Algorand has broken down many barriers between industries in the blockchain space acting as the world’s premier and initial open proof of stake protocol. By initializing a permissionless and secure platform that is scalable without forking and an undeniable use case, Algorand is both innovative and efficient in its actions as it starts to reform the world of finance.
While the goal of Algorand is to create a boundless blockchain platform that provides an opportunity for all, it transcends initial goals by incentivizing adoption, verifiability and its ease of use. At present, one of the biggest blockchain problems is people are often forced to choose between security and rapid transactions. Ethereum is currently the largest smart contract platform, dominating the space in terms of developers and DApps or decentralized applications. However, the transaction speed of the Ethereum network can only handle around 20 per second. Bitcoin is currently the largest store of value cryptocurrency with around a 65% market share of the entire cryptocurrency space. Acting even slower than Ethereum, Bitcoin can only confirm 7 transactions per second. Both platforms are incredibly secure, but many theorize their inability to keep up with transaction speeds of major platforms such as PayPal and Venmo is a major barrier in preventing mass adoption.
In an attempt to speed up transaction speeds, protocols called forking have been implemented but often come with other difficulties and can be a very costly process for miners. In the end, the consensus of the community was scalability should not have to be sacrificed for security. Algorand eliminates the need to compromise and ensures that platforms can continue to remain decentralized while maintaining competitive transaction speeds. The concept is phenomenal and their implementation has continued to exceed expectations as Algorand also helps reduce the cost of blockchain participation with also leads to lower transaction fees.
Lead by a competent team and an extensive amount of resources, Algorand has a subsidiary called the Algorand Foundation that organizes a lot of the research, innovation and garners participation for the Algorand platform. With their founder being the world-class expert in cryptography and protocol generation, the contribution of Algorand members goes beyond just their initial platform. Many of their executives co-founded or were solely responsible for probabilistic encryption, Zero-Knowledge Proofs, and other extensive Blockchain protocols. The Algorand Foundation prioritizes its vision of inclusion and opportunity where all participants can take advantage of a fair and beneficial economy. With the advantage of Algorand being that it is open-source, many blockchain developers and enthusiasts have the opportunity to contribute and help see the philosophy behind Algorand come to fruition.
A major game-changer for Algorand is the fact that their consensus protocol is one of a kind. PoS or Pure Proof-Of-Stake eliminates the requirement for a central authority and is more decentralized than DPoS. While DPoS uses a mechanism to delegate voting power to a limited number of users, PoS randomly selects the block verifiers. Also, without the worry of a future blockchain fork, verifiers don’t have to worry about the consumption cost that can make mining after a fork extremely difficult in addition to having to adapt to a different protocol. By ensuring forking never occurs, this prevents potential attacks on the network and is a large component of why Algorand’s security is so robust.
Algorand understands that without a solution that can scale and compete with top centralized companies, decentralized platforms and cryptocurrencies will never reach mass adoption. While the Algorand Network still maintains the familiar benefits of security and decentralization, it is exceptionally unique in its ability to optimize speed without sacrificing any other components. Developers have optimized efficiency by finalizing blocks in a single round of voting. By ensuring each block can be finalized at an instant, this will increase how many transactions can be handled by the network to about 1,000 TPS.
When it comes to the Algorand Consensus Protocol, the Byzantine Agreement is still utilized but can scale more effectively when compared to other platforms. This works as long as there is greater than a two-thirds honest majority, and participants do not need to be synchronized.
When the elected leader is honest consensus is reached in just two steps, and when the elected leader is malicious consensus can still be reached within a constant number of steps.
This keeps the protocol resilient even in the face of arbitrary network partitions that are of unknown length. The network also recovers rapidly once the partition is resolved. This near-instant recovery from partitions makes it expensive for an attacker to stall the network since the attacker would need to frequently pay the cost for disrupting the network.
To scale this to a large number of network nodes, Algorand has developed a unique mechanism based on Verifiable Random Functions. This solution allows a participant to check privately and see if they have been selected to participate in agreement for the next block, and then include proof of selection in their network messages.
Algorand’s protocol doesn’t require users to keep any private state other than their private keys. This means the network can replace participants immediately after a network message is sent, and avoids attacks that could be targeted on individuals once their identity is known.
When it comes to current platforms and their attempt to modernize the financial industry, restrictive barriers in terms of leveraging security for transaction speed and mass adoption continue to be impediments to a decentralized revolution. However, Algorand has undoubtedly taken many strides in the right direction, finding the sweet spot between security and speed, and will continue to advance upon current measures that will lead to mass adoption.