Algorand and the blockchain trilemma - Crypto Academy / S5W4 - Homework post for nane15
Algorand is a very fast blockchain with very low transaction fees. It is included in the top 50 cryptocurrencies with a market cap of $4 billion. Algorand is a new public blockchain designed to increase the use of cryptocurrencies in everyday life. This project aims for the practical application of blockchain in the real world. Developer Algorand says they are building technology for future financial markets that will combine traditional and decentralized solutions.
Algorand can also be defined as an open source, permissionless, public, scalable and secure Pure Proof of Stake (PPoS) blockchain. As we all know, the Algorand Foundation has been instrumental in the development of our developer network. Algorand's main goal is to create an ecosystem where everyone can participate in the network while ensuring security and performance through the PPoS consensus mechanism.
At this point the algorithm ensures that its blockchain solves the so-called trilemma of scalability: their network is fast, secure and decentralized, and at the same time very cheap and energy efficient. The blockchain project is based on its own version of the Proof-of-Stake (PoS) consensus algorithm - Pure Proof-of-Stake (PPoS). To solve the blockchain trilemma, that is, to strike a balance between the following three elements.
• Decentralization: The network should not be controlled from a single point.
• Scalability: Blockchain must scale to reach a large number of users.
• Security: this security system must be resistant to errors, malicious attacks and other problems.
Algorand is a technology company founded by cryptocurrency expert and MIT professor Silvio Micali. Algorand Coin can be represented by a permission-free, open-source Pure Proof of Stake (PPoS) blockchain.
PPoS is a very democratic PoS consensus mechanism. The minimum wagering requirement to participate and protect the network is very low, only 1 ALGO coin is required to participate. Algorand differs from many cryptocurrency projects in that it uses a Pure Proof of Stake (PPoS) mechanism. This is different from the Proof of Work (PoW) blockchain used by Bitcoin. The PoW blockchain uses high-performance computers to solve complex mathematical problems, create new blocks, and verify transactions. After all, mining BTC consumes a lot of energy.
While this method is cryptographically secure, the problem is that it uses a lot of energy. The result is a shift to alternative consensus mechanisms. Therefore, the Proof of Stake (PoS) blockchain is considered more environmentally friendly.
Algorand, on the other hand, uses (Pure Proof of Stake (PPoS). New blocks and transactions can be created faster here. In Algorand, a random selection is made among ALGO holders to "validate and approve" new blocks on the chain. A group of ALGO users is randomly selected for each new block.
So, according to web developers, the Algorand blockchain can be globalized, decentralized and secure. People with more ALGO are more likely to be selected for block approval. So you can quickly confirm your transactions in seconds.
PPoS has several advantages, including:
Official token holders can delegate their tokens if they want to participate in the consensus.
Very low fork probability Users can rely on new blocks as soon as they come out. Even if the network is temporarily partitioned, PPoS ensures that no user has a different view of the confirmed transaction.
no single entity can all control the network. Anyone can join the network and participate as a block verification node. In a fully decentralized network, all nodes have the same data access rights and the same voting rights.
Community Governance token holders can propose changes to the protocol and approve their eligibility.
Disadvantages of PPoS
The drawback of Pure Proof of Stake (PPoS) is that it is too new when compared to other consensuses. So it is difficult for us to detect deficiencies or weaknesses of Pure Proof of Stake (PPoS). this may be due to PPoS which is not yet advanced among users so we still haven't found any drawbacks of Pure Proof of Stake, this is my opinion after studying it.
In my view, yes, even though this is still developing and the reasons for saying that the algorithm solves the blockchain trilemma are as follows :
- Scalability
Scalability represents the number of transactions the protocol can handle without slowing down. On a highly scalable blockchain, the world will soon be able to record transactions at the lowest fees. Currently Visa is the global speed standard, theoretically processing 56,000 transactions per second (TPS). But as far as I can tell, this has never been really tested. Visa's average TPS is around 1700. Compare this to Bitcoin with a TPS of 4.6. It is calculated by dividing the block size and transaction size.
Since Bitcoin prints a new block every 10 minutes, it reaches 4.6 TPS. During periods of high congestion, the waiting time for a single Bitcoin transaction may be 15 minutes, and the fee is around $23.
Algorand used Pure Proof of Stake to solve this problem. The network can currently support 1200 TPS, due to Instant Finality, will soon increase to 3000 TPS. And with the implementation of Block Pipelining, this number will increase to 45,000 TPS by the end of this year. It is more scalable than Visa. Algorand's fee is locked at 0.002 Algo.
