(Algorand and the blockchain trilemma) - Crypto Academy / S5W4 - Homework post for nane15.
Hello everyone 🤗
I hope we are all in good health.
I have gone through the lesson by professor @nane15 and so today I will be working on the assignment.
Please enjoy.
designed in pixellab
sourceBlockchain Trilemma has always been a major challenge faced by several blockchain project,but recently a few project have claim to have solved this problem,one of which is ALGORAND
ALGORAND is a decentralized network that is built as a remedy to solve the blockchain trilemma and also striving to amplify the dominance and usage of cryptocurrency by increasing transaction speed and reducing the time taken for transaction to reach finality.
Algorand project is a permissionless and open-source blockchain network that have tackled and solved the problem of scalability, security and decentralization.
The project was launched in June 2019 by a computer scientist and MIT professor widely known as Silvio Micali
It makes use of the pure proof-of-stake (PPoS) consensus mechanism,which implies that it distributes validators reward to users who stake and hold it native coin known as ALGO currency.
As a blockchain that uses the PPOS consensus mechanism, algorand project is capable of exhibiting and hosting numerous decentralized app(DApps) on it blockchain as well as providing scalability.
Base on this fact,people now see algorand as a substitute for Ethereum blockchain that is also a host for several DApp but with an ever increasing gas fee..
Without an iota of doubt,the algorand blockchain is now an alternative to ethereum for DApp development and Defi project.
It is imperative to note that Algorand does not just make use of the typical proof-of-stake consensus mechanism,but an exceptional and unique variation of the POS which is known as Pure proof-of-stake(PPOS).
The PPOS is built on the Byzantine consensus and it allows coin holders to stake a low minimum of 1 AlGO coin to participate in the network unlike the ethereum that uses the typical proof-of-stake with the requirement of a minimum of 32 ether{ETH} to participate in the network,which inturn reduces the number of active participant on the network.
Some features of Algorand blockchain are as follows:
•Speed:The speed that this blockchain utilises is something extraordinary.A person can send and receive coin into their wallet within 4.5 seconds and get instant confirmation of payment..no delay at all.
•Scale:The problem of scalability which is among the major challenges most blockchain project is faced with has been solved by this project.
Algorand blockchain is initially built to accommodate the influx of many billions of participants and users,And so, increasing number of participants does not in anyway slow down the speed of transaction.
•SecurityAlgorand claim to make use of the most advance cryptography to make sure information and data on the blockchain is secure and unable to be altered or tempared with.
•Transparency:It operates on the Transparency principle, anyone can check and view the public algorand blockchain to see vital information about any transaction,but it is immutable.
sourceI believe I have discussed slightly about the PPOS when doing justice to the first question.
We can say PPOS which is an acronym for pure proof-of-stake is an open-source and permissionless mechanism built on Byzantine and is adopted and utilized specifically by the Algorand blockchain.
The PPOS ensures the full participation of all nodes along with blockchain protection (security)and good transaction speed (scalability)in a decentralized network.
It is a unique and exceptional variation of the typical proof-of-stake that selects or chooses validators randomly.it does not only select Block validators base on how much coin they stake but also through random selection not minding the amount of coin held by a participant.
This randomly automated selection is conducted using a Verifiable Random Function {VRF}which can be liken to a lottery, giving every user the opportunity to be a part of the selection process.
The PPOS allows every investor who hold or possess a minimum of 1 coin to participate actively on the network.
ADVANTAGE
•Encourage full participation:it encourages full participation in the blockchain as users with minimum of 1 coin can take part actively in the block validation process to get reward.
•Speed & Scalability:speed is one of the advantage of the PPOS.Any blockchain that uses the PPOS mechanism is going to enjoy speed and Scalability because it is highly decentralized.
•Energy efficiency:The PPOS is more energy efficient as it does not require any computational resources for operation and individual with a minimum of 1 coin can stake it to earn reward without stress.
•Security:The PPOS is very secure when it comes to validation of transaction blocks.it executed it by the use of a very secure measure as only the selected block validator is aware of the secret selection which inturn restrict bad actors from launching an attack on the block validator which might disrupt the network.
DISADVANTAGE
•The mining capacity of individual depends on the amount of coin they stake,which implies that the higher the stake coin is the higher the reward.
This most times is a disadvantage to users with low stake coin as they tend to gain little reward.
In this kind of setting,the rich will continue to grow rich and the poor will keep struggling.
