What Is the Blockchain Trilemma And Why It Doesn’t Exist!
Decentralized Blockchains Scale Just Fine
Since its beginning, the internet was in dire need of digital cash, money that would execute payments fast and find a use case in the commerce opportunities the digital realm presents.
Visionaries like the cypherpunks were in a race to figure it out until eventually, someone did.
Bitcoin was a godsend gift. A radical money system using P2P technology, cryptography, and proof-of-work. A form of money perhaps nobody believed could ever exist. The internet of money starts in 2009.
Money without a central authority.
Bitcoin is decentralized digital cash based on a distributed ledger, dubbed the Blockchain.
Yet, some experts suggest that blockchain technology suffers from a fundamental flaw: Scalability.
According to them, the blockchain can’t scale to reach global adoption unless it sacrifices part of its decentralization or security.
The Blockchain Trilemma
Vitalik Buterin coined this term according to analysts in the field, but perhaps Buterin had just figured out a way to excuse Ethereum’s inefficiencies. According to Vitalik, the blockchain as a technology contains three crucial components:
Decentralization
Security
Scalability
Vitalik suggested that a blockchain can provide only two out of three of these benefits, but not all three combined.
If a decentralized and secure blockchain decides to scale, it will always sacrifice part of its decentralization and/or security.
This theory expands to every other combination as well.
In case a blockchain is scalable and secure, it lacks decentralization. Therefore, if a relatively centralized network decides to decentralize processes like mining, validators, developments, etc, ultimately the network will suffer from scalability issues, perhaps weaker security, or both.
It was a rather interesting observation, although one befitting Vitalik’s interests after selecting the easy approach of not scaling:
We may wonder today, what would have happened to Ethereum, if Vitalik was sincere during the Ethereum presales in 2014 and explained his network would one day demand $1500 in fees for a simple trade?
Just as BTC did, Ethereum also failed dramatically.
Vitalik’s supposition of the blockchain trilemma benefited the Ethereum miners greatly while at the same time adding a keystone in the Blockstream side argument, claiming that the blockchain cannot scale.
Well, it can, and it did.
Bitcoin’s Built-in Scalability
(Former Bitcoin dev Laszlo Hanyecz explaining 0-conf -bitcointalk)
The invention of Bitcoin contains the potential to transform the control of money, the way we use money, and how financial entities operate in a global economy.
Hence in just one year of operations, it caught the attention of federal US authorities, Wikileaks, and Silicon Valley.
Satoshi integrated the 1MB patch into the Bitcoin code after discussion with community members as a measure to prevent spam attacks.
Yet Satoshi also suggested directions to change it (increase the blocksize), but eventually, the 1MB block limit became the reason for Bitcoin losing its money features, forever.
(Former Bitcoin dev Jeff Garzik - bitcointalk)
However, nothing is more permanent than what is temporary, especially in coding.
Right from that moment, the Bitcoin community split, yet, it was still too early for the power struggle that would follow with the blocksize wars that resulted in two different directions.
(Satoshi Nakamoto on increasing the blocksize - bitcointalk)
This block size debate ultimately comes down to competing economic and system survival theories. One theory is that a free market range exists for block size, in absence of a hard limit. Another theory is that a hard limit is required to forcibly constrain the free market
-Jeff Garzik: Former Bitcoin Core Dev (Bitcoin is Being Hot-Wired for Settlement)
The Bitcoin (BTC) side led by Blockstream did not want Bitcoin to scale.
With a plan that was slowly unfolding, tones of gaslighting, and promises of compromise that never materialized, Blockstream stalled the explosive growth of Bitcoin, which was rapidly taking the world.
The above image (Bitcoin accepted here) is the sign that was taking over the world by storm for some time until the blocksize debate ended with a fatal result for Bitcoin’s future as P2P Electronic Cash.
The majority of the wider Bitcoin community was in favor of scaling and increasing the blocksize. The users wanted to see Bitcoin succeeding as P2P Electronic Cash, the businesses operating on top of Bitcoin wanted Bitcoin to scale, many exchanges were also in favor, and the miners wanted Bitcoin to succeed and be part of a global payment network competing with Visa, MasterCard, and Paypal.
