The blockchain trilemma is a term used to describe the challenges facing blockchain technology in achieving the three desirable properties of decentralisation, security, and scalability. These properties are often seen as conflicting with each other. For example, while Bitcoin is secure and decentralised, it can only process 7 transactions per second.
Let’s look at the 3 aspects of the blockchain trilemma:
Decentralisation
Decentralisation is a key feature of blockchain technology, as it allows for the creation of a distributed network of nodes that can validate transactions and maintain the integrity of the network without the need for a central authority or control point. This decentralised structure provides numerous benefits, including increased security, transparency, and resistance to censorship.
Security
Security is also crucial for blockchain technology, as it ensures that the network is secure against attacks and fraudulent activity. Security refers to the ability of the blockchain to protect itself against external threats like hacks and bugs. In order to maintain the security of the network, blockchain systems use complex cryptographic algorithms to verify transactions and prevent tampering.
Scalability
Scalability, on the other hand, refers to a blockchain’s ability to handle a large number of transactions without experiencing delays or congestion in the network. As more and more users adopt a blockchain network, the number of transactions that need to be processed increases, which can put a strain on the network and reduce its overall performance.
The blockchain trilemma presents a difficult problem as improving any one of these properties often comes at the expense of the others. For example, increasing the decentralisation of a network may make it more secure and resistant to censorship, but it can also reduce its scalability. On the other hand, improving scalability may make the network more efficient and able to handle a larger number of transactions, but it may also reduce its security and decentralisation.
Despite the challenge, there are ongoing efforts to address the blockchain trilemma and find solutions that can improve all three properties simultaneously.
Some of these solutions include the use of off-chain transactions, sharding, and proof-of-stake consensus algorithms. Blockchains such as Ethereum are taking steps to address the blockchain trilemma with an upgrade known as The Merge.
The blockchain trilemma is a fundamental challenge facing the technology and addressing it will be crucial for the continued growth and mass adoption of blockchain systems.