•Another disadvantage is that "staking" in general is not as lucrative as it seems,most times people are of the opinion that the reward for staking is not as much as the reward from mining.
People who mine or uses mechanism such as POW earn more than those who uses pure proof-of-stake.
of course Yes!
if the blockchain Trilemma comprises of security, Scalability and decentralization issue then I believe Algorand have solved it to a considerable extent.
The Algorand project exhibits speed, scalability, security as well as decentralization,making it one of the few project that claim to have solved the blockchain trilemma.
To solve Scalability and speed, Algorand project was initially built to accommodate many billions of participants and still perform well without breaking down.
The speed of transaction is also extraordinary as it only takes 4.5seconds to receive and send AlGO coin to a wallet.
Talking about security, Algorand boast of the most advanced cryptography for a blockchain and lastly it is highly decentralized.
So if blockchain trilemma is made up of scalability, security and decentralization,then I can say without any fear of contradiction that Algorand project has indeed solve the blockchain trilemma.
my answer to this question is YES
Before stating which is better,it is important that I establish what this 2 things are.
POW is a consensus mechanism which requires users to validate the next block by solving complex mathematical puzzle using advance computer and software in order to get reward.
while PPOS is a consensus mechanism built on Byzantine and involves users to stake a minimum of 1 coin to earn reward.
Taking the aforesaid things into consideration,I strongly believe that it is safe to say that PPOS is better and more preferable when compared to POW.
POW is quite expensive to operate as it requires computation resources that comes at ridiculously high amount and also gas fee to operate unlike the PPOS that only requires a user to stake a minimum of one coin and get reward.
In a nutshell,The PPOS is better than the POW.
Both the POS and PPOS involves staking to earn reward.
Both of them follow the principle of the "higher the stake coin the higher the reward and influence in the blockchain"
The only thing that actually made PPOS better than POS is the fact that PPOS doesn't only select Block validators by the amount of stake coin but also makes use of (VFR)verifiable random function which carry out block validator selection randomly,not minding the amount of coin stake by a user.
On the contrary,POS doesn't make use of VRF but only select validator base on the amount of coin they hold,which implies that the higher the staking of a user is the higher the influence and chances of becoming a validator.
So with this above point,saying the PPOS is better than POS is save.
To explore ALGO transaction using Algoexplore we have to follow this steps.
•step1
visit the website Algoexplorer.io
After clicking the link,the website interface will appear showing some information such as latest block which is about 17,939,437 block speed of 4.39sec, total supply of 10,000,000,00 etc and other necessary information such as lastest Transactions
just as seen in my screenshots.
Step2
To view AlGO transaction,scroll down the the latest transaction and click on any one just as seen in this screenshot.
The next page that will come to view will reveal all the details regarding that particular transaction such as transaction ID,block,type,amount,sender,receiver,address etc..
images from Algoexplore.io
images from Algoexplore.ioAnd finally a note regarding the transaction.
images from Algoexplore.io
As at today when this assignment was submitted,the price of an AlGO coin to US dollar stands at $1.58 in the coinmarket.
screenshot from coinmarketcapTo Cary out the price analysis in Algorand from January to December,I will be doing it by taking 4months each for the analysis.
Jan-April($0.29-$1.40)
screenshot from coinmarketcapFrom the beginning of January,we see price of AlGO moving and continuing in a bullish trend through out the whole month and hitting price pinnacle in February, bringing price of coin to about $1.75 and about $1.40 by the end of March and finally concluded with $1.40 also in April.
MAY-AUG(approximately $1.4-$1.0)
screenshot from coinmarketcapThe market was going bullish for a while at the beginning of May and price was at the range of $1.4. but eventually the bear took over the market and price continue to struggle to rise through out June and July and by the end of August price stood at $1.
SEPT - DECEMBER 10(approximately $1.2 -$1.6)
screenshot from coinmarketcapThe market that has been a bit down since the past 3 months suddenly began to experience an uptrend in the month of September as price hit $1.2 and was within the range if $1.3 and 1.5 between October and November.
by December 10,price stood at $1.6.
There is no doubt that the the Algorand project has tackled and solved the blockchain trilemma,as it is a blockchain that posseses speed,scalability, security as well as decentralization.
The Algorand make use of a unique variation of the proof-of-stake which is pure proof-of-stake which allows users to stake a minimum of 1 AlGO coin and earn reward.
I won't fail to acknowledge the effort of professor @nane15 for this wonderful and eye opening lesson.
Thanks for reading through 🤗