Skip to content

Decentralization vs. Scale: Studies Exploring the Growing Crypto Struggle

You can not have your cake and eat it too, says the old saying. In the cryptocurrency space, the big question is whether you can have decentralization and scale it too.

The struggle between these two goals became more noticeable as new enthusiasts entered the space, attracted by technology that floated as a solution to many global problems (well, that and greed) .

Highlighting the urgency of the problem, a number of researchers are studying whether there is a balance to be struck between decentralization – the main non-financial motivation of cryptocurrency and the excitement of the blockchain – and the ability of these networks to evolve. number of users.

Adem Efe Gencer, a researcher at Cornell University, explains the situation well, telling CoinDesk:

"The key impetus for blockchains is the decentralization of power between entities with minimal trust relationships, but there is a fundamental tension between scale and decentralization." The Decentralized Nature blockchains. "

And this dilemma has become more serious as users are facing significant transaction backlogs and rising transaction costs on the most popular blockchains dealing with the weight of increased adoption.

In response, many are wondering if the blockchain deserves any attention that it currently receives – or whether it's yet another sur-typed technology sector where expectations exceed the average. real utility.

At this point, there are solutions under development, like Bitcoin's Lightning Network, but there are always compromises to be made.

Gencer's new paper and a handful of others published recently explore how the most popular blockchains are decentralized, and how resilient they will be in the future to be supported by a control force.

Reflecting the debates of the Bitcoin community on the best way to overcome the problem, the researchers have each highlighted different possible solutions in their results: chain, off-line and at the consensus protocol level.

See also  Ethereum exceeds for the first time the $ 1,000, the factors behind the increase

How decentralized?

In their article, Gencer and his co-authors aim to "quantify scientifically" the decentralization of bitcoin and ethereum networks


To do this, the document brings together a series of metrics, including how many miners (the stakeholders who order and verify transactions on the network with the use of computer hardware) a network has, how many nodes , how much bandwidth takes to send blocks across the network and so on.

Examining this big picture can help researchers solve the problem of scalability. Gencer told CoinDesk:

"While we know how to get a scale, scaling up solutions may require compromising the decentralized nature of blockchains."

With this in mind, the research sheds light on the "viability of the different proposals of scale".

For example, the size of the blocks can be increased up to 1.7 times to improve the scaling up of the chain without harming decentralization in some respects, the authors found.

It is worth noting that the findings of Gencer and his colleagues have been hotly debated on social media. Because decentralization is such a complex property to measure in a system like Bitcoin, many claim that other elements of decentralization should be considered in order to have an overview.

The "triangle" of scale

Greg Slepak, founder of OkTurtles, a decentralized nonprofit technology, released another quantitative document on the issue last week on arXiv.

The article describes the "basic theory" behind the problem of extensibility by means of a triangle (another researcher, Trent McConaghy, founder of the Oceanic Protocol, has arrived at the same idea)

Each point of the triangle represents one of the three properties that blockchains needs – scale, the ability to support many users; decentralization, a state of affairs in which no entity controls the system; and consensus, the agreement between each node on the validity of the transactions.

See also  Goldman Sachs continues to criticize bitcoin, but there are some ties

Just as a line of a triangle can only touch two of the three points, blockchain developers can only focus and succeed on two of the three properties needed for decentralized blockchains.

For example, blockchain developers may have a system that evolves and reaches a consensus, but this will be to the detriment of complete decentralization.

Nevertheless, Slepak's research was more optimistic than Gencer's because the newspaper claims that there is evidence that off-channel networks, such as Lightning Network, can "get around" this difficult trio of compromise.

To do this, off-line solutions like Bitcoin's Lightning Network can "relax" the definition of consensus. Rather than asking nodes to hold all the transactions that occur in the system, nodes must only track certain transactions requested by users in "rare moments". "

Arguing that his research describes, in more formal terms, the compromises that have been at the heart of Bitcoin's long-standing debate, Slepak told CoinDesk:

"This seems to me quite important given the debate around the size of the blocks [bitcoin’s]."

The base layer

Meanwhile, Shehar Bano, a postdoctoral researcher at University College London, also studied the enigma of scale / decentralization, but with respect to the consensus protocol of each blockchain .

In an article titled "Systemization of Knowledge," Bano aggregates a number of different consensus protocols, including proof of work (that bitcoin uses) and evidence of the issue, and compares them, so to determine where development is lacking.

"The researchers can then look at this and think," Oh, I can contribute here, "or" Oh, here's a gap, "says Bano.

Despite the sprawling scope of the paper, decentralization was one of the key tradeoffs mentioned by Bano in his conversation with CoinDesk.

See also  Blockchain revolution for the luxury industry - Counterfeit Exposed

"Because what appears in some blockchains, is that, if the system is decentralized, one way or the other because of the governance structures or the nature of the protocol, centralization occurs again ". "We can see it with the bitcoin extraction", where only three pools account for about 56% of the hash power currently.

Solving the problem will depend on the development of better consensus protocols, argued Bano, concluding:

"The other features are really the icing on the cake: the consensus protocols are the cake."

Image of conflict via Shutterstock

Leader in blockchain information, CoinDesk is an independent media company that strives to achieve the highest journalistic standards and adheres to a strict set of editorial policies. Do you want to offer your expertise or ideas for our reporting? Contact us at