There is an interesting concept in blockchain development called “The Blockchain Trilemma”.
3 super critical aspects for any blockchain based crypto currency are
- Security : Ability to resist from hacking attacks, bugs & threats
- Speed/Scalability : Ability to perform faster & more transactions
- Decentralization : Having large pool of nodes
In a classic trilemma you can only select one side of the triangle. Here we have 3 options to choose from Scalability+Decentralization OR Scalability+Security OR Decentralization+Security.
In my opinion security can not be compromised for other 2 features. It is the most important and crucial element of any blockchain solution. There is no point of building a blockchain solution which is not secure. So that leaves us with only 2 choices
- Scalability + Security
- Security + Decentralize
Let’s take example of Bitcoin. It is the crypto with highest market cap. It falls under Security + Decentralize bucket. As per CoinDesk, bitcoin is having 76000+ active nodes. It means that Bitcoin is highly Decentralized. Bitcoin uses “Proof of work” mechanism to validate the transactions, where all nodes compete with each other to solve a complex mathematical puzzle. The average time it takes to solve a puzzle is 10 minutes. And the maximum rate of transaction on a block is 7 transactions/second. This makes every transaction expensive.
Recently Elon Musk announced that Tesla will no longer consider Bitcoin as valid currency to by Tesla cars mentioning the environmental concerns. Every transaction on Bitcoin is consuming high amount energy.
So due to top most level of Security & Decentralization, bitcoin is compromising on Scalability.
On other hand, Solana is making lot of headlines in Tech news recently as a solution to scalable blockchain. Solana is using “Proof of history” mechanism to validate the transactions. “Proof of stake” uses significantly less energy then “Proof of work”. It has achieved a highly impressive 1000 transaction/second. But on other hand it only has 1000 validator nodes. So, we might say it is not the highly distributed blockchain at the moment. But with advancements in Solana ecosystem it would be interesting to see how they onboard large number of Nodes while achieving scalability.
To tackle the scalability issue, Ethereum is moving to “proof of stake” mechanism with Etherum 2.0. As Proof of work & Proof of stake are very different mechanisms, it is very difficult to transit from one to another. It is going to be very exciting to witness how blockchain technology will evolve in coming years to tackle the long standing “Blockchain Trilemma”.
We will discuss in-depth about “Proof of work” & “Proof of stake” in next article.
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