A MarsBit article in the policy and regulation category takes a critical view of the long-running blockchain “trilemma” debate. The article says the commonly cited trade-off among decentralization, scalability and security is essentially a false problem, rather than the core obstacle preventing public chains from serving institutional capital and mainstream financial applications.
According to the article, the real bottlenecks are legality and privacy. On the legality side, the permissionless nature of public blockchains creates regulatory uncertainty, making on-chain activity difficult to define clearly within compliance frameworks. On the privacy side, full transparency exposes users’ financial data in a public environment and also gives rise to hidden costs such as MEV.
The article argues that the path forward lies in cryptographic upgrades that deliver “privacy by default plus provable compliance.” Under that approach, blockchain systems would protect user financial information while still offering verifiable proof needed for compliance, allowing institutional capital and mainstream financial use cases to move on-chain in a safer way.