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It turns out that when building a blockchain network - you have to make some tough choices.
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There are three main features a blockchain network needs to have: decentralisation, security and scalability.
- Decentralisation -Ā The idea is to give people across the world the power to govern a network, through a system of interconnected nodes, rather than relying on one central authority.
- Security -Ā AsĀ recent hacksĀ have shown, the safety of a blockchain network is of utmost importance. Blockchain networks are meant to be secure but they are not immune to hacking. If one party controls more than 50% of the nodes in a network, they are able to manipulate transactions and steal from that network.
- Scalability -Ā As the network grows, blockchains should be able to handle thousands of concurrent transactions.
Vitalik Buterin - the creator of Ethereum (El Jefe from earlier) - caused a stir when he said that if a blockchain wants to be really good at two of these three aspects, it will have to sacrifice the other one. Here's what he meantā¦
Decentralisation and Security go hand in hand
The more decentralised a network is, the harder it is for one party to control 51% of the nodes needed to hack the network. In the Bitcoin network, for example, there are more than 10,000 nodes. Hacking the network to the point where one person controls 51% of the nodes would be a herculean task. On the other hand, when it came to the hack of the Ronin network (which got hacked in March 2022), there were only 9 nodes in total. So the hacker only had to control 5 to have enough power to manipulate the network.
So a lot of nodes mean a higher degree of decentralisation and a more secure network. And these are both things we want. Great! The Problem? It can lead to the network becoming really, really slow.