What prevailed though was the minority. A handful of developers with a few whales backing them, controlled the developments under Blockstream. And the even more weird part, the top Bitcoin media (the main sources of information and discussion), all controlled by a single person, Theymos, resorted to censorship and a gross misinformation campaign.
Bitcoin.org
Bitcointalk
r/bitcoin
Blockstream presents the case that the blockchain technology doesn’t scale, yet the company and the BTC maximalists often resort to misinformation since Bitcoin Cash has proven this was never the case. Moore’s law worked perfectly considering file-storage capacity and internet speed, negating arguments of decentralization loss.
Betting against technology seems to have worked for the BTC price in this time horizon, as with the help of fund managers, bankers, and a vast network of internet shills, BTC was marketed as a store of value, and found its way into institutional funding.
While at the same time promoting layer-2 solutions like the Lightning Network that has proven to be inefficient, not user-friendly, and a network containing centralization tendencies with financial hubs dominating transactions.
The solution to the supposed scalability issues of Bitcoin was second layer networks (Lightning Network and Liquid), that SEVEN YEARS LATER still contain massive issues and vulnerabilities (See: List of Lightning Network technical issues, bugs, flaws, and exploits, and Blockstream’s Liquid Network Crashed Today).
It’s all PR and marketing for Bitcoin today, although it wasn’t just about the price in the past.
(Picture by “qimono” on Pixabay)
The majority of Bitcoin OGs have long abandoned the failed BTC project. However, most of them are idle for years in support of the only big block project that scaled Bitcoin.
Some moved to Bitcoin Cash, although perhaps the only alternative to Blockstream’s narratives certainly needs more support from people of the industry that used to support big blocks but have retired from these conversations for years.
Gavin Andresen, Mike Hearn, Laszlo Hanyecz, Jeff Garzik, and every Bitcoin supporter that abandoned the Bitcoin community in disgust with the shenanigans of Blockstream, have to support the vision of Bitcoin that works for payments.
CBDCs are ready to dominate with zero competition, with the global financial landscape at crossroads.
Meanwhile, Bitcoin (BTC) has integrated into the established system built on trust, with Blockstream currently supportive of speculation over utility.
Already most wallets and most users of LN are under custodian supervision, using regulated financial services.
Was the dream of Satoshi a return to the trust system? Perhaps everyone from the old days lost their will to fight against a corrupt and vile monetary establishment, or perhaps everyone adjusted perfectly to the wealth BTC generated for them.
Money needs to be fast and transaction fees inexpensive. Trusted third parties are a central point of failure, so removing trust is mandatory.
Is Bitcoin Cash not the vision of modern money, and has everyone lost their will to fight against a monstrous speculative behemoth pumped by Tether and sustained by atrocious marketing and PR?
In Conclusion
Vitalik’s trilemma does not exist. It is yet another marketing ploy to sustain the stagnation of blockchains, enhancing the competitive edge of the banking sector in the online payments arena.
The 1MB anti-spam limit enforced by Satoshi was too low even for 2010, yet since 2017, it has been a detrimental factor for Bitcoin’s scalability.
BTC maximalists miss the point and don’t think big, ignoring global scale requirements. The end-user will never operate a node to process or audit money.
Users of Tor do not run a server. Users of P2P file transfer services (torrents) do not have to seed. Since mining is industrial, nodes that matter (mining nodes) operate the auditing function since 2011. There is no financial incentive for the end-user to run a node.
Maximalists correctly address the fact that nodes add to decentralization, and the more there is the better audit of new blocks verifying consensus rules. However, maximalists don’t understand what the world needs, but tend to sink into their fallacy of how everyone should be using Bitcoin by running a node.
Moreover, the node becomes unimportant since the push to LN will require even more operations to make a transaction. The complexity, and lack of a user-friendly approach damages the chances of LN adoption without custodians taking control.
The user wants convenience, and every newcomer is already puzzled enough to figure out why they should write down their private key on a piece of paper or how to find ways to store it safely.
Cover Image by “Alexas_Fotos” on Pixabay
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