What is Algorand blockchain?
When the world was introduced to Bitcoin, many people examined the blockchain and tried to create something better that will solve certain problems better than the previous could. This marked the creation of new blockchains such as Ethereum, Solana, Polkadot, and so on.
One of these blockchains created was the Algorand blockchain. This blockchain was founded by Silvio Micali in 2017. The team is headed by him, the CEO Steve Kokinos, and the COO Sean Ford.
The blockchain’s main purpose is to solve the blockchain dilemma. That is they want to be a highly decentralized and secured blockchain that is capable of processing thousands of transactions per second to provide a way better alternative to traditional systems.
In their blockchain, the consensus protocol employed is the Pure Proof of Stake protocol. The PPoS can be seen as a better alternative to the traditional PoS. We shall come back to this.
The blockchain uses smart contracts to process its transactions. Its native currency is the Algorand coin (ALGO).
Some projects that use the Algorand blockchain include the following;
- PlanetWatch
- The Marshall Islands
- ANote Music
What is PPoS?
Blockchains are decentralized so there is no central authority. For transactions to be verified and validated, there arose the need for consensus protocols. Consensus protocols simply that users have to reach an agreement. There are so many different type of consensus protocols such as Proof of Work (PoW), Proof of Stake (PoS), Delegated Proof of Stake (DPoS), Proof of Burn (PoB), Proof of Capacity (PoC), Pure Proof of Stake (PPoS) etc.
PPoS is one of such employed consensus protocol, and it ulis used to process blocks on the Algorand blockchain. In this type of consensus protocol, anybody using the block chain can be a block validator as long as they hold some ALGO coins. So the selection for validators is completely random instead of being based on who has the highest stake.
As any user can be selected, it promotes a lot of trust between users and also makes the system to be actually decentralized. And in order to participate, alongside holding ALGO coins, a user has to create a participation key. This will be used in the block proposing process.
Now how exactly is a consensus reached on this block chain? Agreement and block processing is done in two or three phases depending on how you separate them. I shall break down the process into three phases as can be seen below.
- Phase One
This can also be seen as the Block proposal phase. When the previous block was created, it sent a seed. Users who have participating keys now used the Verifiable Random Function to see if they were selected.
Those that we're selected will get a proof after the computation which they will now send alongside their proposed blocks. So each node will now send their proposed block and proof of selection to each other and validate each other's VRF output. - Phase Two
It is also called the Soft Vote phase. At this stage, every node will run the VRF outputs to see the selected voting committee. All users in this committee will get votes based on the number of ALGO’s they have. Each account will now vote on just one of the proposed blocks.
A vote tally is given after each node has validated the VRF to be a committee member. - Phase Three
At this final stage, another committee comes in to check the block that was voted upon in the previous stage. Once it has been validated, they will still vote the block in the same manner in order to certify the block by reaching a quorum which will prompt the node to create the block’s certificate and add to the ledger. From here, the process starts all over again.
Explain the advantages and disadvantages of PPoS.
This wonderful consensus protocol has to be analysed properly and not just at face value. We have to know it's pros and cons because it is definitely not perfect. This will be well illustrated on below.
Advantages of PPoS
- One thing about PPoS is that you don't need to invest so much money to buy machines or coins to hold. The minimum amount needed can be easily met by any user.
- It is very fast in reaching a consensus, this making the blockchain highly scalable.
- Every stake holder gets rewards from validated blocks in proportion to their stake. So just by holding coins, you get a share in the block rewards.
- Every user has the ability to be selected to validate a blocks, since the selection is done randomly.
- Because of its secret random way of selecting random users to validate, it makes the block chain less viable to security threats.
- It is energy efficient as very little computational power is used.
Disadvantages of PPoS
- The block rewards received are discouraging to validators with little stake.
- Algorand is the first block chain to implement this protocol so there is no road map to follow. Everything is based on theory, and trial and error.
Do you think Algorand really solved the blockchain trilemma? Explain your answer.
The blockchain trilemma first of all, is the problem whereby developers are forced to sacrifice one feature ofr the other two. The features here are decentralization, scalability and security. Since the creation of bitcoin, developers have been trying to create a blockchain that will solve this trilemma. One of such is the Algorand blockchain.
This blockchain was designed purposely to solve the trilemma. Let's see it implements that.
- Decentralisation
The blockchain works on being fully decentralized through various ways. First of all, it allows validators to be selected randomly. This ensures that no one person is or particular persons are in charge of voting. Everybody has a voice.
