Impossible Trinity

The Impossible Trinity, also known as the Trilemma of International Finance, is the economic theory stating that a country cannot simultaneously achieve all three of the following: a fixed foreign exchange rate, free capital movement, and an independent monetary policy. Only two of the three can be maintained at any one time.

Why It Matters in Crypto

This concept has parallels in blockchain and DeFi, where developers often face trade-offs between decentralization, scalability, and security—similar to choosing two of the three options. The Impossible Trinity illustrates the need for balance and compromise in system design.

Broader Implications

Understanding the Impossible Trinity helps explain why some crypto projects focus more on decentralization while sacrificing speed, or why others may prioritize scalability over decentralization. It underlines that no system can optimize all priorities at once.