[Algorand and the blockchain Trilemma] - Crypto Academy / S5W4 - Homework post for prof @nane15
You are Welcome to my homework post that was given by professor @nane15 on the topic: Algorand and the blockchain Trilemma. Remain Bless 🙏 as you keep reading through.
What is Algorand blockchain?
The word Algorand I will says that is a speed that is aim to increase the functionality of blockchain network. Although, that is not what Algorand stands for. So in this post, I will be discussing what Algorand blockchain is. Let's get started.
Algorand blockchain is known as a decentralized blockchain network, that is built to find solution facing blockchain trilemma of achieving security, transaction speeds, and simultaneously decentralization.
Algorand was launched by a computer scientist and Massachusetts Institute of Technology (MIT) professor called Silvio Micali, in June 2019. Algorand stand as a open source blockchain network and also permissionless which give everyone the access to build upon the network. Literally, the purpose of building Algorand is to solve the issues of transaction delay, and increase transaction speeds, security, which is focused on payments as to bring instant finality in less than 5 to 10 seconds in blockchain network.
Holders of Algorand native cryptocurrency ALGO make use of proof of Stake (PoS) consensus mechanism, and distributes validator rewards. With the strong capacity and the fair community encouragement, Algorand is efficient enough in taking care of the high-throughput that is needed to be use globally. Although, Algorand functionality doesn't just end in one aspect, but also in the aspect of hosting a decentralized application and providing scalability since it's and a public smart contract blockchain depends on staking publicly. This mean that Algorand give developers the access to make use of Algorand Standard Asset protocol to transfer their existing tokens or create new tokens that can be transfer to the ecosystem of Algorand.
Algorand blockchain Protocol Structure
There are two kind of blockchain protocol structure that Algorand has which is The first layer and second layer.
The first layer which is also regarded as layer 1 of the Algorand blockchain, it allows users and other platform to create ASAs which stands for existing tokens or new tokens on the Algorand blockchain network. It supports the use use of smart contracts automatic swapping of assets, creation of new asset. The layer 1 make sure that there is security and compatibility of use on it's smart contracts.
The second layer which is regarded as layer 2 Algorand blockchain is the layer that is kept aside for the use of smart contracts and Decentralized application (dApp) development that are more complex and complicated. The combination use of Layer 1 and layer 2 is what allows Algorand blockchain to perform transactions very fast and more efficiently, without any delay.
What is PPoS?
Algorand blockchain makes uses of a Pure Proof -of- Stake protocol that is built on Byzantine consensus. The use of the PPoS are voluminous by users and base on strictly restrictions which are limited to propose blocks and vote on the proposals of block. Each and every users of the Algorand blockchain have an influence on the choice of a new block that should be allocated to what users stake in the system.
In a nutshell, Pure Proof of Stake (PPoS) is known as a new consensus mechanism that is built in the blockchain system that allows users to stake they tokens so it can generate and turn into a block validator. As I have earlier said, it gives users the influence to choose validator. One of the thing that makes PPoS special from Proof of Stake is that users that are still small are not picked to be in charge of block generation and their also do not need to delegate their voting power to to some selected few delegator. The PPos protocol does not need users to keep aside part of their staking before their can be able to participate in the consensus protocol and if a users who doesn't participate in the consensus protocol will still spend his/her stake in the protocol.
Explain the advantages and disadvantages of PPoS.
One of the of the advantage that on PPoS Is that it boosts the quality of decentralized blockchain in a such a way that it make sure that the system of blockchain are highly secure. Although, let's look are some of it other advantages in details below.
Speed
PPoS can handle any demand for transactions that are high without fears congestions. In PPoS blocks are finalized very fast within a twink of an eye (seconds), which has make Algorand to be able to compete with other global payment and financial services globally because it transaction speed.
Low Power Consumption
The power of consumption in PPoS consensus is at minimal level. Meaning that it's doesn't require the use of high energy nor solving complex problem before a new block can be validate. And also their is no minimum or maximum amount of asset that is required before staking can be done.
User Right
The user right of PPoS is that each token holders influence depends on his/her amount of stand that is in the system. The right that is giving to every users of PPoS is that the PPoS Protocol picks users randomly, no matter how third staking is.
Disadvantages
Few Participants
Even though, the PPoS is meant to be use be every users which means that any participants that a own it token can become eligible to participate in validating of block, but even with all this staking process is randomly done. So with this the staking is not meant for small earners since the system needs those that has a larger earning in the system which could be the fallen of PPoS.
