What is the blockchain trilemma and why is it a problem?

Blockchains have become increasingly popular in recent years. For example, digital currencies (cryptocurrencies) run on the blockchains, and developers can even run decentralized applications (dApps) on the blockchain . It ensures that more and more central products and services are taking a step towards the decentralized blockchain.

Despite the fact that blockchains are widely used, we see almost every blockchain running into problems. These are scalability, decentralization, or security issues . When a blockchain meets 2 of these criteria, it has problems with the remaining criterion. Vitalik Buterin described this as the ‘blockchain trilemma’.

In this article, I’ll tell you everything you need to know about the blockchain trilemma , as well as why the blockchain trilemma can be a big problem.

What is the blockchain trilemma?

The blockchain trilemma describes a problem that almost every blockchain encounters. According to Vitalik Buterin , co-founder of Ethereum and creator of the term “blockchain trilemma”, a blockchain can only meet 2 of the 3 main criteria. This is about scalability, decentralization and security.

Is the blockchain decentralized and scalable? Then the blockchain has security issues .
Is the blockchain scalable and secure? Then the blockchain has problems with decentralization .
Is the blockchain secure and decentralized? Then the blockchain has problems with scalability .
There is no single reason for the above statements. Every blockchain works in a different way, and therefore these connections can be caused in different ways, as you will read further in this article.

Why is the blockchain trilemma a big problem?

If you believe in blockchain technology, you naturally hope that blockchains will be adopted and used as widely as possible with meme token. It is possible to move almost any central product or service to the blockchain. This can be done by developing special dApps that can run on the blockchain. Such a dApp uses smart contracts , which can perform fully automated tasks. No central parties are needed for this; everything is decentralized.

Security, decentralization and scalability are the most important parts of a well-functioning blockchain . Still, it seems that a blockchain cannot meet all 3 criteria. You will also read why this is the case.

The blockchain trilemma is a big problem because it can thwart blockchain adoption . For example, if a blockchain is not secure enough, many companies and organizations will not use the blockchain, preferring to stick to a central IT system. Blockchains that are not scalable can make it difficult to use dApps. A low degree of scalability leads to high transaction costs and slow processing times.

Why would a company want to use a slow and expensive blockchain?

The video below explains more about what the blockchain trilemma is and why this can be a problem for blockchain technology.

The three criteria of the blockchain trilemma
I talked about the three criteria that a blockchain should meet for optimal functioning. Below you can read more about these three criteria, and you will understand why it is so important that a blockchain is optimized for this.

What is scalability?

Scalability is the extent to which a blockchain can scale as the number of transactions increases . Just like any other (central) ICT system, the blockchain can also become overloaded. When that happens, the blockchain isn’t exactly scalable. We also call this the scalability problem, and many blockchains suffer from this.

Blockchains that are not scalable can only handle a certain number of transactions per second . That number is not enough in many cases, causing network congestion . This means that the number of transactions performed is much higher than the number of transactions that the blockchain can process. As a result, users have to wait a long time for their transaction to be processed and pay sky-high transaction fees.

Bitcoin (BTC) and Ethereum (ETH) are well-known blockchains that suffer from the scalability problem. Bitcoin’s blockchain can process about 7 transactions per second, while Ethereum can process an average of 14 per second . You can probably imagine that there are many more trades being executed than these two numbers.

Why can’t a decentralized and secure blockchain be scalable?

A blockchain that suffers from the scalability problem is decentralized and secure . The same goes for Bitcoin and Ethereum. Why can’t a decentralized and secure blockchain be scalable?

This is because a decentralized blockchain consists of a large network . To secure a large network , advanced techniques are needed. For example, it is not easy to continuously check a network that consists of 1 million nodes (Bitcoin).

A lot of time is spent building the network and guaranteeing security. This then comes at the expense of scalability; users have to wait a long time for their transaction to be processed and pay high fees. In the case of Bitcoin and Ethereum, Proof-of-Work ensures the decentralization and security, although this consensus mechanism is also the reason for the low scalability.