Blockchain scalability trilemma

The Bitcoin scalability trilemma was invented by Ethereum founder Vitalik Buterin. The trilemma describesThe commitments that the creators of cryptocurrency projects must make to optimize the structure of the blockchain.

Simply put, you can’t do it all at once. The trilemma has three elements: decentralization, security, and scalability. The article briefly describes the three elements, their advantages and disadvantages. The trilemma allows you to compare Blockchain Development against each other. In general, the problem is not weak infrastructure, although this happens, but what aspects of the blockchain the project seeks to optimize and if they correspond to the proposed value and purpose of use. This is an educational article — it will help readers independently evaluate cryptocurrencies.

Decentralization

  • Let’s start with the most centralized organizations. They generally don’t use blockchain. In them, control is exercised by a small group of people: the management, who often owns a large part of the company. Management consists of decision makers and an advisory board. Today, most companies work with this principle.
  • In decentralized networks, the main control is in the hands of the users who, thanks to their actions, can vote, use the services of the platform and make a profit. In all blockchains, users buy tokens to vote, but are given different powers of influence for this, depending on the structure of the network. In protocols with proof of ownership, the strength of the user’s voice depends on the number of tokens he owns. In protocols with delegated proof of ownership, participants use actions to select a third party to vote on their behalf. However, most of this management structure is written in your code, so voting is usually carried out to resolve disputes. In other systems, decisions about changing strategy,
  • Decentralized blockchain developement has another important property: in it, most of the value belongs to the participants. There is no “leadership”: a centralized body that first takes its share and distributes the rest to the rest of the participants. Most cryptocurrency projects do not belong to the founders, but to participants or users. Such a system is beneficial to everyone except the founders. Let’s take a look at the music industry: Apple (iTunes) charges 30% of sales for hosting and distribution, with the remaining 70% going to musicians. If the music industry worked on the blockchain, musicians would receive more than 90% of the value. Other participants who provide the network would also receive a small amount, but most of the value would be transferred to its creators,
  • Advantages and disadvantages of decentralized protocols:

The benefits

  • Generally, the more decentralized the system, the more reliable it is: it does not have a central point of failure vulnerable to hacking. However, even the most decentralized system can be hacked.

Disadvantages

  • On blockchains, where disputes are resolved by all members of the community, there are no central moderators. On social media, its absence leads to the appearance of a hat and fake news.
  • A decentralized blockchain is difficult to shut down as it does not have a centralized server or authority. On the one hand, this is an advantage, but if the blockchain starts to cause damage and its participants cannot solve the problem, the decentralized nature of the network will complicate the process of removing the blockchain.

Security

  • A> 50% attack occurs when one participant (or multiple participants) receives more than 50% of all tokens and takes control of the entire network.
  • Sibyl Attack — Member (or more) participants) create many (hundreds, thousands and more) identifiers in the system to gain control of a large part of the property and / or make decisions on the network.
  • Spam attack: one participant (or several participants) fills a network with transactions with low amounts to stop the blockchain.
  • A DDoS attack (distributed denial of service attack) occurs when an attacker disrupts network traffic and floods it with malicious transactions.
  • Collusion attack: One or more participants (or nodes) agree to perform malicious activities on the network.

The benefits

Disadvantages

Scalability

To provide infinite scalability, you have to sacrifice something. In a scalable and decentralized network, a high security risk. Developers choose the most suitable platform for their needs, and users choose the most productive. Some are willing to sacrifice security for scalability; others are willing to sacrifice scalability for security. We evaluate the basic functions of the system based on its general structure.

The benefits

  • When the application uses more users than expected, a scaled network can bear the load. For example, the Cryptokitties network on Ethereum did not have great scalability, which is why it encountered serious problems.

Disadvantages

  • Buterin was right: it is difficult to create a Blockchain Development Company platform with three equally developed aspects. Users and developers must select and optimize a maximum of two of the three components. In the end, everyone decides what to wear based on project goals and personal preferences.

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