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Welcome everyone to my homework post,
The professor in the previous session has taught us about the blockchain trilemma and now he has introduced the Algorand blockchain who claims to solve this issue. We will further talk about this blockchain in the following sections:
What is Algorand blockchain?
There are a lot of blockchains that are said to be the solution to blockchain trilemma but several issues always occur at some point. So, a lot of teams are busy coming up with a solution but Algorand claims that it has already solved it.
This blockchain is said to be completely decentralized, secured, and scalable. It is unique from other projects because it has made use of Pure Proof-of-Stake which is an advanced consensus mechanism. It can perform thousands of transactions per second and the best thing about the security is that nodes are randomly selected due to which it is not prone to cyber-attacks and makes it truly decentralized.
The use of 3 smart contracts also helps it to solve the blockchain trilemma. So, bottom line is that Algorand is one of the best blockchains that has made exceptional efforts in making a decentralized technology that can benefit everyone.
What is PPoS?
PPoS is the abbreviation of Pure Proof-of-Stake. It is the mechanism that is built on Byzantine consensus and used by Algorand to solve the blockchain trilemma. What makes it interesting is that everyone has the chance to process the next block. Thus, everyone on the network can participate. But selecting the creator of the block is sort of unique as the mostly blockchains prefer those with the highest number of coins staked but not Algorand.
Block processing is done in 3 steps that are as follow:
Block Proposal:
As it is said that the node with the highest ALGO coins will be selected to verify the block, but Algorand chooses a random account that will propose the next block.
Soft Vote:
Once the block has been processed, the nodes will run the VRF to find if they have been chosen to participate in the soft vote committee. The chosen nodes will make votes which will either verify the block or not based on the voting.
Certify Vote:
In the final step, a committee is established to certify that the casted votes are honest and correct. Thus, the process keeps on doing so.
Explain the advantages and disadvantages of PPoS.
Explain the advantages and disadvantages of PPoS.
Advantages of PPoS
- It doesn’t require a lot of money to participate in the block processing procedure.
- It is very secure because of its double-layer system.
- A heavy-equipped PC is not required to become a node on its network.
- There are no charges for withdrawing assets, once staked.
- It can process 2 thousand transactions per second.
- It has provided secure, decentralized, and scalable blockchain to users.
Disadvantages of PPoS
- It ignores the malicious nodes due to which other users have to suffer.
- The reward is not that great for users as compared to other platforms.
Do you think Algorand really solved the blockchain trilemma? Explain your answer.
Do you think Algorand really solved the blockchain trilemma? Explain your answer.
I was of the opinion that blockchain trilemma will help us to improve this technology and Algorand has done it in a great way. It has used the 2-layer system that makes it very safe for the users to make the transaction with great ease. PPoS consensus algorithm has also helped this blockchain to become the most decentralized network in the crypto industry. As for scalability, it can process thousands of transactions without affecting the network.
Till now, it has been operating seamlessly and not a single complaint or cyber-attack has been made by the public. So, we can deduce that it has truly solved the blockchain trilemma.
Do you think PPoS is better than PoW? Explain your answer.
Do you think PPoS is better than PoW? Explain your answer.
Before comparing both consensuses, let’s talk about the PoW first. The top cryptocurrencies like Bitcoin and Ethereum are built on this consensus algorithm. It required huge systems to mine the new blocks and get the reward. In today’s landscape, it is not preferred because of high power consumption and huge investment.
PPoS on the other hand required a few assets in your wallet to become a node in the Algorand blockchain. It doesn’t even consume energy as all you need is to lock your assets and you will be able to gain rewards. Further, you don’t have to pay collateral for unlocking your assets. So, there are a lot of benefits that make it distinguished from PoW.
Do you think PPoS is better than PoS? Explain your answer.
Do you think PPoS is better than PoS? Explain your answer.
There’s not much difference but I consider PPoS better than PoS. The reason is that users with a great number of tokens are much likely to participate in the governance but that won’t happen with PPoS as anyone can become a node with a minimum investment of a single ALGO. Thus, everyone can enjoy the benefits provided by Algorand platforms.
Another thing is that when the tokens are staked on the PoS based blockchain platform, they can’t be withdrawn as some amount will be deducted as punishment. But Algorand doesn’t work that way as its users can take out their assets from stake anytime.
Explore and explain an ALGO transaction using algoexplorer.io ( Screenshots required)
Explore and explain an ALGO transaction using algoexplorer.io ( Screenshots required)
Algorand has its own search engine like a website called Algo Explorer where it gives insight about the latest blocks, online assets staked, the total supply of token, circulating supply, price of ALGO, Transaction per Second, block speed, latest blocks, and whatnot.
It also has a separate sub-section of the latest transactions where you can click on any of the transactions and get to know all about its detail. I have chosen the green highlighted transaction to find its detail.
After clicking on the transaction, I got to know about the transaction ID that is generated uniquely for each transaction. It also tells block, type, timestamp, and other transaction details that show sender, receiver, amount, asset ID, and whatnot.
Carry out an analysis of the price of ALGO from the beginning of the year to the present. Via graphics (screenshots required.)
Carry out an analysis of the price of ALGO from the beginning of the year to the present. Via graphics (screenshots required.)
I will analyze the price of ALGO from the date of its launch to the present price so that we can predict its future. I will be leveraging my knowledge of price action and indicators for technical analysis. So, let’s what it has for the future:
I started the technical analysis by drawing the strong support and resistance zone from the weekly time frame chart so that I can find out strong reversal zone. The following screenshot shows the support and resistance are horizontally marked by the black line while the blue line is the current strong support where the price is currently consolidating.
I expect the price to bounce back from the blue line but it can make a long wick to grab the liquidity from the lower zones and then we can see it making a strong bullish trend that can easily lead to all-time high.
Conclusion
To sum up, in everything I have done in this homework, I have to say that Algorand is a great blockchain technology that can be of great importance in the near future. Since it has improved scalability, decentralization, and security, we can see it making a great impact on the traditional financial system. Also, its coin ALGO is a great coin that can give huge returns if we invest in it right away.
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