Also, the team behind the block chain gors out of its way to share any new developments they are working on, and even get feedback from the users. This makes the users feel like their opinion matters and decision making is brought to everyone. If this does make it attain levels of decentralization many haven't seen before, I don't know what will. - Scalability
The blockchain uses the PPoS consensus mechanism in order to date and process blocks. Unlike others, it requires just two-third of the selected committee to agree. This permits it to be able to process more than 1000 transactions per second, making it highly scalable. It also helps that it is very energy efficient as well. - Security
In order to improve on its security, it's consensus protocol is designed to need just two-thirds of confirmations. Therefore, you need to own more than one-third of the total volume. Now, the purpose of attacks is mostly to steal. And this theft affects the coin negatively. So why will anyone try to attack a coin when they hold a vast portion of it?
As we have seen, the Algorand blockchain has effectively applied first layer solutions to tackle the issue of the block chain trilemma. It may not be 100% solved but it is close. And with the new developments, the trilemma shall be completely solved without a doubt in anybody's mind.
Do you think PPoS is better than PoW? Explain your answer.
Proof of Work (PoW) is a consensus protocol whereby block validators are chosen based on who can solve computer algorithms fastest with higher computational power.
This protocol favours those who have more money to afford higher and faster specialised machines. So the selection is controlled and unfair to those who don't have as much money.
The blockchain is open to attacks because if most if the block miners join together and firm an alliance, they can easily take down the blockchain by a 51% attack.
The whole machine solving calls for the use if energy and power, which is neither cost efficient nor good for the environment.
Because of the whole computing process, it takes a long time for a transaction to be validated which makes the network less scalable.
We can clearly see that PoW is greatly lacking in terms of decentralization, stability and security, all of which PPoS solves. So yes, PPoS is way better than PoW.
Do you think PPoS is better than PoS? Explain your answer.
In an attempt to solve the problems experienced with PoW, Proof of Stake (PoS) was created. Here, the block validator was selected based on the amount of stake a user was holding.
It's attempt to becoming decentralised did not come unflawed as users who had huge shares could still exert some sort of monopoleeoy of power. If such users banded together, the networkcould experience a 51% attack. This makes it not too secure as well.
And even though its scalability is better than that of PoS, it is still found lacking as the slightest increase in number of transactions will lead to traffic.
Also, selection of validators will always be revolving around those with the highest stake, so those with smaller stake will not have a chance. This raises the barrier to entry by a lot already making it unfair.
PPoS, the modified version solves all these problems. First of all, the minimum required can be afforded by all users. It also helps that the selection is random so even those with small stakes have a chance. And well, any attempt to attack the network does not even make sense.
So I do think that PPoS is better than PoS.
Explore and explain an ALGO transaction using algoexplorer.io ( Screenshots required)
In order to make explore an ALGO transaction, we have to first of all go to it's block explorer which is https://algoexplorer.io/.
From there, I scrolled down to where I had latest transactions and I clicked on the first one saw.
Source
I was now brought to a page having all the details about it as you can see below.
Transaction Overview Sat, 11 Dec 2021 23:12:13 GMT
Transaction ID GA34KXBFP3UFA4VESWNN23ZDL45YIBG5A2J2BR2F4WUEIIKHH6TQ
Block 17967550
Type ASA Transfer
Transaction Details
Sender:
C2IPMAS7ANPQAZKFFZWYBGP25SFQIKPI4E3XR543AIHMAJQH5X4QFLXXAQ
Amount:
10 BOOM
Receiver:
V5DSQD7DSRX3RK3UPALWZBX6JVSCBCLAAKDLXXE7SFN7NDBFAH7TKCWFNU
Asset ID:
412219535 (Boom)
Sender ASA Balance:
115,130 BOOM
Receiver ASA Balance:
10 BOOM
source
Below, you could find out more information about the transaction if you wished.
Carry out an analysis of the price of ALGO from the beginning of the year to the present. Via graphics (screenshots required.)
My analysis was done using Coinmarketcap.
At the beginning of the year, the coin was valued at $0.3981 with a volume of $341,885,747 and a market cap of $475,506,414.
The price increased in a steady fluctuation till February 14th when it hit it's first major value of $1.71.
The price dropped before fluctuating upwards then downwards and upwards again for a while, till it experienced a sharp increase to it's highest value all year of $2.31.
From then, the price has been fluctuating downwards and upwards. Yep priceat the time of writing now is $1.53.
All in all, the coin has experienced a good bloom this year and is flourishing as it fights for it's place in the market. All these is supported by the chart below.
conclusion
Algorand blockchain is the closest that blockchains have come to solving the trilemma. With it's amazing one of a kind PPoS consensus protocol, one can only way in anticipation on what next the team will develop.
CC @nane15