blockchain trilemma - Crypto Academy / S5W4 - Homework post for nane15
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It is an open-source blockchain that utilizes what is called Pure Proof of Stake(PPoS), this works differently from Proof of Stake(PoS) in the sense that, it breaches the gap between who can validate blocks, PoS says how many tokens you have while PPoS says only a token. With this, you’ll find out that PoS is somewhat biased.
the PPoS does not care about the number of tokens a user owns, users are chosen at random to be given validation rights, all a user needs to have is his 1ALGO.
In terms of Scalability, Algorand is capable of processing over a thousand (1,000) transactions per second, this beats the blockchain giant Bitcoin.
As of the time I was writing this, the market of Algorand(ALGO) is as follows,
Price $1.52
Rank #20
ALG chart Source
Pure Proof of Stake(PPoS) unlike PoS works a bit differently, this involves selecting a user at random to validate a block, selecting a group of users to either verify or not verify the block. This whole process happens in two phases namely Proposal and Voting
- Proposal phase: At this phase, once you’re an Algorand token holder, you have a chance of being selected as a block leader, the selection is done at random by a means called Verifiable Random Function(VRF), if a user is selected, the assignment goes to the person’s private participation key, once this done, the selected leader will now have the ability to officially propose the block, this way no one will know who’s been chosen. This also shows how secure the PPoS mechanism is.
- Voting phase: after the block has been proposed, different sets of users are selected at random to be the Voters and Verifiers of the proposed block. This group of users is to make sure the proposed block has no problems such as overspend, double-spend, not only that but any other problem concerning the block.
All in all, PPoS involves randomly choosing a user to propose a block which is verified by a different set of people chosen at random.
As technology develops, there are good sides and bound to have bad sides too. Lets take a look at the advantages and disadvantages of the PPoS.
By the way, PPoS operates it has many benefits such as,
- Fairness: PPoS makes use of Verifiable Random Function(VRF), which is purely random selection. Once you own at least 1ALGO, you’re qualified to participate unlike Ethereum 2.0 which requires you have 32ETH before you can participate.
- Security: PPoS brings about security in the sense that, a participating node is chosen at random and the proposal right is assigned to the node’s private participation key.
- Scalability PPoS makes the Algorand blockchain process more than 1,000 transactions per second, and validates a block in less than 5 seconds, if this isn’t fast enough, ask the blockchain giant Bitcoin.
- Energy conservation: unlike other mechanisms like PoW which requires a person to wear his/her machine down solving algorithms, PPoS doesn’t require all of that stress.
From the above, one can see that PPoS requires fewer tokens before a user can be a participant node, nodes are also chosen at random which shows how fair the process is, a leader node is not also exposed for people which shows how secured the mechanism is. A user doesn’t also need to buy machines just to be a participant node.
Just as PPoS is good, it also has some comings which are stated below,
- Even though, it requires a user to own at least 1ALGO before you can be a participant node, it also means that those which with more ALGO tokens would have a higher chance of being selected, because, it picks a token and traces back to its owner and assigns the leader node status.
- PPoS doesn’t penalize users who proposed faulty blocks, it's good in a way but could cause a lot of problems soon, if a faulty block is proposed and by chance gets verified, you can imagine what that might cause, it could even cause a hack.
- Another drawback of PPoS is the reward system, compared to PoW, the reward gotten from PPoS is very small. This could cause people to move away, though PoW will wear down machines, the reward is worth the trouble.
4. Do you think Algorand solved the blockchain trilemma? Explain your answer.
Yes, Algorand has solved the blockchain trilemma, this is what I think for a blockchain to achieve Blockchain trilemma free, it needs to achieve,
- Decentralization: This means, it is not controlled by any bother and everyone has an equal say in the decision. Algorand has shown how it is decentralized by giving its users equal rights to be a participant node by holding as low as 1ALGO.
- Scalability: The scalability of a blockchain has to do with its ability to accommodate increasing users, Algorand has proven its scalability by being able to process more than 1,000 per second, as I said earlier, if this isn’t fast enough, ask the blockchain giant Bitcoin.
- Security: Algorand’s use of PPoS which uses VRF to randomly select the next leader node shows how secured and anonymous it is, it only assigns the leader mode status to the private participant key which is also kept private.
With the above, I stand by the fact that Algorand has been able to beat Blockchain's Trilemma.
5. Do you think PPoS is better than PoW? Explain your answer
Yes, I do think that PPoS is better than PoW, and this is why.
The PoW consensus mechanism has a lot of drawbacks, one is the fact that it requires its users to have computers that can solve complex mathematical problems, this is not only tiresome but also costly, imagine you buying the latest AMD processor just for the mining and also having to take care of electricity bills.
Also, the PoW consensus mechanism makes validation of blocks take a long time, just imagine how the Bitcoin blockchain is yet it can only validate 1 block per 10 minutes, which is not very encouraging.
Furthermore, PPoS does not require all that hustle just to get a block validated, all you are to be an ALGO holder of at least 1ALGO and you’re good to go.
So, once more, I think PPoS is way better than PoW.
6. Do you think PPoS is better than PoS? Explain your answer
Yes, I do think that PPoS is better than PoS, and this is why.
PoS was proposed as a way to improve blockchain activities, however, it has some drawbacks which are addressed by PPoS.
PoS works with the number of tokens a user has before the person would have the chance of being selected to be a leader validator, so basically the more tokens you have the higher your chances of being selected.
Also, because it focuses on how many tokens a user has, this can cause hackers to be able to have some guesses on who might be the next validator, this way, the person might be prone to cyber-attacks.
7. Explore and explain an ALGO transaction using algoexplorer.io (
Screenshots required)
I first visit algoexplorer.io
On the homepage, this is what can be observed.
SourceFrom the screenshot above, we can see a search engine(in red), latest block(in black), circulating supply(in green), Total supply(in blue), online stake(in yellow), ALGO price(in red), Block speed, TPS, TX cost, and Accounts(in blue).
You can also see a chart representing the Number of Txs(in black), below it we have Latest Blocks to the left and the Latest Transactions to the right.
I then choose a transaction to explore.
SourceFrom the above, in Transaction Overview, we can see the Transaction ID(in black), Timestamp(blue) Block(in red), and Type(in green)
In Transaction details, we can find Both the Sender and Receivers address, amount sent, Asset ID, Sender ASA Balance as well as the receivers ASA Balance.
Bellow the above mentioned, mentioned one can also get more information about the transaction.
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8. Carry out an analysis of the price of ALGO from the beginning of the year to the present. Via graphics (screenshots required.)
For the analysis of the price of ALGO, I decided to use Tradingview
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At the beginning of the year, ALGO was priced at $0.0.3962 but didn’t stop there as it received a bullish trend up-till it was priced at $1.7145 on 13TH February 2021.
From there on, it had a sharp bearish movement which took the price down to $0.9768, from there, it moved steadily upward to $1.6765 on 17TH April 21.
It later had a downtrend which lasted for 3 months with the lowest price being $0.7103.
It later bounced back from the bear to a bull and achieved a high of $2.3713,
Since then, there has been a battle between buyers and sellers, the market is now in a ranging phase, with not many bullish or bearish movements.
Since the introduction of blockchain technology, the world has taken a different step towards development, but the huge drawback is the blockchain trilemma, however i think that Algorand Blockchain has been able to solve this issue and on a way to revolutionize the blockchain world.
Cc:-
@nane15