Cryptocurrency Help Logo

Cryptocurrency help is reader-supported. When you buy through links on our site, we may earn an affiliate commision.

What is the Blockchain ‘Trilemma’?

By Evan Jones08/22/2023

Share

If you’re new to the world of blockchain and digital assets, then it’s likely that you’ve heard that one network is faster than another, or that it’s capable of processing a million transactions per second. This refers to one of the three parts of the blockchain trilemma: scalability. A blockchain network in theory wants to be secure, fast, and decentralized, but this is easier in theory than in reality, and is why it’s referred to as a trilemma, as no network has yet been able to solve the issue. 

In this guide, we’ll outline the blockchain trilemma, its components, and then postulate about the potential for any network to solve the problem. Let’s start by defining the trilemma.

The Blockchain Trilemma

The blockchain trilemma is the main problem which blockchain networks need to solve in order to become the disruptive technology they aim to be. It’s thought that public blockchain networks will have to sacrifice one of the three components of the trilemma in order to succeed. As a result, the trilemma problem is what most blockchain developers are trying to solve.

The three components of the blockchain trilemma are: decentralization, security, and scalability.

Decentralization

Decentralization is perhaps the most important component of the blockchain trilemma. The purpose of decentralization is to remove the need for intermediaries in processes such as financial transactions, while also preventing data and monetary flow from being censored or controlled by a single source. These sources are referred to as centralized authorities or sources (think a major news network or conglomerate). The main issue with centralized sources is they present a single point of failure that can drag things to a halt.

For example, many people, myself included, use Google’s Authenticator (2FA) to help secure various accounts such as a crypto exchange account. If someone were to gain access to the servers where this data is stored, they’d have access to all users’ information for all of those accounts. Similarly, if the Authenticator servers went down, every user wouldn’t be able to log in to accounts that use 2FA until the problem was solved.

Security

Security is well, the security of the blockchain. It’s difficult to make a network decentralized and secure, while also being fast (scalable, we’ll get to it momentarily), hence the trilemma. 

For example, the Bitcoin network is extremely secure and decentralized, but it has always had to solve the issue of scalability. Many networks can achieve faster throughput (the speed at which transactions are sent and confirmed), but have to sacrifice security to do so. This is done by either reducing the number of nodes involved or where they are located. Either way, it centralizes the network and makes it more vulnerable to the issues noted in decentralization. 

This is why scalability solutions like Bitcoin’s Lightning Network are becoming more and more popular and important for the future of blockchain.

Scalability

With blockchain, scalability refers to the ability for the blockchain network to maintain its transactional processing speed and support a growing number of users. If a blockchain starts to slow down as more users begin utilizing the network, that is a network with poor scalability. There are many networks, such as Bitcoin, which have good security and decentralization, but poor scalability as the network can only process 7 transactions per second at a base level. 

The lack of transactional throughput for Bitcoin is why the Lightning Network, a layer-2 network built on top of the main Bitcoin network, is so exciting. It allows for millions of transactions per second on the network, but still needs mass adoption. If enough nodes start running the Lightning Network, then it’s possible that Bitcoin will be the asset to solve the trilemma.

A good analogy for scalability is to think of a restaurant that has a feature or a special, or has been featured in the news or on a food show.that would increase demand and business. If the restaurant doesn’t buy more ingredients for the special, or increase staffing and ordering if they’re expecting more customers, it won’t be able to meet demand and will suffer in various ways.

How Long Will it Take to Solve the Blockchain Trilemma?

This is incredibly hard to predict. In some ways, there are networks that are capable of solving the trilemma, such as Bitcoin. But it doesn’t really matter if Bitcoin solves the blockchain trilemma if there isn’t a mass adoption of Bitcoin and digital assets in general. 

We’re also so early in the adoption of blockchain and cryptocurrencies that it’s impossible to say that a new network or another network that’s already being developed and on the market won’t be the one to solve the trilemma. It’s also impossible to guarantee that blockchain and cryptocurrencies won’t just fall by the wayside, though that would probably be bad for society considering the issue we have with centralization and centralized authority. The amount of nuance that comes with the blockchain trilemma is another problem in itself, but hopefully it’s solved in a way that benefits humanity.

Article tags

Beginner
cryptocurrency
guide
Evan Jones

Author

Evan entered the crypto scene in 2017, attracted to the many disruptive possibilities that blockchain could have on current world systems. He has a keen interest in decentralized services, payment processing, and viable NFT use cases such as event ticketing. He spends his days writing with his dog Kobe under his feet, if not on his lap.

Further reading

What Are the Best Strategies for Investing in Crypto? image
What Are the Best Strategies for Investing in Crypto?02/23/2023
Why Are There So Many Cryptocurrency Hacks? image
Why Are There So Many Cryptocurrency Hacks?02/27/2023
Five Tips for Sending and Receiving Bitcoin Safely image
Five Tips for Sending and Receiving Bitcoin Safely06/08/2023
What Are the Most Common Trust Issues in Crypto? image
What Are the Most Common Trust Issues in Crypto?07/03/2023

Recent News

Is $50,000 Bitcoin Back for Good? image
Is $50,000 Bitcoin Back for Good?02/21/2024
Amazon to Develop Movie Based on Billion Dollar Bitfinex Hack image
Amazon to Develop Movie Based on Billion Dollar Bitfinex Hack02/19/2024
What’s the Verdict on Bitcoin ETFs? image
What’s the Verdict on Bitcoin ETFs?02/12/2024