- Security
Security refers to actions that prevent opponents from verifying fraudulent transactions. In a completely secure blockchain, it is impossible to create fake data without controlling more than 50% of the protocol's secure assets. At the same time it is almost impossible to gain this kind of control. Algorand security is handled by a unique consensus algorithm. Due to the randomness and secrecy of PPoS, bad actors cannot destroy the votes of every participant. Even if they discovered the identity of each participant, it would be too late. The final confirmation time was less than 4 seconds, and it was impossible for anyone to tamper with the system. The deterministic speed of this block is also useful when printing NFT (non-fungible tokens).
Even if a Bitcoin transaction takes an average of 10 minutes, it can take up to an hour before the transaction cannot be reversed due to its slow confirmation time. This slow time can lead to differential forks or blockchain splits. This is not possible in PPoS.
- Decentralization
no single entity can all control the network. Anyone can join the network and participate as a block verification node. In a fully decentralized network, all nodes have the same data access rights and the same voting rights. Due to the nature of PPoS, there is no central point of authority or power.
I think yes, because the algorithm differs from many cryptocurrency projects in that it uses a Pure Proof of Stake (PPoS) mechanism. This is different from the Proof of Work (PoW) blockchain used by Bitcoin. The PoW blockchain uses high-performance computers to solve complex mathematical problems, create new blocks, and verify transactions. After all, mining BTC consumes a lot of energy.
While this method is cryptographically secure, the problem is that it uses a lot of energy. The result is a shift to alternative consensus mechanisms.
Algorand, on the other hand, uses Pure Proof of Stake(PPoS). New blocks and transactions can be created faster here. In Algorand, a random selection is made among ALGO holders to validate and approve new blocks on the chain. A group of ALGO users is randomly selected for each new block.
So, the Algorand blockchain can be globalized, decentralized and secure. People with more ALGO are more likely to be selected for block approval. So you can quickly confirm your transactions in seconds.
According to yes. Since the verification capability is limited to the percentage of transactions determined by the proportion of coins owned by the user, it eliminates the need for the verifier to consume a lot of energy to solve complex problems. PoS also solves the 51% chance of attack by only allowing a certain percentage of the fee to be awarded to the verifier.
PoS still has its inherent problems. These problems have led to the development of two main PoS models, namely Delegated Proof of Stake (DPoS) and Bonded Proof of Stake (BPoS).
Whereas PPoS Here, new blocks and transactions can be created much faster. In Algorand, a random selection is made among ALGO holders to verify and approve new blocks on the chain. A group of ALGO users is randomly selected for each new block. The PPoS method relates the security of the entire economy to the integrity of most people, rather than relating security to a small part of the economy.
First of all, we go to the page algoexplorer.io when we enter the page, the menu will appear as shown below:
On the top menu there is a menu that displays about ALGO, Amount in Stake, Outstanding Supply, last block, total supply and several other menus.
Meanwhile, at the bottom, it displays two menus regarding the latest blocks and the latest transactions made. we can also see about block and transaction information.
Click on the block so that we can see the transactions, by clicking on the id we can see the number of transactions that the id has made. There is also the amount for this id or block, which is 37 times with a rewards rate of 47.3.
We can see more about the transactions made by selecting one transaction.
Then we will be able to find out all the details about the transactions such as where to send, how much, delivery time, shipping fee and a lot of other information.
On this occasion I will analyze ALGO in CoinMarketCap
We can see in the picture above, that the price of the ALGO coin during 2021 occurred on January 1st, the price was at $0.3981 and then the price started to rise until it touched the price of $1.7124 on February 12th.
After an increase at $ 1.7124 the price was back down on July 20 at a price of $ 0.6972.
The highest price during 2021 occurred on September 12, which was $2.3795 and for today the price of ALGO is at $1.51
Algorand is the first cryptocurrency in the world to use its unique consensus algorithm to solve the blockchain trilemma. It is decentralized and each user can choose instead of entrusting their cryptocurrency to an equity pool.
Algorand can also be defined as an open source, permissionless, public, scalable and secure Pure Proof of Stake (PPoS) blockchain. As we all know, the Algorand Foundation has been instrumental in the development of our developer network. Algorand's main goal is to create an ecosystem where everyone can participate in the network while ensuring security and performance through the PPoS consensus mechanism.
post was edited cause not displayed on #nane15-s5week4 tag.
No problem, I check.