The Case for Algorand’s Scalability and Smartcontracts

A smart contract is very similar to the traditional contract apart from the fact that it is purely virtual. It is a computer protocol that is in charge of facilitating, verifying, or enforcing negotiations. Smart contracts make it possible to conduct credible exchanges without the need for third-parties intermediaries. The most common features of transactions done through smart contracts are traceability and irreversibility.

Scalability, on the other hand, can better be understood as a coin’s ability to handle itself with an increase in volume, i.e. it represents a coin’s adaptability to an increase in transactions. Some of the factors that determine a coin’s scalability are the speed of a transaction and the amount of data processed at once.

Are Smart Contracts and Scalability a Match In the Making?

Achieving scalability is fundamental as far as the viability of Blockchain technology is concerned. If cryptocurrencies are to become mainstream, they are expected to be able to handle a great deal of  traffic as fast as their centralized counterparts, if not faster. Unfortunately, scalability has been a persistent challenge for  Blockchain technology. BTC and ETH,  two  of the most common cryptocurrencies in use today, are markedly slower than their centralized alternatives. Some reasons for this include:

  •         The time taken to add a transaction to the block. Both ETH and BTC use the proof-of-work model whereby a transaction has to go through each miner in the system before it is validated. transactions Each transaction is thus considerably delayed due to the inevitable congestion such a model entails.
  •         The consensus period. As crypto-enthusiasts are well aware, cryptocurrencies are decentralized, sothey are controlled and governed by every user in the system. Key decisions are thus made through consensus,  and users from all over the globe each have different opinions that they are not afraid to raise. Getting all of these users to agree  on one course of action often wastes valuable time.

Problems Facing Smart Platforms and DApps Usage

Bitcoin was the very first cryptocurrency developed. It was decentralized and very secure, and it was built on the first generation Blockchain. While people were still wrapping their heads around this innovative invention, the second generation Blockchains (which were ETH-based) burst onto the world stage. Second generation Blockchains were presented as faster, cheaper and more scalable than Bitcoin.The third generation Blockchains  (essentially anything that came after ETH) soon followed. The third generation Blockchain applications promised even greater optimization.

ETH is the most popular platform for DApps, and particularly for gaming. Unfortunately, these networks have had to contend with several challenges like competition for scarce resources, high gas costs, high costs more generally, slow confirmation speeds, and congestion. Because of all of these obstacles, DApps have  struggled to maintain users. 

Blockchain applications can be rendered powerless in times of high network congestion. Take for instance the recent MakerDAO fiasco whereby ETH was rendered practically useless due to limitations such as scalability and Blockchain bloat. For those unfamiliar with these concepts,MakerDAO is a decentralized autonomous organization within the ETH Blockchain that works to minimize the vitality of a cryptocurrency token called DAI. DAI has its price stabilized compared to the US Dollar. The team behind this token hopes that the stability as against the USD will give everyone the ability to hold money that will maintain its purchasing power. Unfortunately, it has been quite difficult to attain this goal because ETH is much too volatile, as its prices continually rise and fall dramatically. 

For DApps to be able to retain a substantial number of users they will have to match the scalability and responsiveness of traditional centralized apps. There are several ongoing attempts to help build DApps with the necessary capabilities, but unfortunately these attempts have been met with several challenges. The following problems have arisen for both first and second generation Blockchain technologies and prevented their mainstream adoption and acceptance, consequently hindering the evolution of DApps.

  •         High Scalability

Scalability is at the top of our list because it is the most prominent problem facing Blockchain systems today. BTC is currently limited to just seven transactions per second, and ETH is currently facing issues in its distributed computing network which have increased the gas fees and significantly slowed the confirmation process.

  •         Interoperability

As of today, it is very difficult for separate Blockchains to communicate with each other, and there is a growing need for the standardization of communication between diverse protocols.

  •         Governance

The governance structure of Blockchain systems is one of the most attractive elements of the technology . However,the emphasis on decentralization in the industry makes it notoriously difficult to implement any sort of viable governance scheme.

  •         Privacy

BTC transactions are largely pseudonymous. However, many users are concerned because of the possibility for others to track both their transactions and BTC addresses. It is difficult to achieve a truly private cryptocurrency network, and privacy is sure to be a major obstacle to any widespread adoption of Blockchain technology.

  •         Sustainability

A troubling recent trend is the proliferation of altcoins that exist for only a few months and then suddenly disappear,  causing huge losses for users. Only a small minority of coins such as BTC and ETH have proven to be sustainable over the long term.

Promising Solutions

After taking stock of the limitations that I  highlighted above,  you are probably asking yourself what the proper way forward is —is there any hope? Theshort answer is an emphatic “yes.” Despite the numerous challenges facing Blockchain enthusiasts, there have been several noteworthy dynamic developments in the sphere of Blockchain technology.

These solutions were made possible by the advancement of Blockchain to Blockchain 3.0, and through the efforts of trailblazers such as the Algorand project. The Algorand company is a tech company that developed the world’s first open, permissionless, pure proof Blockchain protocol without forking. It was able to provide the necessary security, scalability and decentralized needs of today’s economy. The Algorand team is led by Turing award-winner Silvio Micali who is the brain-child behind the project that is set totackle the Blockchain Trilemma. Silvio is working with an award-winning team that is committed to the ongoing development of best-in-class solutions for the future of economic exchange. They intend to make their layer 1 scalable, allowing businesses to leverage the layer 1 scalability.  And they continue to roll out technical innovations.

The Rise of Blockchain 3.0 and A New Wave of Innovations

Innovators and developers are working day and night to develop solutions to the above-mentioned problems. The rise of Blockchain 3.0 technology has  initiated a wave of innovations and decentralized applications. Here is a summary of the solutions to the above-mentioned problems. 

Problem Solution
Scalability ·         Use of sharding to scale to thousands of transactions per second.

·         Implementation of programming languages such as Scilla and Vper that facilitate better smart contracts designs. 

·         Adoption of new methods of consensus methods such as PoS

Interoperability ·         Implementation of private cross-chain smart contracts and removal of centralized counterparty risks.
Governance ·         Allowing the community to edit the underlying protocol through voting, as well as adjust the voting mechanism.
Privacy ·         Implementation of technologies such as zero-knowledge proofs, ring signatures, and I2Pand Tor functionality.
Sustainability ·         Attempts to alter the legal framework in order to lower barriers to entry and enhance the comfort level of more mainstream users.



The Blockchain 3.0 era will usher in a new wave of innovation that will be a vital component of the Web 3.0 technology stack. By providing models for open protocols, communication, scalability, decentralized governance and payment models, and distributed data storage/integrity, the Web 3.0 will look vastly different than the internet today.

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