Algorand And The Blockchain Trilemma - Crypto Academy/ S5W4 - Homework post for @nane15.

1) What is Algorand blockchain?
Algorand is a blockchain cryptocurrency that aims to solve the blockchain trilemma while at the same time is secure, scalable and is fully decentralized. Algorand was created by Computer scientist and MIT Professor Silvio Micali in 2017 though its official release was in April, 2019. The native cryptocurrency of Algorand is ALGO.

Algorand has a consensus algorithm based on Pure Proof of Stake and a Byzantine Agreement protocol. This blockchain is also designed to be a payments focused network with rapid transactions and a strong focus on achieving near-instant finality and this enables it carry out numerous transactions within a second with finality. It is able to carry out the above mentioned function because it requires minimal computational power per node giving it ability to finalize transactions efficiently.

Algorand is an open-source and a permission-less blockchain upon which anyone can build dApps. The fact that Ethereum requires more gas more developers are transferring to Algorand which is more efficient and cost friendly. Blocks on Algorand can be created by any user however sometimes they have to go through three steps that include; proposing, voting and then certification of the vote for which particular Algorand user is to create the block.

Algorand’s block rewards are distributed to all ALGO coin holders offering all of them an opportunity to earn rewards and not only those that produce the blocks.

2) What is PPoS?
PPoS stands for Pure Proof of Stake. Pure Proof of Stake is built on Byzantine consensus and it processes all over the blocks on the Algorand blockchain. Much as Proof of Stake was created to work on scalability, it still had the disadvantage of putting most of the influence in the hands of the few that had the most amounts of tokens. This undermines the concept of decentralization therefore PPoS was created to create pure decentralization.

Under PPoS, users are chosen randomly to process blocks and that is only if they are online. One has to note that tokens gotten from this process are distributed to members whether they processed the blocks or not. This enables members to participate without regard to how many tokens they hold.
It must be noted however that the chances of being a user being chosen are increased if they have a high stake i.e high number of tokens.

PPoS also enables random Algorand members to be chosen to vote the users who are to process the blocks and this ensures that decisions on the platform are not concentrated in the hands of the few with a higher stake rather everybody has an opportunity to be chosen by a random system which promotes decentralization.

3) Explain the advantages and disadvantages of PPoS.
Advantages.
• It does not a minimum staking requirement therefore anybody can be chosen to process the block and this enables any user to participate in securing the Algorand network.
• PPoS also creates an environment of high security because power is spread out among all users of Algorand to deal with their tokens according to their wishes and the process is decentralized as every user has an opportunity to be chosen to process the blocks and all users get to share in the tokens awarded.
•This system is scalable as it focuses on rapid production of blocks due to the consensus protocol. This system enables over 2000 transactions to take place within a second and achieving transaction finality in less than 5 seconds which is quicker than normal transactions.
• The protocol selects users randomly irrespective of their stake therefore all users have the opportunity to get picked.

Disadvantages.
• Much as PPoS is meant to bring about full decentralization, this is deterred by the fact that the likelihood of being chosen to propose, block and vote on block proposals is directly proportional to one’s stake in Algorand. This means that a user with a higher stake has more chances of being chosen for block proposals.
• Only users who are online are considered therefore those unable to go online may miss out on the opportunity to be chosen to propose, block and vote on block proposals.

4) Do you think Algorand really solved the blockchain trilemma? Explain your answer.
Yes, I think to a certain extent Algorand has solved the blockchain trilemma because it is more scalable, decentralized and more secure. Blockchains like Bitcoin have faced issues of scalability where transactions take long to be confirmed and finalized. Even though alternatives like Ethereum have stepped in to work on the issue of scalability, they have undermined decentralization in the sense that users with a higher stake may have more power over the network.

Algorand has solved all the three important issues of security, scalability and decentralization due to is concept of Pure Proof of Stake. The PPoS consensus algorithm enables transactions to not only be processed but also shares them. It also makes them visible and verifiable. This makes transactions to happen fast therefore catering for scalability.
It’s efficiency in scalability does not undermine decentralization in anyway because the PPoS consensus employs randomness in choosing validates add to the new transactions therefore everyone has an opportunity to be chosen therefore catering for decentralization as power is not concentrated on the hands of a few users with a high stake in the network.
The fact that no knows who is next in line to be chosen as a validator creates security because no one can interfere with the process.

6) Do you think PPoS is better than PoS?
PoS refers to Proof of Stake. PoS is a mechanism that is maintained by validator as nodes seeking to become validator are required to lock up minimum amounts of tokens that act as collateral.
• PPoS is better than PoS in the sense that PPoS has minimal requirements as to stake for the process of block proposals yet PoS requires that nodes seeking to become validators lock a minimum amount of tokens. This disadvantages nodes that are unable to come up with the required amount of tokens to act as collateral therefore defeating the idea of decentralization.
• PoS requires large amounts of computing power used by miners thus causing delay in transactions however PPoS requires minimal computing powers therefore has more scalability thus making transactions to get quickly confirmed and finalized.
• PPoS is better than PoS in terms of security because PPoS uses randomness in choosing its validators therefore no one knows the next validator however with PoS the validator can be predicted as it those with a higher stake that are considered therefore it is actually easy for them to interfere with the outcome of the validation this interfering with security.

9) Conclusion.
PPoS is a consensus algorithm that has actually managed to solve the blockchain trilemma because it provides for decentralization,
scalability and security with efficiency without compromising any of them.

Thank you @nane15 for the assignment.