If it wasn't obvious by now, blockchain protocols are becoming increasingly popular due to their decentralized and robust potential. However, to address the challenges blockchain engineers face, it's important to understand the fundamental and inherent problems the technology has.
Blockchain projects are known for their vision and ambition — but what they prioritize and what they’re known for can vary. Normally, projects rotate around three core concepts: decentralization, scalability, and security.
And while we can argue that the whole industry evolved from primitive concepts, fundamental challenges remain the same.
The term blockchain trilemma was firstly introduced by Vitalik Buterin to point to the problems developers face in creating a blockchain that is scalable, secure, and decentralized - Without having to sacrifice any facet. It's more like a model in which you can conceptualize the main issues, and visualize how it's all connected. There's no perfect system out there, yet.
There's a problem though, most, if not all of the projects had to make a trade-off, preventing them to reach all three propositions.
Security - The ability of the blockchain system to operate expectedly, and defend itself from malicious actors, bugs, and security breaches. Security architecture is highly dependent on how distributed and decentralized the nodes are.
Decentralization - The system in which there's no one point of failure, meaning more people are running the nodes and influencing the network policies, hence increasing the overall security of the network. Decentralization is a relative and controversial phrase, and the consensus by which you reach that state is even more complicated.
Scalability - The ability to handle an increase in the number of transactions, without experiencing any delay issues, that could affect UX.
Those three components should be met for the perfect system to exist. So far, no one managed to get all three figured out, but we're getting there. At least our understanding is expanding.
While some developers believe that the blockchain data structure itself has inherent limitations that prevent it from scaling, many architects, including CertiK, believe that it’s possible to build a blockchain project that hits all three targets: one that is scalable, decentralized, and secure.
Decentralization.
Decentralization is a core component, or at least it should be the core component of blockchain technology. It is one of the three unique value proposition blockchains has, thus deserves its spot among the stars.
In traditional finance, the system is entirely centralized and governed by a few individuals or corporations at the expense of the majority. The problem gets bigger once we understand that unilateral decision-making can get us in a lot less favorable position. In a blink of an eye, the whole gameplay can change, thus leaving us in the limb of the status quo.
That's why a decentralized system matters, it empowers a permissionless economy and ownership anyone can use and build upon. Decisions are made by a consensus, meaning that transactions are approved by multiple node runners as opposed to a single entity or order book - that often gets corrupted, LOL.
Once everyone agrees on the truthfulness of the transaction, the transaction is stored on the blockchain.
The trade-off of pure decentralization, however, is speed. If a transaction requires multiple confirmations before reaching consensus, then inherently, it would take longer than if a transaction can be confirmed by a single entity. Bitcoin is known to be robustly decentralized, but at the same time, pretty slow.
Fully decentralized projects should have both infrastructure and token distribution as widely spread as possible.
Scalability
And while it may sound not so ideologically relevant, in terms of UX and mass adoption it plays a vital role. Imagine how frustrating can it be once the network gets overloaded thus expensive and slow as fuck. Having to wait for an hour to get a transaction validated is not something that will retain the users, especially not if we are talking about social platforms that are highly dependent on how fast they can operate.
I think scalability weights more value than people like to think.
It's boring to read about, it's boring to present the solutions, but it's something every blockchain should consider having in mind. Just look at #ETH, it's slow as fuck, expensive as hell, and in most cases, it's not even worth withdrawing any amount as the cost of tx exceeds the value you wanted to withdraw - happened multiple times so far...
Even polygon doesn't provide a good experience lol.
Security
You can imagine how important the security of the network is, especially if we consider that money and governance rights are involved in the same equation. I mean, we have already witnessed countless vulnerabilities in source code, hacks of the exchanges, rug pulls... You name it...
Projects that are not audited should be avoided at any cost, and while it may not be on purpose, no one will give a shit once you lose your money.
Due to the transparent nature of an open-source code and the potential lucrative outcome of the hack, crypto is becoming an increasingly interesting playground for hackers.
Ronin and similar projects secured half a billion dollars with 7 private key holders, four of which got compromised resulting in heavy losses.
If the node validators weren't from the same company, but some random dudes elected by the stakeholders, probably having different ways of securing their keys, such a thing wouldn't be possible.
Not to even mention they had no security measures involved, to trigger the alarm if something sus happens.
Professional.
The future still relies on open-source protocols that are governed in a transparent and decentralized manner. Acting as a public good for both information and value transfers.
Crypto is an industry that emerged out of necessity and blockchain happens to be the technology fueling the progress.
This is by far the most important financial revolution that ever happened and I cant get more hyped than i currently am.
