A maximum number of transactions per second

Blockchains can only process a limited number of transactions per second. For example, the Bitcoin network can process around seven transactions per second. If blockchain technology wants to adopt worldwide, then it must be able to process much more data and with higher speeds, so that more people can use the network without becoming too slow or too expensive to use. However, the fundamental design of many decentralized networks means that increasing scalability tends to weaken decentralization or safety. This is known as the blockchain trilemma. Developers who want to solve this problem, experiment with different consensus mechanisms and scalability solutions, such as sharding and sidechains.

In basistermen, a blockchain is a distributed digital ledger. Blocks data is stored in chronological order. The blocks are connected and secured by cryptographic evidence. The application of this technology in different sectors is already changing our way of working and living. The idea is that decentralized and safe block chains make a world possible in which we are not dependent on third parties to make networks or markets function. Experts, however, agree that a core problem must be solved if this technology wants to be applied on a larger scale. The problem in question is known as the "blockchain-trillema".

This term was made popular by Ethereum co -founder Vitalik Buterin. To understand the blockchain trillema, it is important to be aware of three different elements that are desirable in a blockchain: decentralization, safety and scalability. The blockchain trilemma refers to the idea that it is difficult for blockchains to achieve optimum levels of all three properties at the same time. Increase from one usually leads to weakening of the other.

What is decentralization?

Bitcoin and similar blockchain networks have been decentralized by their design. The entire structure is such that not one person or organization is in charge. It has previously been decentralized. The network layer is open to anyone who wants to participate. Consequently, the control is fully distributed and not in the hands of a single entity. Everyone has access to the same data. If someone tries to cheat the system by changing the data to his advantage, the rest of the participants will reject the wrong data.

This can be quite technical, but let's take the Bitcoin network as an example. There is no third party who has control. Compare this with the need for banks in the financial system. The banks ensure trust between people who do transactions, and ensure that all data is kept correctly. The Bitcoin Blockchain, on the other hand, shares all that data with everyone on the network so that they can be checked and confirmed before they are added to the digital database. The result is a system that can exist without the intervention of third parties.

However, one thing must be noted: the way in which these distributed systems work - where a large number of participants must agree on the validity of the data - the transaction times can be slow due to the way in which information must be shared and processed. And so block chains must be scaled up, and will have to be able to process more data with a higher speed. Moreover, decentralism only applies if the underlying block chains are safe. If a blockchain is not safe, a malicious person can take control and change the data to his advantage. This leads to the second part of the vibration: security.

What is blockchain protection?

It does not matter how decentralized a blockchain is if it is lacking in security. A good blockchain network must be resistant to attacks of malicious people. Centralized systems derive their safety from the fact that the system is closed. Those who have the control can guarantee that the data is free of interference. But how is this achieved in a decentralized system in which everyone can participate?

It is a complicated subject, but we can return to Bitcoin as an example of decentralized blockchain protection. The Bitcoin blockchain uses a combination of cryptography and a network consensus mechanism called Proof of Work (POW). In terms of cryptography, each block has a kind of digital signature. Any attempt to change the data would be quickly identified by the rest of the network. The proof-of-work consensus mechanism is another part of the puzzle. It helps to protect the ledger of the cryptocurrency. In short, the goal of POW is to validate new transactions and add to the ledger through an activity known as Mining. This uses computing power to resolve a mathematical puzzle. Part of the process requires that these computers perform numerous hashing functions. This plays a role in scalability, because the POW mechanism is safe but relatively slow.

Also note that the more participants (nodes) are in the network, the safer it is. The greater the number of parties, the harder it becomes for one malicious person to take over control over the system. In short, security is a fundamental condition for the success of a blockchain, because without security, attackers can take control of the chain, making it unusable.

What is scalability?

Scalability refers to the goal of building a blockchain that can support more and more transactions per second. Scalability is required if blockchain technology wants to operate the wider society and possibly billions of users. But this is what many block chains are still struggling with. That is because decentralization and safety are so fundamental to blockchain that people first focus on it. Decentralization is so central to the ethos and the objectives of Blockchain that it is the core of most recognized blockchains. Safety is, as we have discussed, a core requirement for a successful and useful blockchain. However, by giving priority to decentralization and safety, scalability becomes a challenge. The number of transactions that a chain can handle can be greatly limited.

The base layer of Bitcoin is currently unable to process more than seven transactions per second and Ethereum, the second most popular network. As mentioned, these blockchain transaction speeds are limited by the way in which the information must be processed by the various participants that form the decentralized network, and by the nature of the proof-of-work consensus mechanism itself. If more and more people in society start using blockchain technology, the networks will get stuck due to the limited number of transactions they can handle.

Why the blockchain trilemma exists

The most obvious and fundamental solution for the problem outlined above is a reduction in the number of participants who confirm and supplement the network data in exchange for a larger scale and speed. But that would lead to a weakening of decentralization, whereby the control is transferred to a smaller number of participants. And it would also lead to a weakening of safety, because fewer players means a greater chance of attacks.

So here lies the trilemma: given the connection between the desired properties of decentralization and safety, the fundamental design of how blockchain works it is difficult to scale up. Increase one, and you weaken the other. How do you increase scalability without harming decentralization, safety or both?

Finally

The blockchain trilemma stands in the way that Blockchain can fully utilize its potential as a technology. If blockchain networks can only process a small number of transactions per second to maintain decentralization and safety, it will be difficult to achieve mass adoption. However, the solutions that are currently being proposed by developers who want to solve this problem indicate that the technological progress that Blockchain has already made will only go further, and that these networks will be able to process much more data in the future.