Crypto Academy / S5W4- [Algorand And The Blockchain Trilemma] - Homework Post for @nane15
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Greeting Everyone,
First thing first, I would like to thank @nane15 for his efforts as he has previously explained blockchain trilemma and now brought the topic of Algorand blockchain which is said to solve this trilemma. My homework will further give you a detailed insight into this topic.
What is Algorand blockchain?
The majority thinks that blockchain is perfectly decentralized, secured, and scalable, which it is not. The blockchain trilemma is a renowned issue that suggests that every developer has to choose 2 elements out of 3 which makes this advanced technology sort of imperfect. However, a lot of blockchains have been established with the claim that they have solved blockchain trilemma and Algorand is one of those projects.
Algorand blockchain was founded in 2017 by Silvio Micali. It is said to be the utmost secured, decentralized, and scalable blockchain which is based on a unique consensus mechanism that is called Pure Proof-of-Stake (PPoS). The main problem of POS was that the node with the highest number of coins can create a block which was a kind of bias situation and it was insecure as well, but Algorand has solved it as anyone can take part in block creation thanks to PPoS.
The scalability is also improved as it can perform 2 thousand transactions per second. Therefore, it has not only overcome the traditional finance system but provided tough competition to some of the major cryptos as well. Thus, it has become one of the most secured, decentralized, and scalable blockchains.
Further, it supports 3 smart contracts are known as stateless contracts, stateful smart contracts, and algorithmic smart contracts while each of them has a unique purpose. These smart contracts make the Algorand blockchain distinguished from other blockchains.
What is PPoS?
Pure Proof-of-Stake is one of the latest consensus mechanisms that is built on byzantine consensus. It is leveraged by Algorand blockchain due to which they have been able to become a fully secure, decentralized, and scalable blockchain. It is actually done in 2 phases.
In the first one, a random user with the highest number of ALGO coins is selected so that a block can be proposed. This phase is known as the proposal phase. The second phase is soft voting and certifying vote so that malicious activities can be avoided and blocks can be processed without any issues.
Explain the advantages and disadvantages of PPoS.
Explain the advantages and disadvantages of PPoS.
There are several benefits of PPoS that make it distinguished from POS and POW. The majority of people prefer it because it is very easy for everyone to participate because all they need is ALGO coins in their wallets. It is also highly secured as compared to other consensus mechanisms as committees are formed on a random basis. A user doesn’t need a high-end PC to verify block transactions. Plus, the best advantage is that it has overcome the blockchain trilemma.
There are several disadvantages of PPoS as well like it doesn’t provide enough rewards for validating blocks as other blockchains do. Further, the punishment for those nodes who accept flawed blocks is not severe which makes it possible for them to keep making malicious actions.
Do you think Algorand really solved the blockchain trilemma? Explain your answer.
Do you think Algorand really solved the blockchain trilemma? Explain your answer.
Algorand was formed with great expectations to solve the blockchain trilemma. It has been stated by its developers that they have made a fully decentralized, utmost secure, and highly scalable network which has the potential to become the future of the finance system. Let’s see each element with sheer focus:
Decentralized
Decentralized means carrying out any transaction without any central body. Algorand makes use of 2 phases that opt for the random users every time which helps in processing the blocks seamlessly without the interference of any third party.
Security
We can say that Algorand is very secured because it makes use of 2 phases where each committee is chosen on a random basis as if it’s a lottery system. So, random selection helps it to stay secure from cyber-attacks.
Scalable
Algorand is decentralized and secured while it is scalable as well because it can process thousands of transactions per second. Further, it can create blocks within a short span of time and that doesn’t even affect its network for a bit.
Do you think PPoS is better than PoW? Explain your answer.
Do you think PPoS is better than PoW? Explain your answer.
We can say that the PoW is an old way of varying blocks as it consumes a lot of money, energy, and high-end PC to solve the cryptographic puzzles and get the reward. Bitcoin is the top example of PoW powered crypto.
PPoS have a lot of benefits over PoW due to which I believe that it is a much better consensus mechanism. The core feature of PPoS is that it doesn’t require heavy investment in terms of systems as all it takes is some shares in the form of coins to become a node. Further, the one who solves the equation in POW gets to create a block and get the entire reward due to which other nodes don’t get anything. That’s not the case with PPoS as it distributes equal rewards.
The next feature is that it is less prone to cyber-attacks as compared to PoW. The reason is that it is completely decentralized due to which it can’t be affected by wrongdoers. Plus, the scalability is great as it can process blocks in seconds while PoW consumes around 10 minutes.
Do you think PPoS is better than PoS? Explain your answer.
Do you think PPoS is better than PoS? Explain your answer.
PoS was created to solve the blockchain trilemma issues that PoW was facing. But there are still some issues that occurred in PoS. That’s why PPoS was created with the aim to become a better version of PoS that can offer decentralized, secure, and scalable blockchain to the users.
So, I believe that PPoS is better than PoS as it has improved the existing issues and solved the blockchain trilemma to a great extent. Additionally, the assets that we bet on PPoS are not locked which means we can withdraw them easily and in case of violence, the asset won’t be deducted.
Explore and explain an ALGO transaction using algoexplorer.io ( Screenshots required)
Explore and explain an ALGO transaction using algoexplorer.io ( Screenshots required)
Now we will explore ALGO transactions with the help of "algoexplorer.io". Once you visit the website, it will show you the details of ALGO like circulating supply, total supply, online stake, and the latest blocks. It also reflects ALGO price, block speed, transaction history, latest transactions, TPS, and much more.
Now that we have to explore a transaction, I will click on one of the links from the latest transactions.
Once clicked on the link, it will take you to another page where you can find complete details about that transaction. It shows the transaction ID, timestamp, block number, and type of transfer. Other details include the sender's wallet address, amount of asset, name of the asset, receiver’s Wallet address, Sender ASA balance, and receiver ASA balance.
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.)
Now I will analyze the chart of ALGO on a weekly timeframe so that I can cover the entire beginning of the year to the present price. Further, I will break down my analysis into 2 parts, the first one will be done through chart patterns and the second one with the help of technical indicators.
ALGO Analysis Via Chart Pattern
As you can see from the below-mentioned image, the price of ALGO/USDT is making a huge cup & handle pattern on a weekly timeframe. It is a bullish pattern which means that price will pump after breaking the neckline of the cup. The price has already broken the neckline and it is coming for retest to that zone once again so we can expect a minor retracement. Once it’s done, we can expect a strong bullish rally in the price.
ALGO Analysis Via Technical Indicators
To analyze ALGO/USDT via technical indicators, I have used Donchain Channel, MACD, and RSI. The Donchain Channel shows that price has broken the mid-range band which indicates that it can test the lower band by making a retracement. Additionally, MACD has made a sell crossover so 2 indicators are making sell signals. As for the RSI, it is making a bullish divergence which is a sign that it can pump. However, I’m expecting a minor retracement in the price, and then it can possibly pump to the new high.
Conclusion
After doing this homework, I have come to the conclusion that Algorand is a strong project with unmatched fundamentals. It has the ability to become one of the leading cryptocurrencies in the future as it has solved the blockchain trilemma through PPoS which is a great improvement in this field. Further, the price action of ALGO looks great which also means that it is a good investment opportunity to make a great profit.
Thanks For Visiting My Post And Your Appreciation
Cc:
@nane15
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