What is Algorand?
Algorand, a fast growing blockchain and ecosystem (11 778 854 addresses currently) blessed with a vibrant community and pristine developer support, is often dismissed by discussion forum experts as “yet another Proof of Stake network”. Proof of Stake, a consensus protocol in which participants can mine and validate blocks by staking their token holdings, is a fascinating idea and yet our experts are not entertained.
Fortunately, Algorand is much more than a “mere” Proof of Stake blockchain with a “Vanilla” token attached. Algorand introduces a set of bold, novel ideas that are exceedingly well implemented.
Let us take a look.
We mentioned above that Algorand uses the Proof of Stake (POS) consensus protocol, however it would be more accurate to state that Algorand is a “Pure” Proof of Stake network. There are three types of POS consensus protocols, which we will go over quickly: bonded proof of stake, delegated proof of stake and pure proof of stake.
Proof of stake
Bonded Proof of Stake forces nodes into compliance by making them deposit a certain amount of tokens prior to producing blocks. Once the deposit has been made, it cannot be removed until after a certain amount of time – Nodes have “Skin in the Game”, as Nassim Nicholas Taleb would say, and stand to lose a lot if they act maliciously (their deposit will be slashed).
Delegated Proof of Stake is a structure in which entities are selected (voting power is “delegated” to them) to create blocks in a round-robin order. Block producers are voted into power by the users of the blockchain, who get votes according to the number of tokens they own.
Pure Proof of Stake is a brand new design introduced by Algorand. Anyone wanting to participate in the Algorand network can “flag” their account with Algos. The likeliness of a user being selected will depend on how much Algo they have in their account compared to all other accounts. Pure in this context means that they are free to come and go as they wish, and that their Algos will not be locked for a period of time.
Rekeying is a brilliant idea and one that is specific to Algorand as I have never seen it implemented anywhere else. Rekeying allows users to change their private key while keeping their public key. Rekeying gives individuals and organizations more flexibility and continuity when it comes to the management of multiple wallet addresses.
Algorand’s Smart contract language is not Solidity, Vyper or Rust but rather TEAL, which stands for Transaction Execution Approval Language, an Assembly-like language which is interpreted by each Algorand Node. TEAL smart contracts can be coded manually or with the help of PyTEAL, Algorand’s Python compiler. Algorand Smart contracts (ASC1), written in TEAL, can operate at over one thousand transactions per second, with a finality of 5 seconds, which is truly impressive.
Algorand Standard Assets (ASA), such as tokens, Non-fungible tokens (NFT’s), CBDC’s and even restricted securities can be deployed on the Algorand Network in a simple and cost-effective way.
With the fast growing community, ecosystem, and unique features Algorand looks to have a promising future ahead. We will continue to follow the progress of the project and keep you updated as time passes.