Will the triple problems of blockchains be finally solved?

Blockchain is a decentralized system that uses mathematical algorithms to provide security without the need for intermediaries and third parties. However, this complex information processing process can reduce the transaction processing capability in the network. In other words, blockchain has always been on the crossroads of decentralization, scalability, and security. Blockchain networks must be able to strike a balance between providing a secure and scalable infrastructure while remaining decentralized. Now, is it realistic to imagine such a future for Web3?

In this article, with help an article Published on the Cointelegraph website, we examine each of the basic pillars of blockchain, i.e. security, scalability, and decentralization. Then, by comparing the three blockchains of Bitcoin, Ethereum, and Solana, we show that the problem of providing these three features has not been solved even in the top blockchain networks.

Problems threeTheWhat is blockchain?

One of the fundamental elements of blockchain is decentralization, which allows people to transact without the need for a central authority. In the Bitcoin white paper published by Satoshi Nakamoto in 2008, decentralization is mentioned as the core, and in terms of ethics and network, it can be considered the basis of any Web3 product.

However, with the attraction of more users, concerns such as scalability and network security became more prominent. Although Bitcoin can be considered the most decentralized blockchain network, its transaction speed cannot keep up with the creation of popular applications. This has led other tier-1 chains to devote capital and effort to providing features that Bitcoin cannot provide.

The creators and developers of the first layer networks claim that they provide the most security, scalability and decentralization to the users; But is this claim really true? Can these three important elements be provided to the same extent in blockchain networks? Unfortunately, the answer is no.

We can say that almost no layer 1 network can draw all three sides of the triangle of security, scalability and decentralization equally. Thus, the way is open for innovators trying to solve the biggest problem of the blockchain money-making network.

Next, we will evaluate the three blockchains of the first layer of Bitcoin, Ethereum and Solana in terms of these three main network criteria. A study of the priorities of each of the three chains, Bitcoin, Ethereum, and Solana, shows which blockchain feature is most prominent.

Which chain is more decentralized?

Bitcoin can be considered more decentralized than Ethereum and Solana due to its Proof of Work (PoW) algorithm and the absence of a central authority to oversee the development and governance of the network.

Solana’s token allocation is highly concentrated, with half going to venture capitalists, developers, and Solana Labs. This issue has been criticized by Web3 fans and theorists. Critics believe that Solana’s token distribution method does not respect the ethical principles of Web3. It should be mentioned that the centralized design of Solana token allocation caused this token to fall more than Bitcoin and Ethereum after the controversial fall of the FTX exchange.

Although Ethereum is more decentralized than Solana, it cannot match the decentralization of Bitcoin. In addition, metrics such as cloud infrastructure and minable value (MEV) and proof-of-stake (PoS) consensus mechanism in Ethereum have made the network more centralized compared to Bitcoin.

Which scale chainTheIs it more acceptable?

In this context, Solana has stolen the lead from the other two competitors. Blockchain networks must have seamless scalability to compete with international payment networks in the real world and to easily process micro-transactions. Now the question arises whether decentralization and scalability can be combined to the same extent in a network? Currently, the answer is no.

Web3 is still in the early stages of its life, and to increase its popularity and acceptance, it must be easily accessible and usable by the general public. In other words, scalability in the network is an important factor that depends on the speed of completion and final processing of transactions; A problem that has always been difficult for Bitcoin and its users.

Although the Bitcoin network is at the fore in terms of decentralization and security, scalability issues and low throughput have reduced public access. For this reason, the Bitcoin blockchain does not provide a very satisfactory user experience and cannot be a suitable host for decentralized applications.

On the other hand, Ethereum and Solana have better scalability due to higher transaction speed and throughput. Ethereum uses the “Proof of Stake” mechanism and Solana uses the “Proof of History” mechanism to improve scalability and throughput. However, Solana performs faster and is cheaper, and we can consider it more scalable. Needless to say, Solana’s special architecture has caused this network to struggle with other problems.

Which secure chainTheis it more

Among the three chains mentioned in this article, the consensus mechanism of Bitcoin has caused this network to have a stronger shield against hacking and cyber attacks. Wherever money is involved, there is a risk of theft and security attacks. Network vulnerabilities caused more than $3 billion in digital assets to be stolen on Web3 in 2022. Now, how can blockchain networks guarantee security in such a way that, while scaling and decentralizing, users can carry out their transactions more easily?

Security is one of the important components in Web3; Because this space is still facing countless scams and internet hacks. Unlike the Internet Protocol/Transmission Control Protocol (TCP/IP) that secures the current Internet, blockchain protocol layers store real value; Therefore, any security breach may lead to generally heavy financial losses.

Although the scalability of Ethereum and Solana seems more favorable compared to Bitcoin, the security of these two first-layer chains is not as high as that of Bitcoin. Bitcoin’s proof-of-work mechanism has strengthened the two features of scalability and network safety; While it is easier to get 51% network control in Solana and Ethereum.

Are second layer networks the savior of first layer blockchains?

The emergence of a new layer of blockchain, called second-layer chains, which use advanced cryptographic technologies such as “Zero Knowledge Proof” (ZKP), has helped to solve the scalability problem of first-layer blockchains.

Read more: Fast and cheap transactions; What are the solutions of the second layer of Ethereum?

At the same time that experts in the blockchain and cryptocurrency world were grappling with blockchain’s triple dilemma, some more savvy developers realized that they didn’t necessarily need to act on the first layer to improve scalability. Thus, in order to solve the basic problems of blockchain, the idea of ​​creating second layer chains on the first layer and outside the main chain was proposed.

Some second-layer networks, such as Polygon, Immutable, and the Bitcoin Lightning Network, use different concepts, including sharding and rollups, to solve scalability problems. Thus, as the chains of the first layer are busy settling transactions, the networks of the second layer help to execute and carry out transactions a lot.

Although several networks have taken steps to simultaneously improve the three important features of security, scalability, and decentralization at the first and second layer levels, and a number of these networks are leaders in all three fronts, it still cannot be said with certainty that a specific blockchain has been able to solve the three problems of blockchains. pass successfully. However, there is no doubt that the ecosystem and network that can provide the best solution for optimizing these three basic features of blockchain will dominate the future of capital markets and Web3.