What is Algorand?
Crypto for Advanced
Algorand (ALGO) is a Boston-based open-source software firm dedicated to the creation of a borderless economy. They created a permissionless and pure Proof-of-Stake (PoS) protocol that allows for open participation, scalability, security, and transaction finality.
Algorand seeks to address the three major issues confronting blockchains today, dubbed the blockchain trilemma: security, scalability, and decentralization. The network's security is tied to the honesty of the majority in Algorand's consensus mechanism, dubbed Pure PoS. In contrast to Delegated Proof-of-Stake, Liquid Proof-of-Stake, or Bonded Proof-of-Stake, there is no penalty mechanism, also known as slashing, in case an actor misbehaves – think of liveness faults like poor uptime, or security faults like trying to verify the same block twice. Rather than penalizing bad actors, Algorand seeks to make money cheating by a minority impossible and money cheating by the majority foolish. The process will operate perfectly as long as two-thirds of the majority is truthful.
In Algorand, blocks are divided into two parts by lottery known as "cryptographic sortition," allowing for quick finality. Gone are the days when one had to wait for 30+ confirmations and, finally, many hours to guarantee that a transaction had occurred. The proposal phase begins when a single token is chosen at random, and its owner suggests the following blocks. However, this proposer is only known to the whole network during the propagation phase, at which point it is too late to interfere. In Pure PoS, every token has the identical ability to be chosen.
Voting round: a committee of 1,000 random token owners is chosen, and the block submitted by the first user is approved. Unlike the fixed committee architecture used in many Proof-of-Work or Proof-of-Stake blockchains, the random selection of committee members makes the protocol exceptionally safe against adversary attacks: they just don't know who to target.
Difference between Ethereum and Algorand
The Ethereum and Algorand blockchain platforms are rivals. Both platforms, which employ smart contracts, provide infrastructure to allow the creation of new blockchain-based projects.
The blockchain's consensus method is one major distinction between Algorand and Ethereum. Ethereum employs the proof-of-work (PoW) mechanism, which necessitates massive computer power and energy resources in order to "mine" new currencies and execute transactions. Ethereum is increasingly shifting to the proof-of-stake mechanism, the most prevalent variant that needs blockchain network users to opt in as validators.
Key take aways in differences:
- Algorand is still relying on pure proof of stake.
- The Ethereum platform can process a new block of transactions every 12-14 seconds.
- Transactions handled using the Algorand network are completed faster, in roughly four seconds.