The Blockchain Trilemma is a concept developed by Ethereum co-founder Vitalik Buterrin.
He stated that every blockchain has to solve these three problems to succeed.
The three problems are Scalability, Decentralization, and Security.
Scalability
Scalability measures the efficiency of a blockchain at processing transactions. This shows how fast the blockchain processes and approves transactions. It is usually measured by the blockchain’s Transaction Per Second (TPS).
Naturally, the shorter the TPS, the better the blockchain. This is because these blockchains are competing with global payment companies such as Visa and MasterCard who process transactions in seconds. So, for a blockchain to achieve widespread adoption and serve millions of users efficiently, it would need to be scalable.
Scalability is advantageous as it enables the blockchain to support lots of customers. However, developers have to sacrifice security and decentralization for scalability. This is because scalable networks have to become centralized or less decentralized to ensure transactions are processed and confirmed faster than they would ordinarily be in a decentralized network.
This is the issue of scalability that needs to be solved before creating and launching a blockchain
Decentralization
Decentralization in a blockchain means there is no central authority that controls the network. No individual has special privileges on the blockchain.
To achieve sufficient decentralization, there have to be a lot of nodes that could secure the network.
“Nodes” refers to the number of computers that have the blockchain on them. The more computers that are on the network, the more decentralized it is.
Developers usually have to sacrifice scalability for decentralization. This is because decentralized networks take a lot of time to process and confirm transactions. All the nodes/miners have to update their computers with every transaction. This usually takes a lot of time which makes it impractical to use Bitcoin for payments. This issue is common with networks that use Proof-of-Work (PoW) consensus mechanism.
Currently, decentralized networks that use PoW are not scalable.
Security
Security refers to the state of the blockchain to withstand attacks. Blockchains need to be free from manipulation and remain immutable. The major threat to the mutability of a blockchain is a 51% attack.
Developers tend to sacrifice scalability for security. This is because decentralized networks using PoW are more secure, however, they are not scalable.
Vitalik Butterin proposed the solution to this trilemma is upcoming ETH 2.0 or Eth2.
Ethereum is migrating to Proof-of-Stake(POS), Sharding, and Side Chains which is expected to make the network more scalable, decentralized, and secure.
Other projects are also claimed to solve the trilemma including Algorand, Solana, Cardano, etc.
I guess we would have to wait to if these projects — including ETH 2.0 — provide a solution to this trilemma.
