Scaling Blockchain: Algorand Quest to Solving the Blockchain
Algorand is a smart contract platform that has gained a lot of attention in recent times due to its underlying technology. One of the core components of its technological stack is its pure-proof-of-stake (PPOS) protocol. The PPOS creates a more egalitarian version of the traditional POS protocol and successfully solves the scalability trilemma.
What is the Scalability Trilemma?
Scalability Trilemma is a concept that states that there is always a trade-off between the following three DLT properties – decentralization, scalability, and security. Simply put, it states that a blockchain protocol can only have two of the three features. Bitcoin’s proof-of-work mechanism champions decentralization and security while compromising on scalability. Similarly, the delegated proof-of-stake (DPOS) algorithm emphasizes security and speed by compromising on decentralization. Algorand claims to have successfully created a public chain protocol that satisfies all three properties.
Decentralization is made possible by the fact that PPOS is not dependent on “the few” doing their job right. In traditional POS, a node’s voting power is directly proportional to the size of its stake. As such, more affluent individuals and companies tend to get more opportunities to make money. EOS’s DPOS straight-up elects 21 block producers from the entire network who take care of the consensus. PPOS selects a token holder randomly from the network, regardless of the size of the stake. As such, the barrier to entry is low, and it encourages more user participation, which organically increases decentralization.
Algorand transactions achieve finality, by default. This is in stark contrast to Bitcoin, which requires a 10-min block time to ensure that transaction history won’t get overwritten by finality problems. Algorand can achieve swift block times (usually takes a few seconds). A small committee validates each block, and the committee member doesn’t need to directly communicate with each other, thanks to Algorand’s innovative cryptographic self-selection technique. Plus, keep in mind that unlike traditional POW protocols, Algorand nodes don’t need to waste their time and computing resources to solve cryptographically hard puzzles.
PPOS assures security via rigorous mathematical analysis. Firstly, it is impossible to rig the consensus system since the validator chosen secretly from the network. As such, a potential attacker won’t know who the validator is beforehand. Plus, along with the voting committee, validating a block is routinely re-selected after every step, which makes corruption impossible. Also, Algorand’s instant finality ensures that forking the protocol is impossible, so an attacker can’t change transaction history as and when they want to.
As you can see, Algorand’s underlying technology solves the scalability trilemma with ease. There is a reason why organizations like Assetblock, International Blockchain Monetary Reserve, Italian Society of Authors and Publishers, PlanetWatch, etc., have chosen to collaborate with Algorand. This is why the Marshall Islands will be building its central bank digital currency (CBDC) called SOV on top of Alogrand. Backed by a highly-qualified team and headed by Turing Award winner, Silvio Micali, Algorand is a project that will dominate the blockchain space soon.