Blockchain Trilemma

Let’s dive briefly today in explaining the Blockchain Trilemma:

Security, scalability and decentralization.

I)Scalability:

Bitcoin is the first cryptocurrency aiming to be a peer to peer currency for transactions all around the world with no need of intermediaries. To achieve this however bitcoin initially fails to tick the scalability box, indeed the bitcoin network can only process 5-8 transactions per second while other transaction networks such as Visa can process more than 4000 thousand transactions per second. In this context, layer two blockchains have developed themselves to enable the scalability of the transactions. Lightning network is the layer two that runs on the bitcoin blockchain, it processes transactions away from the main blockchain and can therefore scale to millions per second.

Still scalability is not the most important aspect of the trilemma, decentralization might be the fundamental cultural question we may ask ourselves about blockchain.

II)Decentralization:

What is it with us all the crypto-maximalists looking for a decentralized peer to peer cryptocurrency ? Well, Immutability.It is the idea that an object/entity cannot be modified after its creation, no third party has the right to change it.

Is it the case for Bitcoin and other cryptocurrencies ?

Decentralization might be the key question to be asked. If the network is spread all around the world with many operators participating in its securitization, then the blockchain is immutable as it is impossible to change or stop it without consensus. On the other hand, centralised entities such as VISA or PayPal have the possibility to decide who has access to the network, for how long, when to stop etc.

Blockchain is agnostic, it can be used all around the world, at any time and by anybody. Scaling a highly decentralized blockchain became difficult due to the technology limitations. Indeed, if we take the example of bitcoin each transaction is added to a block of transactions that need to be validated each 10 minutes, as the network is used by millions of people we can imagine the hardware technology that would be necessary to scale the functioning of the blockchain while keeping it decentralized as it is.Why would one want decentralization if it is a brake to the development of the technology and its adoption ?

III) Security

Each block of transactions relies on the previous blocks, altering a block would have an impact on the whole record of transactions. An operator of the network with bad intentions can try to submit a falsified version of the record for a specific block, but it will thereafter be verified by the other operators. This is why the more operator the safest the blockchain will be as thieves will not be able to “lie” to the blockchain.

Still, we may ask if the blockchain is a transactional record can’t someone go back in previous blocks and modify a transaction ?

Well each block is secured by cryptography and needs a specific hash (digital fingerprint) to be validated. Once it is, it is not possible for a single operator to “go back in time” to falsify a block. To do so one would need to possess more than 51% of the calculating power, which would mean the centralization of the blockchain…

The blockchain trilemma is one that will surely take time to resolve, many projects state that they’re the solution and have found the perfect solution…. It’s still not the case, and solving it will open the door to many new use cases and mass adoption.

I believe that decentralization should always be prioritized as it is the very nature of blockchain. Code is law, and agnostic values must prevail over any central authority aiming to advance a political agenda over a life changing technology.