The blockchain trilemma

The blockchain trilemma describes the difficulty of maximizing decentralization, security, and scalability at the same time. In practice, architects have to compromise: they concentrate on two of the three properties while the third one is neglected.

This is the observation BlockchainBench is built around. Because no configuration wins on all three axes, there is rarely a single best system — instead there is a set of equally valid compromises. Finding that set is what the Pareto analysis does.

Blockchain systems

A blockchain is a decentralized, tamper-evident database that stores records in a continuously extended chain of blocks. It allows values to be exchanged securely without a central authority, because every participant in the network maintains an identical copy. Each block always references its predecessor.

Every blockchain system has to decide individually how it deals with attacks, faults, decentralization, and scaling — and those decisions are exactly what places it somewhere inside the trilemma.

Consensus protocols

A consensus protocol (or consensus mechanism) is the decentralized process by which network nodes agree on the current state of the blockchain and the validity of transactions, without a central authority. It secures the network against fraud, ensures a single consistent data basis, and governs which node may validate and append the next block.

Proof of Work (PoW) guarantees security through proof of expended work. Miners (validation nodes) compete by solving complex mathematical puzzles in order to validate and append new blocks of transactions. This requires substantial computing power and energy, but it prevents forgery and double-spending.

Proof of Stake (PoS) is an energy-efficient alternative in which participants (validators) deposit coins as collateral — their stake — in order to confirm transactions and create new blocks. Validators are usually selected at random, with a higher stake increasing the chance of being selected.

The choice of consensus protocol determines which metrics are meaningful: hashing-power distribution applies to PoW, while token concentration and wealth distribution apply to PoS. See Metrics.