Let’s first get it straight, not all blockchain are created equal. Each blockchain released in the space has some advantages and some disadvantages, have you ever heard of the Blockchain Trilemma?
Even though the blockchain ecosystem has made significant steps in the last year to overcome this Trilemma and some blockchain Layer 2 solutions such as Polygon claim to have solved the Trilemma once they will be fully deployed, the Trilemma is still a real thing to take into account.
For each blockchain proposed in this article we will analyze how the blockchain addresses the Trilemma, the strengths and weaknesses, so that based on your business needs you can choose the best solution available out there.
First we’ll take a look at the blockchain Trilemma, then we’ll focus on the different types of blockchain technology categorized based on their openness and finally on the Best Public Blockchains that can be a fit for solving your business challenges.
The Blockchain Trilemma is a concept coined by Vitalik Buterin, the co-founder of Ethereum. It refers to the inherent challenge faced by blockchain networks in trying to simultaneously optimize three key aspects: decentralization, security, and scalability.
Decentralization
This refers to the distribution of control across a network, rather than it being concentrated in a single central entity. In a blockchain, decentralization gives power to people across the world to govern using their computers (nodes) rather than having a central control of the network live with one person or party.
Security
Blockchain is inherently secure, but it’s not entirely immune to hacking. If a hacker is able to secure control of more than half of the network (51%), they can alter a blockchain and manipulate transactions to steal from the network. In blockchain, the more nodes, the more security.
Scalability
This refers to the ability of a network to grow in the future while maintaining the same sort of transaction speed and output.
The trilemma suggests that it’s extremely challenging to optimize all three aspects at once. If a blockchain network improves scalability and decentralization, it might compromise on security. Conversely, enhancing security could limit the network’s ability to scale.
Various solutions like sharding, side-chains, state channels, and finally Layer2 chains are being explored to address this trilemma.
Before getting deep though you should also know that public blockchains are not the only solution. As Shadowy Creators we believe in the open world of public blockchain, we have worked with several of the major public blockchain and they proved to be more than capable to solve most business needs.
Let’s now address the different types of Blockchain technologies based on the openness. In the remaining part of the blog post we will focus solely on this public blockchains solutions.
The different types of blockchain are categorized by how open or closed they are to letting participants do the main work of the blockchain, which includes transacting business on it and verifying the accuracy of each block that gets added to the blockchain.
Here are the major types:
Source: Blockchain for businesses - The ultimate enterprise guide
Public (permissionless) blockchain
A public blockchain doesn't require permission to join and is transparent to all participants. It's the kind of blockchain where cryptocurrency lives. It's also the slowest because opening the blockchain's consensus process to so many participants makes data verification more tedious, but also less vulnerable to hacking or control by a dominant actor
Private (permissioned) blockchain
Running on a closed network, often under the control of a single entity, this type of blockchain usually has the same decentralization and peer-to-peer architecture as public blockchain but on a much smaller scale, which boosts performance. Ironically, trust is weaker than on a public blockchain because the owner or central node decides what's valid. Security can also be weaker because it's easier for a small number of nodes to dominate the consensus mechanism used to validate transactions.
Hybrid blockchain
Unsurprisingly, a hybrid blockchain combines aspects of public and private blockchains. Organizations can use it to segment some data and transactions behind a permission scheme while maintaining connections to the public side. The blockchain security risks and data integrity issues of private blockchain are mitigated by not allowing the owner to alter transactions, and performance tends to be better than a public blockchain's. Users joining a hybrid blockchain have privacy until they enter into a transaction.
Consortium blockchain
This is a lot like private blockchain, but it's controlled by a group instead of a single entity. There's less security vulnerability than is typical with private blockchain, though one node is responsible for validating transactions. Evidence is emerging that consortium blockchains are too expensive and don't provide a clear ROI for participants.
As said before, we have been able to solve most business needs through public blockchains, and we strongly believe this is the type of technology that will make our world more open, free, transparent and decentralized.
The best minds out there are working on public blockchains and so far they’ve been able to solve most of the issues, even getting close to solving the Blockchain Trilemma.
Let’s start with some of the most known blockchain solutions and the ones we love the most.
For each solution we’ll provide you the strength and weaknesses of the blockchain and which type of business in our view is most adapted for each one.
Here are the strengths and weaknesses of each blockchain you mentioned, along with the types of businesses that might be most suitable for each.
1. ETHEREUM
Strengths: Ethereum is decentralized and enables the deployment and execution of smart contracts, thereby enabling a decentralized value-settlement and computational layer.
Weaknesses: It has high transaction fees and slow transaction processing speeds.
Recommended for:
2. POLYGON
Strengths: Polygon maintains fast transaction processing speeds and consistently low transaction fees.
Weaknesses: It's still pretty centralized.
Recommended for:
3. ALGORAND
Strengths: Algorand offers high transaction speed, low fees, and improved security.
Weaknesses: It's still pretty centralized, and the tokenomics of the project are not that great.
Recommended for:
4. AVALANCHE
Strengths: Avalanche provides fast transaction processing times and a reward structure that incentivizes participation.
Weaknesses: It faces stiff competition from platforms like Ethereum, and validators must stake 2,000 AVAX tokens.
Recommended for:
5. ARBITRUM
Strengths: Arbitrum ensures a cheaper and faster throughput while leveraging Ethereum’s security.
Weaknesses: It's less decentralized, and there are sequencer privilege issues on transaction ordering.
Recommended for:
6. POLKADOT
Strengths: Polkadot allows developers to launch chains and applications leveraging a shared security model.
Weaknesses: It's competing with many other general-purpose, smart contracting, Proof of Stake blockchains.
Recommended for:
7. OPTIMISM
Strengths: faster transaction speeds and lower transaction costs while sharing the security of the Ethereum mainnet.
Weaknesses: It has a 7-day delay for transaction finality and potential transaction ordering issues.
Recommended for:
8. FANTOM
Strengths: Fantom offers improvements in transaction throughput¹⁸.
Weaknesses: The network consists of few validator nodes relative to well-distributed networks such as Bitcoin and Ethereum¹⁸.
Recommended for:
9. ZKSYNC
Strengths: ZkSync uses zero-knowledge proofs and on-chain data availability to keep users' funds as safe as though they never left the mainnet.
Weaknesses: It’s a very new blockchain with a lot of ongoing development and still low user adoption
Recommended for:
Selecting the right blockchain for your business is a critical decision. Understanding the Blockchain Trilemma, categorizing blockchains based on their openness, and exploring the strengths and weaknesses of various public blockchains is essential for making an informed choice.
At Shadowy Creators, we're passionate about the transformative power of public blockchains. These technologies have proven their potential to solve real-world business challenges. Whether you're exploring Real World Asset Tokenization, scaling your enterprise, or venturing into the world of DeFi, the right blockchain can be a game-changer.
We're here to help you navigate this exciting journey. Contact us for a free exploratory consultancy session to unlock the true potential of your business with blockchain technology. Embrace the future today!