Do you think Algorand really solved the blockchain trilemma? Explain your answer.
Well Algorand which is known to be the world first PPoS blockchain that provides scalability, security, decentralization in many ways has done a lot, which I can confidently say that it's has really solved the blockchain Trilemma. Algorand has positioned itself and services and has target for smooth running of blockchain Trilemma which the blockchain network has prove itself worthy enough to be safe decentralized system and fast in terms of transaction ever since it was launched. With this it is of no doubt that Algorand has really sol e the blockchain Trilemma not just by saying it as a mere word but as to how its has help participants on the pure proof of Stake network.
Do you think PPoS is better than PoW? Explain your answer.
Well since I have probably discussed much on PPoS compare to PoW, I will like us to first have a brief look at PoW. Currently today the most unused consensus protocol is PoW which has make the protocol to become unworthy enough by users, even with how users are trooping into various consensus protocol, they never thought of using PoW simply because it cannot meet the demand for higher throughput, of which blockchain is something that requires much greater scalability and transaction speed.
In terms of market capitalization of blockchain network, PPoS stand as alternative to PoW which has been in existence before PPoS consensus mechanism. Even with the early introduction of PoW with bitcoin, it still has not meet the high demand that is need in the blockchain network, now instead of providing greater scalability and fast transaction PoW is consuming large amount of energy when miners are trying mine.
Now with all these issues that are confronting PoW when it comes to mining and other things that the consensus is facing it is o no doubt that PPoS is far better than PoW.
Do you think PPoS is better than PoS? Explain your answer.
Yes I think PPoS is better than PoS. Regardless of the success which PoS has achieved in addressing the issues of scalability they are still face with some issues where takers with greater amount of tokens can be dominated which can seriously affect decentralization. This is the main reasons to why Algorand created PPoS to stop some particular people to becoming richer than other. To this PPoS came up with a concept of giving every users equal rights which has make PPoS to be more better than PoS.
Although there are several reasons to why think PPoS is better than PoS. Another problem with PoS is that before a participant get to the next block validator, such a participant must have stake the highest, which means that the consensus mechanism is face with a lot of competition, where PPoS participants are pick randomly irrespective of their stake. Meaning that every participants has the opportunity to be attended to.
Although, without much writing and bringing of different points, I say yes it is of no doubt that PPoS is better than PoS in so many ways.
Explore and explain an ALGO transaction using algoexplorer.io (Screenshots required)
Exploring a transaction using algoexplorer.io
At this point, in other for me to explore and explain an ALGO transaction using algoexplorer.io I visit https://algoexplorer.io/ where I was taken to the algoexplorer homepage as shown below.
From the above screenshot which is the homepage of algoexplorer, in the box circle we get to see latest Blocks information on the top. Below the Latest Blocks is the Latest Transactions.
Algorand Blocks
The latest Blocks information as shown from the screenshot of algoexplorer, show the Block, proposer and Block reward.
As I click on the hash address, I was taking to Algorand Account Overview where the information on sender account balance and the sender block of which the transaction was processed is shown as seen from the screenshot below.
Algorand Transactions
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As I click on the latest transactions the relevant information such as Transaction ID, Timestamp, Block Number, Sending Information,Sender and Amount shown.
Carry out an analysis of the price of ALGO from the beginning of the year to the present. Via graphics (screenshots required.)
At this point in other for me to carry out my analysis of the price of ALGO from the beginning of the year 9 December,2021 as at the time of writing this homework post, I visit statista.com which is shown below.
From the screenshot above, the price of ALGO was at January 2021 was at $0.66 and looking at the screenshot we can see that ALGO was trending for a long time.
Looking at the screenshot we can see that as at April 2021 the price of ALGO was at $1.32 and the market was moving on downtrend for some time before the price of ALGO then fall.
Looking at the Month of May, 2021 from the screenshot we can see that the falling in price of ALGO stop at $0.85 and then the price started raising up gradually from Bearish to bullish.
As of November, 2021 the price of ALGO which was at $1.78 was higher than two U.S.dollars far compared to the price as at August 2021.
As at 9 December 2021 which is the day this information is gotten, the price of ALGO is at $1.69 and it simply showing a bullish movement which is shown on the screenshot Above.
conclusion
Algorand is the newest project that was launched in 2019 which is about 2 year plus now. The mission of Algorand is to make cryptocurrency transactions very fast thereby reducing the time it take for transactions to be finally process on its network. All thanks to my noble professor @nane15, for the wonderful lesson which is the backbone to this homework post.
Best Regards;
Cc:-
@nane15