Blockchains Can Only Handle A Limited Number Of Transactions Per Second. For Example, The Bitcoin Network Can Process About Seven Transactions Per Second. 

The above technology usually has a good ability and speed in processing transactions. Still, suppose this technology is to be used globally in that case. In that case, it must be able to process and manage a larger volume of data so that more people can use the network without the network slowing down or access to it is associated with high costs.

However, the underlying design of most decentralized networks is such that increasing scalability comes with weakening decentralization or security.

This is the issue that has become famous as the Blockchain Trilemma. Developers seeking to solve this problem have proposed or are experimenting with different consensus mechanisms and scalability solutions, such as sharding, sidechains, and state channels.

In this article, we examine the triple-forming elements of the blockchain and explain how each of them works.

Once you have detailed information about these components and what they do, you will better understand what and why the blockchain triad is.

What is blockchain?

In its simplest definition, blockchain is a distributed digital database whose data blocks are organized in chronological order. The blockchain uses cryptographic tokens to secure the partnerships to increase the security of the blocks. This issue has made implementing this technology in various industries more accurate and safer.

The main idea is that decentralized and secure blockchains allow users to use networks or markets without the need for intermediary individuals or companies. However, experts agree that if the technology is to be used more widely, it must first overcome a significant problem surrounding it. This is the main problem of the Blockchain Trilemma.

This term was first coined by Vitalik Buterin, one of the founders of Ethereum. To have an accurate view in this field, you must have basic information about the three primary and critical elements that form the blockchain, i.e., “decentralization, security, and scalability.” The blockchain triad refers to the fact that it is difficult for blockchains to achieve optimal levels of all three features simultaneously because increasing one of them weakens the performance of the other components.

What is decentralization?

Based on a decentralized model, Bitcoin and blockchain networks share a similar design pattern. The whole structure is such that no one person or organization is responsible, and everything is decentralized in the true sense of the word. As a result, the control is entirely distributed and done by the users themselves instead of by a single entity. This issue has opened the network layer to anyone who wants to use the blockchain.

In this case, all network users have access to the same data. If someone tries to cheat the system by changing the records in his favor, the other participants will recognize the distorted or fake data and will not approve it.

As you can see, this is quite technical, so let’s look at the Bitcoin network as a concrete example. In the Bitcoin network, no third party controls it. Contrast this approach with the traditional model on which banks and financial systems operate. Banks ensure trust between transacting people and that all records are correctly kept.

However, the blockchain Bitcoin shares all data with everyone on the network to be verified before being added to the digital database. The result is that the system can continue to work without needing third parties to be involved and confirm the validity of the information. Decentralization makes possible the emergence of a concept called Web3.

We currently have Web2, which is the Internet we use daily.

Internet, where blockchain technology decentralization allows people to manage their data and online lives. Web3 is the next step beyond the traditional Internet. The Internet consists of web-based sites and applications controlled by companies and whose content is created by users.

However, there is something to consider about blockchain architecture; Due to the way distributed systems work, which requires the agreement of a wide range of participants to confirm the validity of data, transactions will take time due to the type of information sharing and confirmation.

Developers have proposed a solution to implement scalable blockchains. In this case, the network can handle and process more data faster.

The decentralized dream can only be realized if blockchains have a secure infrastructure. The problem that causes the second part of the trilogy that we mentioned, security, is distorted. If a blockchain lacks the necessary protection, an opportunistic user can take control of the network and distort the data to their advantage.

What does security mean in blockchain?

If a blockchain lacks security, no matter how decentralized it is, it can no longer be trusted. A good blockchain network should resist various attacks and maintain its stability. Centralized systems owe their security to the closedness of the system. That is, each person in charge controls the performance of the infrastructure and ensures that data is transmitted smoothly over the network. However, how is such a level of security achieved for a decentralized system that anyone can participate in?

This is technically a complex process, but we can refer to Bitcoin as an example of decentralized blockchain security. The Bitcoin blockchain uses a combination of cryptography and a network consensus mechanism called Proof of Work (PoW). From a cryptographic perspective, each block has some form of digital signature (or hash).

Each data block is connected to other blocks in a way that cannot be tampered with because any change will change the hash league. For this reason, any attempt to change the data is quickly detected by the rest of the network members.

The PoW consensus mechanism is another puzzle that helps secure the cryptocurrency ledger.

The working mechanism of PoW is that only network members can approve new transactions and add them to the ledger through mining. This involves using a lot of computing power to solve complex mathematical equations. For this reason, a group of computers is needed to perform different hashing functions. This makes scaling slow, as the secure PoW mechanism is relatively slow.

