When blockchains were in their infancy they had to hardcode some decisions before truly understanding the scalability of the systems and that has led to a wide range of blockchain offerings. These decisions are known as “the blockchain trilemma”, referring to the difficulty of creating a blockchain system that is able to simultaneously achieve three properties: decentralization, scalability, and security. These properties are often considered to be in tension with one another, as increasing one can make it more difficult to maintain the other two.
Decentralization refers to the distribution of power among a large number of nodes in the network, which helps to ensure that no single point of failure can bring down the system. Scalability refers to the ability of the blockchain to handle a large number of transactions, or a high level of usage, without slowing down or becoming bogged down. Security refers to the ability of the blockchain to protect against malicious actors and maintain the integrity of the data stored on it.
In an ideal world, you would have all three and you would have a fast & secure blockchain with low/no fees, the reality of the early chains was anything but that. Take bitcoin for example, the transaction times can easily reach 15 minutes to confirm a transaction but they are extremely decentralised and extremely secure. Etherium is also extremely decentralised and secure but also has high gas fees that can get in the hundreds of dollars to do a single transaction.
It is difficult to achieve all three properties simultaneously, as increasing the number of nodes in a decentralized system can slow it down and make it less scalable, while improving scalability can make it less decentralized and therefore arguably less secure. Many blockchain projects are still trying to find a balance between these three properties but the question comes just how decentralised to you have to be to be secure?
When looking at the 10 largest crypto hacks of all time none of them are actual blockchain hacks. To hack a blockchain you normally need to take control of the entire chain, not a single 51% attack was successfully executed. A 51% attack is an attack on a blockchain by a group of miners who control more than 50% of the network’s mining hash rate to hijack the blockchain. This gives them the ability to manipulate the blockchain by reversing transactions, double-spending coins, and preventing new transactions from being confirmed. It is a serious security issue for any blockchain, as it undermines the integrity and trust of the network.
So of the 10 largest hacks none of them were attacks to a blockchain, almost all of them were exploiting security flaws of a centralised system like an exchange or exploiting bad code in a smart contract or bridge.
So the question comes, just how decentralised do we have to be to still be safe, Bitcoin has over 10,000 nodes, Etherium has over 2,000 and EOS has just 21 nodes. None of these blockchains have fallen to a 51% attack or a double spend so just how many nodes are too many?
Reducing the number of nodes increases the speed and cost of the network, EOS for example has blocktimes 30x faster than Etherium and 1,200x faster than Bitcoin.
Yes, it is easy for small chains to fall to a 51% takeover but it is extremely unlikely for the larger chains. So let's start prioritising best practice procedures when writing our smart contracts and bridge protocols while also improving internal security procedures for staff. The number of nodes for something to be “truley decentralised” is a moving target every year and becomes less important.
I’d far rather build on a blockchain that is fast and responsive with low/no gas fees than use any alternative.
