Even though Bitcoin solves many issues that were prevalent in the traditional financial systems, it doesn’t come without flaws of its own. Most traditional cryptocurrencies come with plethora of criticisms regarding their perceived governance issues, speed of transaction, inefficient verification process and so on.
Algorand, which is co-authored by MIT professor and Turing award winning cryptographer Silvio Micali aims to solve these problems
Algorand confirms transactions with latency on the order of a minute while scaling to many users. It ensures that users never have divergent views of confirmed transactions, even if some of the users are malicious and the network is temporarily partitioned. In contrast, existing cryptocurrencies allow for temporary forks and therefore require a long time, on the order of an hour, to confirm transactions with high confidence.
Algorand uses a new Byzantine Agreement (BA) protocol to reach consensus among users on the next set of transactions. To scale the consensus to many users, Algorand uses a novel mechanism based on Verifiable Random Functions that allows users to privately check whether they are selected to participate in the BA to agree on the next set of transactions, and to include a proof of their selection in their network messages.
In Algorand's BA protocol, users do not keep any private state except for their private keys, which allows Algorand to replace participants immediately after they send a message. This mitigates targeted attacks on chosen participants after their identity is revealed.
Experimental results show that Algorand acheived 125x Bitcoin's throughput, and incurs almost no penalty for scaling to more users. It was evaluated on a thousand EC2 virtual machines, simulating up to 500,000 users.
Features of Algorand
- Scalability: Algorand can be scaled to billions of user. It does this by scaling the block in two phases. In the first phase a user is randomly selected and proposes a new block and in the second phase a small group of users are randomly are randomly selected to verify and agree on the block. In essence a new block is generated as fast as it can be propagated through the network.
- Security: Algorand is guaranteed to work securely in a system here most of the users are honest.
- Computationally Efficient: It doesn’t have hard cryptographic puzzles to be solved to generate a block. Moreover, this amount of computation remains constant as the network grows. The transactional costs remains low regardless of the number of users.
- Clean and Fast: Traditional blockchains are elongated by expensive probabilistic processes. The latency of the system makes it inapplicable in many financial operations. In Algorand the probability of having a fork is 10-18. Their consensus protocol certifies a block every few seconds, thus resulting in a very low latency.
- No Censorship: As Algorand’s blocks are generated in two phases. This means that no valid transaction can be censored.
- Frictionless Evolution: Algorand’s unique consensus protocol allows the system to evolve and adapt based on future community needs without much problems.
Silvio Micali along with his team recently raised $4 Million to build this blockchain. Micali’s proof-of stake based system, which gives Algorand an edge over cryptocurrencies such as Bitcoin and Ethereum has been under public’s eye for over a year now with almost unanimous acclamation. Scheduled to be launched in less than a year, Algorand will mostly be turning some heads towards it.
More information about Algorand is available on https://www.algorand.com/