Algorand is a decentralized cryptocurrency and smart contract platform. The platform aims to expand on the use cases for cryptocurrencies. Algorand hopes to achieve this by increasing transaction speeds and reducing the time transactions take to achieve finality on its platform.
The platform is seeing continuous growth and sees an average of 500,000 daily transactions. Over 500 companies are developing applications on Algorand, thanks to the advantages that the platform’s layer-1 smart contract provides and other functionalities of the platform.
Using Pure-proof-of-stake as its consensus mechanism (PPoS), Algorand can confirm transaction blocks in seconds. This provides almost instant finality to transactions on its platform. The platform also offers users customizable smart contracts and atomic transfers.
How does the platform work?
Founded by Turing award-winning professor Silvio Micali, the Algorand platform has the backing of reliable technology, a strong team, and investors who have backed the platform. Algorand was also able to raise funding through public and private sales.
How does the platform work? Algorand uses its Pure-proof-of-stake consensus mechanism to choose token holders to add blocks to the blockchain. Token holders are chosen randomly, irrespective of the size of their stake. This ensures both decentralization of the network and security from any threats. The Algorand platform has partnered with organizations like Coinbase, ISDA and has seen several projects create their protocols on its blockchain.
The platform promises security, speed and decentralization, and is the world’s first permissionless pure-proof-of-stake protocol. Recently, Algorand outlined its ambitions for 2021, which we will briefly discuss.
Algorand is continuously adding new functionalities, improving performance, and ensuring that decentralization is not compromised. It aims to become an alternative to platforms like EOS and Ethereum in the DeFi space.
What are the advantages that Algorand offers?
All smart contracts are written in a bytecode based language called TEAL (Transaction Execution Approval language). The language can be used to write stateless and stateful smart contracts. One of the properties that make TEAL the most secure language to write smart contracts in, is that it cannot be modified once the contract is attached to the transaction.
Algorand is also cheaper than other platforms in the DeFi space and has better security and scalability. All transactions are instantly processed and stored on the blockchain.
The Algorand platform supports two types of smart contracts. Layer 1 smart contracts and Layer 2 smart contracts. Layer 1 smart contracts are used when the user has to execute an atomic swap or create a new token. Layer 2 contracts have more complex uses. To give you an example, If a contract has multiple execution stages, the user would have to use a Layer 2 smart contract.
What are the advantages that Algorand has over other blockchains?
- Algorand is a better medium of exchange — Algorand, with its faster block times, ensures that it is a better medium of exchange than other blockchain protocols.
- Tokenization — Algorand offers universal tokenization. Users of the blockchain can tokenize assets in different fields.
- Forkless — Algorand’s Pure-proof-of-stake consensus mechanism ensures that the blockchain does not fork. Every new block on the blockchain receives finality by default.
Algorand’s plans for 2021
The Algorand platform aims to see continuous growth in the next year. The developers aim to improve performance and functionalities while focusing on keeping decentralization intact.
The platform measures performance using three key metrics.
- Block proposal time — Block proposal time is the time that it takes observers to become aware of the block that has to be added permanently to the blockchain.
- Block finalization time — Block finalization time is the time that it takes to add the new block on the blockchain permanently.
- Finalized transactions per second — As the name suggests, this is the number of transactions finalized per second.
In 2021, Algorand plans to improve the following metrics.
- Block proposal time — Algorand’s block proposal time will remain what it currently is, 0.5 seconds. However, the block size will grow from 5000 to 25000 transactions.
- Block finalization time — The Algorand blockchain plans to reduce the block finalization time from 4.5 seconds to 2.5 seconds.
- Finalized transactions per second — The platform aims to grow its finalized transactions per second from 1000 TPS to 46000 TPS.
Through these improvements, the Algorand blockchain hopes to achieve a permissionless, decentralized network. The platform can achieve seamless scaling and overcome the drawbacks that first-generation blockchains faced.
The Algorand blockchain gives decentralization and security the utmost importance, and it is their stated goal that every improvement made to the platform will ensure that they remain central to the blockchain.
The developers at Algorand hope that the platform sees success in the smart contract and DeFi space. To achieve this success, the team needs to ensure mass adoption of the platform. Algorand is working on completing mass adoption by partnering with several partners across the world. These partners represent the venture capitalist, financial, cryptocurrency, and technology communities. The Algorand platform also ensures that it is accessible to developers, so creating and deploying smart contracts and decentralized applications are cheaper than other platforms in the DeFi space.
Algorand is poised to face 2021 and hopes to achieve successful long-term results by improving the technology behind the platform.