for two proof-of-work blockchains, then scalability becomes directly proportional to security. For example, by keeping decentralization constant, if we increase the hashrate, the validation and confirmation time decreases, which in turn increases the scalability. Therefore, we can say that with constant decentralization, the scalability becomes directly proportional to security.
Ethereum is an example of such a trilemma at play; i.e. Ethereum cannot scale beyond a specific limit, which means it has preferred decentralization and security parameters over scalability (limiting number of transactions per second). Likewise, Bitcoin allows seven transactions per second (TPS), while maintaining decentralization and security concurrently.
Challenge for Developers
It is challenging for developers to implement a mixture of decentralization with high transactional throughput in a network while maintaining watertight security at the same time. Technologists around the world are striving to implement layer-1 and layer-2 solutions (to be explained later) to catalyst the growth and adoption of decentralized networks.
Significance of each Trilemma Element
Before moving on to the proposed solutions to address trilemma issues, it's good to understand the significance and role of each aspect of trilemma in detail.