One of the main obstacles to the general acceptance of crypto is its lack of scalability in the block chain industry. As cryptocurrencies become more popular, demand for the blockchain technologies that underpin them will also increase. We can expect to see the two blockchains working together in such a single system if this issue is resolved.
Blockchain and cryptocurrencies are built on the principle of decentralization. For the project to be successful, there must be no central authority or body in charge of it, thus eliminating the need for third party intervention. For example, there are banks in the conventional financial sector. There is an intermediary between you and your money which is centralized. In exchange for security, we cede some of our authority over our money to banks, which are responsible for providing us with a safe place to store and transmit money.
Individuals have direct access to their money through decentralized blockchain-based networks. Having no one in charge of the system is great, but it has some downsides. On the one hand, transaction times can be longer and the system is more difficult to expand due to the huge volume of data being processed.
Know the scalability in the blockchain
Scaling a computer system increases the number of transactions per second (TPS) it can perform.
The “throughput” of a system is the number of transactions it can process per second.
Layer 2 blockchain technology is currently used by a large number of people. The use of smart contracts in these systems enables automated transactions. Despite the complexity of this technology, it all comes down to the ability to trade and invest that it has provided through trusted channels. There are cryptocurrencies like Codaprotocol that work like a tiny, portable blockchain, which could make a cryptocurrency as accessible as any other app or website.
As the value of Bitcoin increases, blockchain developers aim to expand the scope of blockchain administration. There are two ways to reduce processing times and increase transactions per second: increase the scalability of the second layer of the blockchain.
What is this trilemma?
To solve one of these problems, computer scientists in the 1980s developed the (PAC) concept concept of consistency, availability and partition tolerance. Only two of these assurances can be satisfied simultaneously when using decentralized data storage systems like blockchain.
This concept gave rise to the blockchain trilemma seen through the lens of today’s contemporary distributed networks. According to conventional wisdom, public blockchain infrastructure must give up security, decentralization, and scalability to be secure.
The holy grail of blockchain technology is achieving internet-scale transactional throughput while maintaining impenetrable security across a widely dispersed network.
Three points should be kept in mind: security refers to the blockchain’s ability to protect data against various types of attacks and its defense against double spending; scalability refers to the decentralization of the blockchain; and network redundancy ensures that no one party has complete control of the network.
Scalability, security and decentralization
Before a transaction can be paid out, the network must verify its validity. With a large number of players in the system, getting an agreement can take some time. While decentralization reduces scalability, security needs remain constant.
As the hash rate improves, the security and scalability of the system improves because transactions can be confirmed faster. Decentralization and size, therefore, are intimately linked.
A blockchain is forced to compromise to achieve all three desired characteristics simultaneously. The trilemma has been implemented in Ethereum. On the Ethereum platform, Decentralized Finance (Defi) The apps have seen significant growth in popularity. Ethereum expansion is limited.
Due to the increased demand for blockchain transactions, several customers have found it excessively expensive. The rising fees on Ethereum illustrates a trilemma, indicating that scaling Ethereum does not compromise its security or decentralization.
Miners favor users who pay more fees. Scaling is a secondary concern for Bitcoin users compared to decentralization and security.
Scalability is a well-known property of blockchain technologies such as Bitcoin and Ethereum. A global community of startups, businesses, and technologists are tackling the blockchain trilemma.
Speed, security, and scalability are the primary goals of Layer 1 blockchain networks.
Bitcoin Cash (BCH) features a larger block size for easier scaling. Either way, it doesn’t seem to be gaining traction.
The Bitcoin blockchain is being extended with an additional layer to address this issue. Many transactions, in principle, will be bundled together and very rarely available through the base layer blockchain. With the shared base layer blockchain, a host of layer two solutions are expected to dramatically increase throughput.
Even if the Blockchain Trilemma poses major barriers to the adoption of blockchain technology, new ideas may provide a remedy. The goal is to achieve a good balance between network security, decentralization and scalability. While the CAP theorem has been valid for almost 40 years, the adoption of Layer-1 and Layer-2 solutions and the introduction of Proof-of-Stake systems are changing the trend towards decentralized, secure and scalable blockchain networks.
Although it was only an idea at the time, a “trilemma” remained. Based on the available evidence, this hypothesis appears to be valid, although it has not been tested or ruled out.
It is important to remember that the Trilemma is just one symbol of the many challenges that blockchain technology faces. There are no restrictions on your ability to complete the three tasks. Several teams have so far focused on decentralization, scalabilityand security.
The nature of the trilemma complicates the achievement of decentralization, scalability, and security in any blockchain system. Despite the excitement, blockchain technology is still in its infancy.