Algorand, also known as ALGO, is a project which aims at expanding the
way cryptocurrency is used while focusing on accelerating the speed in which
transactions are made and greatly reducing the necessary time for them to be
deemed final on their network.
Its design fully embraces their claim of being a payment-focused network
and shows a strong focus on near-instant finality by a TPS (transactions per
second) speed of over 1000 and finality in less than 5 seconds.
Algorand Explained
The platform has applications in and been used by microfinance experts,
real estate agencies, and in some cases, in copyright as it enables its users
to create smart contracts and tokens which can represent new and/or existing
assets.
Its code is open source which by definition means that it can be copied,
cloned or used in permissioned blockchains.
Algorand’s blockchain is craft in a way that enables other developers as
to create different kinds of applications powered by cryptocurrency. It can
host decentralized application (DApp) capabilities and provide scalability.
The ALGO cryptocurrency is distributed into the economy as every ALGO
coin holder receives a certain amount with each new block.
As stated by the Algorand Foundation, only 10 billion units of their own
cryptocurrency will ever get to be created.
The History Behind ALGO
ALGO was created by Silvio Micali, a computer scientist, MIT professor
and 2012 Turing Award winner. In 2017, Algorand’s white paper was published by
Micali and Jing Chen, a professor in Stony Brook University. Funding was
possible due to the Singapore-based corporation, The Algorand Foundation.
Algorand officially launched in 2019 and quickly raised around $62
Million USD in funding.
The Inner Workings of Algorand
Algorand’s blockchain features a two-tiered structure. Its base layer is
where smart contracts, asset creation and atomic swaps find support, and where
security and compatibility are ensured.
Users can use the first layer as a platform to create ASAs, representing
new or existing tokens, as well as Algorand Smart Contracts (or ASC1s) have the
same level of security as its consensus protocol.
The second layer is intended to be used for more complex
operations such as smart contracts and dApp development.
By use of a bifurcation, smart contracts happen off-chain
which, in turn, make the processing of simple transactions effectively faster
as the blockchain doesn’t become clogged.
The Pure Proof of Stake Mechanism
Algorand’s Pure Proof of Stake, often referred to as PPoS,
is a democratized PoS with absolute low staking participation requirements as
only 1 ALGO coin is needed.
Any user can stake ALGO in order to have his proposal up
for voting. To do so, one must generate a participation key to become a
Participation Node.
The PPoS is a two-phased process for block production and
it consists of the proposing stage and the voting stage.
Block leaders are randomly selected on the first phase by
means of a VRF (verifiable random function) and can propose the block. The VRF
will then supply the block leader with cryptographic proof of his role so that
his status can be verifiable.
After the block proposal stage comes the voting stage in
which participation nodes will randomly elect a committee whose responsibility
is to avoid overspend and double-spend.
The quorum needs to agree that the right procedures have
been followed in order for the block to be added to the blockchain. If
wrongdoing is found, the process goes back to stage 1 with a new leader, while
the block is discarded.
