Solving Vitalik Buterin’s ‘blockchain trilemma’ will ensure cryptocurrency growth

of Hugo Feilerco-founder and CEO of Minima

The recent CityAM article by CertiK’s Hugh Brooks “Is Centralization the Real Ethereum Killer” is an insightful take on where the crypto industry is today, not least because it speaks to a growing concern about whether blockchains are maturing in a way that is closer or further from what they were designed to do.

The ‘Blockchain Trilemma’, as termed by Ethereum’s Vitalik Buterin, described the challenges developers face in creating a blockchain that is decentralized, scalable and secure, without compromising any element. Vitalik’s point was that blockchains are forced to make trade-offs that prevent them from achieving all three aspects.

A few blockchain networks claim to have solved this – for example Algorand – but with only 120 relay nodes on the network, it is unlikely to be considered a real contender to overcome the challenge. As for the recent Ethereum merger, one could argue that it is simply a trade-off, sacrificing decentralization and security for scale.

But let’s take a few steps back to how we got here.

Before Bitcoin there was simply no way for technology to reach consensus in a decentralized environment, then Satoshi proposed Bitcoin and the arrival of blockchain meant that consensus could be reached without any third parties. The ambition was a decentralized, scalable and secure system.

In contrast, a centralized system, where everything is, for example, stored on a large server, makes transactions faster and cheaper, but the monumental disadvantages are the ability for external parties to focus an attack, and the ability to control what is allowed on the network . If the ambition is to remove attack vectors and gain censorship resistance, the only way to do that would be to remove everyone centralized components.

In a recent hack, Binance – the largest cryptocurrency exchange temporarily suspended its blockchain network after hackers got away with over $500 million of the BNB token. The target of the hack was a centralized point in a “cross-chain bridge”, a tool that allows the transfer of tokens from one blockchain to another. Due to the centralized nature of the bridge’s smart contract, hackers were able to falsify transactions and send money back to their crypto wallets. This is just one of many examples.

Blockchains that have some form of centralized elements is basic defeats the purpose of blockchains:

1. In a transaction between two entities, just entities that can validate and process that transaction should be these two entities. Action point: Run a search for how many validators are involved in various blockchains and exchanges. Who are these validators? Remember that the validators literally validate (IE censorship) whether a transaction can take place.

2. In a network of many, there can not be a hierarchy in which one group has greater power to control any other group. Action point: Research which groups control your favorite crypto project. Can you detect a hierarchy of any kind?

3. Each part of the network must run one complete the version of the network that is identical to all other parts of the network. Action point: Investigate how many devices in a network are running full code, just as much.

If these three requirements were to be in place, the outcome would be the solution to the blockchain trilemma. As the market and indeed the world becomes aware of this reality, the level of questions about Ethereum and even Bitcoin, let alone thousands of “meme coins” will grow exponentially.

One would be justified in wondering whether some web3 offers stand the test of these three requirements. Those who can, will succeed in delivering the ambition and promise of blockchain. Freedom.