3: The Blockchain Trilemma
The Blockchain what?
When building a blockchain, you can pick two sides of the triangle to address. Only 2.
Crypto is full of scams. Don't forget that. But, it's also a learning process to filter truth from falsehood. I'm a bitcoiner. I admit, I wasn't always. Like I think you should, I owned cryptos like ETH and ADA. Understanding crypto makes you realize the value of bitcoin and garner a deep appreciation for it. However, I did the work (* & still am doing the work), and I came to the conclusion that bitcoin is the answer. The 21 million bitcoin are our tools for the 21st century.
But you have to take ownership over your ideas and your learning process. The path to bitcoin adoption will not be easy. You have to own your learning experience to be able to HODL (hold on for dear life) through the ups and downs.
When people tell you to sell, that you're wrong, that bitcoin is technologically stagnant, that you're making a mistake, your beliefs will be the handle bars you can latch on to, to steady yourself.
The only way you gain peace in your decision is by putting in the work. A little ironic right that to understand PoW you have to put in the work?
We live in a Proof of Work society. We don't live in a Proof of Stake model of society. So, why do we want our money, how we transact our values, what underlies every element of society to be PoS?
In college, you don't get an A on an exam by your friend going to your professor and saying, yes, I saw Ella studying last night, she knows these topics. No, you work hard, you study, and you either perform or you don't on the test. You prove your work.
"The real secret of [bitcoin] it's not so much about the cryptography but about the secrets we unlock in ourselves. The ways that we find new understandings of the world, new approaches of the world. It's a little corny but that's the deepest ontological part of bitcoin. It's not that it's making us rich in terms of its monetary wealth. It's making us rich in actual knowledge that we have. That is fundamentally changing and transforming us in an important way and it's explicitly doing it through Proof of Work. We are not going out and getting our blockchain certificate to prove that we understand bitcoin; we are playing with it and hacking and exchanging and utilizing. It's really important because these are the pedological steps that we need to take to understand that this is a power; it's a real power that we have and when we utilize encryption correctly it protects us in a way that nothing else can and that's very important.
Erik Cason on The Bitcoin Matrix Podcast (02/26/23)
Ok, sorry, I got off track, but hey, I said this was going to be like a conversation :)
When you hear about a new blockchain, new projects, new tokens and you get excited, I'd like you to stop and think about the Blockchain Trilemma. When evaluating a blockchain ask:
What is it trying to solve?
Where does it fall on the Blockchain Trilemma? What are the tradeoffs being made?
What’s its consensus mechanism?
What’s the native token? How are tokens distributed? Is there a cap?
Is there a founding team?
Is it a commodity or a security?
What are its layers?
Bitcoin, notice the capital "B," addresses security and decentralization.
Security: There is no more secure protocol than Proof of Work (as will be discussed further), which uses energy. Energy is a scarce resource. Bitcoin, scare in itself, is created and secured by a scare resource.
Decentralization: There is no "CEO" of bitcoin. What you must understand is that bitcoin can run and exist without any of us. Bitcoin survives because of its integrity. Sure, there are notable bitcoiners, but they have no more control than you or I.
Scalability: Solved through Lightning.
In the cumulative, bitcoiners support the game theory adoption of bitcoin. They get on the mission and support the cause of bitcoin education, bitcoin utilization, bitcoin innovations.
Ethereum was supposed to be a "better bitcoin." But ,why does it need additional layer's to complete its mission? The "problem statement" Ethereum was built to address was to make it easier to build (decentralized) applications. Technically speaking, you could say Ethereum chose Security and Decentralization. However, I think that's incorrect.
Security: Ethereum recently switched from a PoW consensus mechanism to PoS. There is no underlying scare resource creating or securing Ethereum. There's no actual work required. To me, that's incredibly insecure.
Decentralization: Ethereum has active core founders, who pre-mined tokens, set up The Ethereum Foundation, and is constantly pushing updates. To me, that's the definition of centralization. Ethereum and every other (that's a large claim but I believe it's correct) has a core team of founders remaining. Vitalik Buterin is the revered figure head for Ethereum.
Scalability: We will dive more into this later, but Ethereum switched to PoS to make transactions occur faster, to make Ethereum more scalable.
It kinda seems like Ethereum doesn't really address any parts of the Blockchain Trilemma? I'm biased, so do your own research.
“You’re going to want to build your buildings on a solid footing of granite, so bitcoin is made to last forever — high integrity, very durable.”
Michael Saylor, CEO of MicroStrategy
So...Why don't we just stick to the actual solid foundation bitcoin provides? If every other blockchain needs Layer 2s to fulfill their goals, let's just stay with the one purely decentralized, secure and scalable foundation of Bitcoin.
*Originally published on April 12, 2023
