Solving the “Impossible” Blockchain Scaling Problem Demands a New Approach — is Pure PoS it?

First featured in Hackernoon |  August 2019

CryptoBeadles interviews serial tech entrepreneur, Algorand blockchain CEO Steve Kokinos

The current state of the blockchain and cryptocurrency (crypto) industry is at an inflection point set to define the future of the technology for many years to come.

Over the last few years, we’ve seen the development of a new economic ecosystem that hopes to create a more economically inclusive world. Recent advances in enterprise blockchain technology by big players such as Microsoft and Amazon have shown this technology is here to stay.

Perhaps the biggest announcement recently was Facebook’s introduction of a whitepaper proposing their crypto solution, Libra, offering Facebook users an on-platform stablecoin.

2019 and 2020 will continue to see dramatic paradigm shifts in the adoption of blockchain and crypto, as more and more businesses decide to invest in the technology. Worldwide spending on blockchain projects is estimated at $2.9 billion in 2019, and forecast to rise to $12.4 billion by 2022 according to recent reports.

Like the internet in the 1990's, blockchain and crypto technologies still present many unknowns. Back then, no one would have envisioned a world of social networks, e-commerce and personal data mined as the new gold. In the same way, blockchain stands to meaningfully change how
people work and interact, but it remains to be seen which projects will succeed past the hype cycle.

Internet pioneers enabled subsequent world-altering institutions to grow, changing the way business was transacted across the globe. 25 years (or so) later blockchain offers similar opportunities.

Algorand

Steve Kokinos, CEO of Algorand, is a technology entrepreneur who found success during the internet boom. A serial entrepreneur, Kokinos most recently co-founded Fuze, a global voice, messaging and video conferencing enterprise platform, which he took public.

He has since committed to helping build the future of blockchain and crypto with Algorand.

Even with all these business accomplishments however, CEO's often have wider interests and my favorite quote of the CryptoBeadles interview...

“I studied electronic music before it became fashionable…”


This illustrates the importance of having the kind of curious and visionary mind required to drive pioneering technology innovation and a blockchain company forward in this unknown future, one shaping the way we trade globally between institutions and peer to peer.

Undoubtedly, Algorand will face many challenges and criticisms as it's platform grows and leads the way with its innovation since competition is fierce. Currently, there are roughly (at the time of writing this article and growing by the minute) 2,300+ cryptocurrencies trading on various exchanges with a rough market cap of $345 billion. Some are legitimate projects, while others are not.

The potential once in a lifetime opportunity in crypto attracts a lot of attention from the good, the bad and the ugly. If the 90’s internet was compared to the Wild West, then crypto takes it one step further, and
having an award-winning and responsible technology, business and economic team behind a blockchain and crypto project is imperative.

CEO's are fascinating people, and blockchain CEO's are some of the most interesting people I have met, including Algorand's Founder MIT Professor Silvio Macali. They have been generous with their time and knowledge and have a driving desire to bring socially transforming technology to fruition. I was impressed at Silvio’s ability to make complex computer science accessible, and the business and developer materials available at the Algorand Foundation are an excellent place for anyone to start learning about Algorand and their pioneering blockchain technology.

In my opinion, the Algorand team have stayed consistent with the social ethos for deploying blockchain foundational technology, and the hope at making the future of money accessible to all.

Mass adoption

Although the hype around the potential of our industry has yet to be fulfilled, many experts in blockchain and crypto believe the turning point of mainstream adoption is growing near — but certain problems must be solved first.

A major hurdle to the true adoption of blockchain infrastructure and architecture is the looming “Blockchain Trilemma” — an industry-acknowledged truism when it comes solving all three problems of security, scalability, and decentralization. Currently, even the most sophisticated blockchain projects have only managed to address a maximum of two of the three problems for a public and permissionless blockchain.

One way Algorand aims to make mass adoption easier is by using drastically less computing resources than other cryptocurrencies…

“There’s very little computational power requires…a microsecond basically,” says Kokinos

What Makes Algorand Different?

Bitcoin, Ethereum, and Litecoin have led the way in crypto adoption. Algorand is hoping to be part of the next generation of crypto, and offers a scalable solution as well as solving the problem of the Blockchain Trilemma.

As shared by Steve Kokinos to CryptoBeadles, one of the biggest differences between Algorand and other options is…

“At a simple level there are no miners, and it’s proof of stake.”

Let’s take a deeper look at the key differences of Algorand compared to other projects in the space...

Pure Proof of Stake

While not the first crypto to use pure proof of stake, many believe the future of blockchain technology is proof of stake, as it provides improved efficiencies on transaction times.

Pure proof of stake represents a significant upgrade compared to the proof of work model by requiring far fewer energy-consuming resources and presents a much safer alternative to proof of work.

No Miners

Again, Algorand has no miners and uses a random selection process for confirming transactions. A random lottery selection is used to determine who is responsible for confirming each transaction, it increases the safety of the network because bad attackers have no idea who to “attack.”

Through user replaceability, the entire block procedure is performed without anyone but the user knowing they are selected. This significantly reduces the chance of bad actors attacking the network, as it’s virtually impossible for them to know where to attack. If a bad actor does decide to attack the chain, it’s already too late and they cannot benefit from their actions.

Simple programming language

Algorand was built with scalability in mind. The code is robust and designed to be an easy build for new users and crypto professionals
alike. Using the programming language “Go” makes it an accessible programming language for developers.

The more people around the world that can participate in building the future of Algorand the more inclusive the technology becomes.

Dutch auction

Algorand has implemented Dutch auctions for their coin release (Algos) making it easy for anyone to become an Algo holder, Algorand is working to create a truly decentralized crypto by releasing tokens into the economy over the next 5 years.

Their first Dutch auction was held in June 2019 and ensured that all participants of the coin offering paid the same price for the Algo tokens.

For crypto to be widely adopted, it must be inclusive by nature, allowing anyone with an interest to be involved in the projects of their choice. Algorand designed their technology to be inclusive and fair from the start.

Self-Selection via Verifiable Random Function (VRF)

Algorand aims to achieve their vision by relying on self-selection and user replaceability.

As noted by Algorand...

“The selection of users to participate in the certification of blocks using the VRF is done randomly and secretly, without any communication among the users. Since executing this procedure requires a user’s private key, no one except for that user knows whether they were selected… by the time an adversary realizes that a user is selected, it is too late for them to benefit from an attack; the user has already sent their message and fulfilled their responsibility in the consensus protocol.”

What next…

With dozens of powerful and practical use cases in business, academia and music! Algorand is currently making its mark in the crypto world, and along with informative channels like CryptoBeadles encouraging everyone to learn and take part in forming the future of commerce and money.

Authors Note I: It is important to note, however, that any form of crypto trading is very high risk and you should seek professional financial advice before undertaking any trading