Blockchain Trilemma - Crypto Academy / S5W2 - Homework post for nane15.
Hello everyone, it's with great delight that I write this week's homework work task and I want to specially thank @nane15 for this amazing lecture on Blockchain Trilemma. I will go ahead to attempt the questions.
1. Explain in your own words what the Blockchain Trilemma is.
Ever since Bitcoin was launched in 2009, the Blockchain technology has shown great improvement in revolutionizing the world by introducing new use cases each day. However, the Blockchain technology in it's infancy has tried to over come some challenges as it gains popularity. In order to understand a better way to co-relate these challenge, this led to the creation of the concept "Blockchain Trilemma" by Vitalik Buterin, he wanted to bring these challenges under an umbrella term, hence, the creation of this concept. Now, What is the Blockchain Trilemma?
Before I will dive in to what the Blockchain Trilemma is all about, In the late 1990s, a computer scientist called Eric Brewer came up with a theorem called the Cap Theorem which was intended to probably give a better understanding of these challenges. This theorem argues that's, it's at least very difficult or impossible for a Blockchain or any distributed data store to deliver on all of the following guarantees: consistency, availability and partition tolerance at the same time rather the Blockchain must compromise by letting go of at least one of the guarantees in order to deliver on the other two.
Now, the CAP theorem evolved in to the Blockchain Trilemma as the distributed data stores evolved into public decentralized ledgers as the Bitcoin was launched. The Blockchain Trilemma concept argues that though an ideal Blockchain has be decentralized, secured and scalable, only two out of these three can be possible and those poses as the major challenge the Blockchain needs to overcome as it gains popularity. Below are what makes a Blockchain ideal.
Decentralization: the Blockchain allows every participants to be in charge and in control of the network rather than allowing the network to be controlled by a single entity.
Security: the Blockchain network should be able to prevent malicious attack by building a very strong defense to protect the network.
Scalability: The Blockchain should be able to allow a huge number of transactions to be carried out without increasing the transaction fees or time.
2. Is the Blockchain Trilemma Really a Trilemma?
It is very necessary to have in mind that even though Blockchain Trilemma presents some challenges that the technology face as it goes viral, there haven't been any actual law that says all three guarantees can not be achieved at the same. Rather, the Blockchain Trilemma was created to help conceptualize and give a better explanation of the challenges faced when developing the blockchain technology and how they work with each other.
However, the developers are making sure to find ways to solve the blockchain trilemma challenges, though there have been some proposals and ideas that can help deal with the trilemma and they have been seen to have some levels of success. So it is safe to say that although some level of progress has been achieved but then, the trilemma still presents a challenge which can still be solved.
3. Define the following concepts in your own words:
A. Decentralization:
This is a feature that is implemented on the Blockchain network and when the system is decentralized, it does not need a central entity to manage the system, Now how does the Blockchain work?
A decentralized Blockchain which is also known as a permission-less network is a network that enables miners confirm transactions by themselves and get rewarded with incentives from transaction fees paid by other users. Now, these miners are seen as unique nodes in the Blockchain and they all have equal power and control as other nodes and as such, one node can not redirect the network without the approval of the other nodes.
With that, every participants has the freedom and control on the decentralized system as compared to the centralized system. In this recent time where financial institutions can possibly freeze accounts for biased reason, the decentralized system is very great option. Although, decentralization is quite easy to implement but then, developers are forced to let go of this unique feature if they wish for a project to scale it's Blockchain. This is mostly done on blockchain network that are permissioned, where only a few special users have the control access and can actively participate.
Advantages
Decentralized network allows users to have equal control and as such can not over ride others. Together, they have to agree to change a protocol in a governance manner, so cooperation is needed from these crypto enthusiasts to be able to discuss issues.
When a Blockchain technology is decentralized, security is a sure thing. So if the system has a larger nodes just like in the blockchain network, it will be difficult for the system to be attacked as larger entities and more resources will be required for an attack.
Disadvantages
Things are not very sure of going well in this governance model where each node is entitled to one vote because they can possibly all agree to a wrong decisions and the proposal might not be moderated properly. This means that there can be the controversial features in some of the members
Most protocols make use of the Proof of Work consensus mechanism to achieve decentralization and this can be a problem because mining needs a lot of energy and when there isn't enough energy, it causes an ecological problem. However, such protocol will not be able to reach a high TPS count and as such result failure in scalability.
B. Scalability
Scalability is known to be the most problematic feature when incorporating into the blockchain network. Most projects tends to get to this stage but ends up not supporting large user base. It is very important to note that scalability does not measure specifically the X TPS as related to Y number of users because developers do not really have the idea of the kind of workload that the Blockchain can reach in this stage of global acceptance. Rather, it is safe to say that scalability is considered as a degree of effectiveness that should be present at all time.
