The Case for Algorand’s Scalability and Smartcontracts

A smart contract is very similar to the traditional contract only that it is purely virtual. It is a computer protocol that is in charge of facilitating, verifying, or enforcing negotiations. Smart contacts make it possible to conduct credible exchanges without the need for third-parties intermediaries, these represent some of the most common features – transactions 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 or adaptability. 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 Blockchain is concerned. If cryptocurrencies are to go mainstream, then it is only expected that they’re as fast as their centralized counterparts if not faster and capable of handling the traffic. Unfortunately, scalability has been a great challenge for the Blockchain. BTC and ETH which happen to be the two most common cryptocurrencies are way slower than their centralized alternatives. Some of the reasons for this include

  •         The time is taken to add a transaction on 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. As you would imagine, the transactions end up congested and delayed.
  •         The consensus period. A crypto-enthusiast would know that cryptocurrencies are decentralized meaning that they are controlled and governed by every user in the system. Key decisions are thus made through consensus, remember the users are placed in different parts of the world and they each have different opinions which they are not afraid to raise. So you can only imagine how long it takes all the users to get on board about something.

Problems facing smart platforms and DApps usage

         Bitcoin was the very first cryptocurrency to appear, it was decentralized and very secure, it was built on the first generation Blockchain. While people were still wrapping their heads around this new exciting invention, came to the second generation Blockchains (ETH-based). Second generation Blockchains were presented as being faster, cheaper and more scalable than Bitcoin. Then came the third generation Blockchains which is essentially anything that came after ETH. The third-generation Blockchain applications promised even greater optimizations.

         ETH is the most popular platform for DApps especially games. Unfortunately, these networks have had to battle with several challenges due to reasons such as competition for scarce resources, high costs, very high gas costs, slow confirmation speeds, and congestion. Due to these reasons, DApps have been struggling to maintain users. 

         Blockchain applications can be rendered powerless in times of high network congestion. Take for instance the recent Maker DAO fiasco whereby ETH was practically rendered useless due to limitations such as scalability and Blockchain bloat. For those of us who are not familiar with what I’m talking about, I will attempt to walk you through it in the simplest way I can. MakerDAO is a decentralized autonomous organization within the ETH Blockchain that works to minimize the vitality of a certain cryptocurrency token called DAI. DAI has its price stabilized compared to the US Dollar. The team behind this token hopes to give everyone the ability to hold money that will maintain its purchasing power since it is stable against the USD. Unfortunately, it has been quite difficult to attain this goal because ETH is volatile, its prices keep rising and falling 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 attempts to help build DApps, sadly there have been a few challenges hindering these steps. The following problems have faced Blockchain 1.0 and 2.0 and prevented their mainstream adoption and acceptance, consequently hindering the evolution of DApps.

  •         High Scalability

This issue just had to top our list because it is the most prominent problem facing Blockchain systems today. BTC is currently limited to 7 transactions per second while ETH is currently facing issues in its distributed computing network thus increasing the gas fees and slowing the confirmation process.

  •         Interoperability

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

  •         Governance

I have to be honest, the governance structure of Blockchain systems is simply fascinating. The emphasis on decentralization in the industry makes it notoriously difficult to implement governance.

  •         Privacy

BTC transactions are largely pseudonymous. Many users are concerned because it is possible to track their transactions and addresses. It is very difficult to achieve a truly private cryptocurrency network.

  •         Sustainability

If you have been keen, you would know that lately, numerous altcoins have existed only for a few months before disappearing causing huge losses on the users. Very few coins such as BTC and ETH have proven to be sustainable.

Promising solutions

         Having highlighted all those limitations above, I know you’re probably asking yourself what the way forward is. Is there any hope? And the short answer is yes, despite the several scalability issues at hand, there have been several noteworthy dynamic developments.

         These notable solutions have been 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.  They are led by Turing award-winner Silvio Micali who is the brain-child behind the project that is set to make tackle 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. They continue to roll put technical innovations.

The Rise of Blockchain 3.0 and A New Wave of Innovations

         Innovators and developers are working day and night to come up with solutions to the above-mentioned problems. The rise of Blockchain 3.0 technology has come with 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 Vvper 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 remove centralize counterparty risks.
Governance ·         allowing the community to edit the underlying protocol through voting as well as adjusting the voting mechanism.
Privacy ·         implementation of technologies such as zero-knowledge proofs, ring signatures, and I2Pand Tor functionality.
Sustainability ·         attempts to get the legal framework to lower barriers to entry and comfortability to mainstream users.



         The Blockchain 3.0 era will usher in a new wave of innovation that will become 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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