What Is the Blockchain Trilemma? Blockchain Trilemma Explained

There are a whole lot of trilemmas out there.

We’ve all struggled with the classic student trilemma, balancing good grades with social life, and sleep.

But now we’ve grown up, we now face a new trilemma — the blockchain trilemma.

What Is the Blockchain Trilemma?

The blockchain trilemma, also known as the scalability trilemma, describes the constant trade-off between scalability, decentralization, and security. When developing blockchain technology, this is a battle you will constantly have to fight.

Why Can’t We Just Have All Three?

We can!

However, it’s hard to have all three to the nth degree. When trying to maximize scalability, for example, we may have to reduce decentralization a little. Or in order to increase security, we might have to reduce the scalability. It’s a constant challenge that developers face, one that they must be aware of the consequences.

What Is the Origin of the Blockchain Trilemma?

The term blockchain trilemma (the scalability trilemma at the time), was originally coined by the co-founder of Ethereum, Vitalik Buterin, on a GitHub post sometime before 2018 — the post has since been deleted.

In the post, Vitalik references CAP theorem, a computer science theory on distributed consensus which states that if a network failure occurs, you can’t have both consistency and availability. Many have pointed to this similar theory as the inspiration for the blockchain trilemma, as well as evidence that all three (of scalability, decentralization, and security) cannot be obtained.

That being said, Vitalik Buterin rejects this idea. He replied to a Twitter user saying, “the [Blockchain] Trilemma was never an impossibility result, it was claiming that getting 3 of 3 is hard.”

The Ethereum upgrade to proof-of-stake is a direct response to this trilemma. Attempting to simultaneously improve the network’s scalability, decentralization, and security — all while improving its sustainability.

Why Does Proof-Of-Stake Help Solve the Blockchain Trilemma?

Proof-of-stake is the consensus mechanism that cryptocurrencies like Cardano and Solana use. Instead of mining blocks and solving cryptographic puzzles, it asks network participants to stake coins and forge blocks.

We have covered consensus mechanisms in more detail here.

Let’s take a closer look at each corner of the trilemma and explain why proof-of-stake improves each one of them.

Scalability

Proof-of-stake decreases transaction times which, in turn, improves the blockchain’s scalability. Ethereum can currently process only 30 transactions per second, while the update to proof-of-stake will increase that to 100,000 transactions per second.

As we all know by now, proof-of-stake uses less computer power, which is better for the environment. It just happens to also improve its scalability. A proof-of-work network may struggle to run the world’s entire financial system purely because they’d struggle to have enough resources to run the network.

Decentralization

The barriers for entry to participate in securing a proof-of-stake network are much lower.

In order to be a miner, you must dedicate a lot of computer power. This costs money, time, and energy. Being a validator is much more accessible for the everyday man.

This means that more people can help secure the network. For every new validator joining the network, the blockchain is becoming less centralized than it ever was.

Security

The most common form of attack on a blockchain is the 51% attack. This is where someone gains control of 51% of the network through miners or validators. Due to being more decentralized, the 51% attack is harder to obtain.

Proof-of-stake also requires you to lock up funds in order to validate blocks. This means that if you are a bad actor, your locked up funds will be taken away. This makes bad actors less likely to act, as it won’t be financially viable.