The more participants (nodes) in the network, the better the security; Because the more nodes there are, the more difficult it is for people who want to abuse the network to control the system. People who intend to take over 51% of the network’s shares and become its owners.

But, if a single entity (or group of opportunistic users) can control more than 50% of the total hash rate of a blockchain network. They can override the consensus and buy off-chain data, such as tokens or cryptocurrencies, at a higher price. To change in his favor.

In short, security is a fundamental requirement for the success of blockchain because, without it, hackers can take control of the chain and debase it.

What is scalability?

Scalability refers to building a blockchain that can process more transactions per second. Scalability is an important principle to consider if we want to expand blockchain technology to a broader community of billions of users. 

As we mentioned, security has been the factor of success, usefulness, and user acceptance of the blockchain. This is the point where most blockchains struggle because decentralization and security are so essential and functional to blockchain that most developers tend to focus on it. To be more precise, the word decentralization has become so prominent in this context that all blockchains are implemented around this axis.

However, by prioritizing decentralization and security, scalability becomes a challenge, severely limiting the number of transactions a chain can handle. For example, a centralized payment system like Visa claims to support 24,000 transactions per second because the network is closed and lacks components such as public nodes and consensus.

A report published by Bloomberg in 2022 points out that since September, Bitcoin has not been able to do more than seven transactions per second, and Ethereum, the second most popular network, is limited to 15 transactions per second, which is not comparable to the number of transactions that A centralized payment system can support them.

The speed of blockchain transactions is limited by how information is processed by the various participants in the decentralized network and the nature of the PoW consensus mechanism itself. Now, if more people start using blockchain technology, transactions will slow down due to the low speed of these networks.

Why does the blockchain triad exist?

The most basic solution to the mentioned problem is to reduce the number of participants. In this case, achieving high scalability and higher speed is possible. Of course, reducing the number of participants makes validating network data more dubious. It undermines the principle of decentralization, as control is delegated to a smaller number of participants.

Also, the smaller the number of participants, the less security is weakened because the large number of users plays a vital role in improving safety.

Considering the relationship between the features above and especially decentralization and security, designing an efficient large-scale blockchain is challenging and complex because if you insist on one part, the other will be undermined. The critical question is how to increase scalability without harming decentralization, security, or both.

Solving the blockchain triple problem

Unfortunately, there is no golden solution for this trio. Still, due to the importance of solving the problem, the developers have used various solutions, bringing exciting results. Let’s explore some of the most popular developments in this field to get an accurate overview of the space.

1. Sharding

It is a method of dividing blockchains (or other types of databases) into smaller blockchains. In this case, the process of managing certain sections becomes easier. The advantage of segmentation is that it allows a chain of transactions and interactions in a network to be operated more efficiently and to maintain security. In this case, each split blockchain is known as a micro-blockchain with its ledger.

These macroblocks can then process their transactions while a main blockchain manages these micro blockchains. The above solution provides layer one network scalability.

2. Different consensus mechanisms

One of the reasons that led to the emergence of triples in the Bitcoin network is the way PoW works to ensure security. The need for miners, cryptographic algorithms, and massive amounts of decentralized computing power has led to the implementation a secure but slow system. One approach to solving this triad is finding a different way to ensure consensus.

PoS is the only approach that can be used for scalable consensus. This is why Ethereum migrated from PoW to Proof of Stake (PoS). In PoS blockchains, participants involved in validating transactions must share (lock) their tokens. In this case, there is no need for machines like mining. In this case, validation becomes more straightforward and more accessible.

3. Layer two solutions

Both different sharing and consensus solutions are known as layer one solutions. They seek to make a fundamental change in the network’s infrastructure design.

However, some developers went for another powerful solution for blockchain triples that focuses on the existing network structure. In other words, they believe the key to solving this problem lies in the second layer. Examples of this solution include side chains and mode channels.

A sidechain is a separate blockchain connected to the main chain and is set up to allow the free transfer of assets between the two streams. The sidechain can operate under different rules and provide incredible speed and scale.

Similarly, state channels are another way to remove transactions from the main chain and reduce the pressure on layer one. Instead of a separate chain, a state channel uses a smart contract to enable users to interact with each other without publishing their transactions on the blockchain. In the above method, blockchains only record the start and end of the channel.

last word

As you can see, the trilemma of the blockchain prevents us from achieving scalability and using the potential capacities of the blockchain as a viable technology. Suppose blockchain networks only support a small number of transactions per second to maintain decentralization and security. In that case, serving a wide range of users and responding to transactions will be difficult.

However, developers are testing solutions to fix the above issue. Therefore, these networks are expected to be able to manage and process more data shortly.