The landscape of blockchain technology is constantly evolving, driven by the desire for innovation. Three critical factors that are considered among the many challenges faced by blockchain networks are scalability, security, and decentralization.
In this article, we will delve into the evolving world of blockchain technology, explore the crucial importance of achieving the right balance between scalability, security, and decentralization, and highlight Qtum’s groundbreaking approach to addressing this challenge.
The blockchain technology landscape has undergone significant changes since the launch of Bitcoin in 2008. With the exception of meme coins, nearly every project launched in the years following Bitcoin’s debut has attempted to enhance and expand the ecosystem’s capabilities.
Achieving a balance between scalability, security, and decentralization has been challenging. The concept of “scalability trilemma” was first introduced by Vitalik Buterin in 2021: Why sharding is great: demystifying the technical properties (vitalik.ca)
The Blockchain Trilemma
The trilemma lies at the core of blockchain design. It proposes that any network must make a trade-off between three essential properties: decentralization, scalability, and security.
These three properties can be visualized as the points of a triangle, and a network must choose to prioritize one side of this triangle. In other words, a network that emphasizes security and decentralization will have to compromise on scalability and vice versa.
To give an example, let’s take Bitcoin. Its founder, Satoshi Nakamoto, prioritized security and decentralization, leading to the implementation of the Proof-of-Work (PoW) algorithm.
However, this decision resulted in a very low transaction processing rate of about 7 transactions per second (TPS).
On the other hand, centralized networks like Visa offer high security and can handle over 65,000 TPS. Nevertheless, they compromise on decentralization.
This compromise has been a significant point of disagreement in the blockchain world.
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