For instance, lets look at the number of users on the Bitcoin Blockchain, if we want to check out the number of users that the Blockchain supports in this recent time, it is easier to go on social media platforms and see the number of active users the Blockchain supports. If the fees attached to a transaction on the blockchain is $25 then we can say that Bitcoin is at its limit and low number of users compared to other social media platforms. In 2017, we remember that Bitcoin suffered a high level of network congestion during the last bull run making users pay up to $60 per transaction.
Therefore, scalability is a major problem that should be fixed, because if it's reaches that global acceptance like it did in 2017, the blockchain will experience a harsh rejection and users might doubt if the blockchain technology is the way forward.
Advantage
- Scalability ensures that the network supports a higher workload and also works perfectly at extreme condition at lower fees.
- it helps some protocols that apparently needs supports when carrying out high number of transactions like the gaming sites, social media platforms, video streaming platforms etc.
Disadvantages
- Scalability can only work if security is sacrificed and if scalability is to be featured on the network without touching the security of the network, projects have to make use of the Proof of Stake instead of Proof of Work.
C. Blockchain Security
When we talk about security in the blockchain, the Blockchain will be totally useless without it because everyone will have access to manipulating them and disrupting the ledgers. Well, a lot of developers make sure that this is not a case in most of the Blockchain network because they try as much as possible to make this feature strong that the Blockchain has a 51% chance of not being attacked.
One of the reasons why Blockchains are less secured compared to centralized database is because decentralized technology is known to be an open-source which makes it easy for hackers to read the codes, and give then enough time to figure how to hack the system. However, the Bitcoin network has quite a strong security unlike other Blockchains that are prone to this kind of attacks because they make use of the smart contracts.
Furthermore, We can say that security and scalability works in a opposite direction in the sense that security tends to keep the network secured, stable and functional while scalability tends to grow the system. So with this cases in recent times, developers tend to leave security behind while focusing more on decentralization and scalability, even when they know it is an aspect that shouldn't be neglected.
Advantages
- Security is an important factor that is required to make the blockchain work properly. This prevent hackers and malicious entity from controlling or manipulating the nodes and ledger's data. So we can possibly say that if the Blockchain is not secured, it is totally unreliable and useless.
Disadvantages
- The major disadvantage that can be found with the security feature is that it requires a lot of resources to set up. The blockchain make use of PoW consensus mechanism and it requires a huge number of miners to support the network's security. However, when the miners continue to join the network, the network continues to be more secured but the scalability suffers because the PoW doesn't support high transaction through put.
4. Based on your knowledge, explain at least two viable solutions to the challenges posed in the Blockchain Trilemma.
Developers have taken some approach to solve the Blockchain Trilemma problem, I will go ahead to explain two of the solutions below:
- Layer-1 Solution.
a. Shading: This solution basically function in a way that transactions are splited into smaller "shards" and processed at the same time parallel to each other, so the blockchain allows it to work on several transactions simultaneously. However, the information are splited and stored in different nodes, so it is not necessary for the nodes to hold a copy of each block from genesis.
b. Improving consensus mechanisms: One of the most popular blockchain which is known as Bitcoin is been known to use the Proof of Work as it's consensus mechanism and it ends up been very slow though secured and decentralized. For instance, Bitcoin can only carry out a transaction through put of 7TPS. However, on some other Blockchain like Ethereum 2.0, developers have been able to switch to the Proof of Stake consensus mechanism which can determine the status of nodes based on their stake on the network instead of allowing the nodes to use the computer power to solve cryptographic algorithms.
- Layer-2 Solutions.
a. Nested blockchains: this system is basically where the main blockchain sets the rules of the entire network and is not allowed to partake in the operations of the network unless there is a conflict or dispute. This works in a way that the blockchain is built on each other and is connected to a parent chain. However the parent chain allocates the work to each of the children linked which they execute and sends the results back to the mainchain. This helps to reduce work load for the mainchain and also increases scalability.
b. State Channels: the state channel works in a way that it creates a two-way communication and this is between the blockchain and off-chain transactional channels. The state channel does not need the node to verify and validate any transaction rather using a smart contact, the off-chain resources verifies and validate transactions. Once transactions are completed, the final state of the channel including the transactions are been added to the underlying blockchain. For instance, the Bitcoin's Lightning network is a good example of the State Channel.
Conclusion.
The Blockchain Trilemma has become an important issue for all hardworking developers and even though Bitcoin and Ethereum have both done enough, in order for the Blockchain to reach the level of revolutionizing the world, these developers still needs to look for more ways to solve the issues of the trilemma
However, most projects make use of the PoS and Sharding mechanism but none has proven that it's is capable of supporting a larger use base. From the analysis of market cap, we know that Ethereum is the market's second-largest project and if Vitalik Buterin can do that, I know that Blockchain Trilemma will no longer be an issue.
Thanks for reading.