Blockchains are distributed and transparent ledgers that form trustful and cryptographically-secure digital relationships in permissionless environments via consensus protocols. Fundamentally, blockchain technology is comprised of three preexisting technologies — distributed ledgers, public key cryptography, and a consensus protocol that incentivizes, securitizes, and defines the rules of the system.
Blockchain’s inherent value is channeled by its ability to function as a “trust machine.” Society relies on third-parties and intermediaries to facilitate trust between two or more parties. Intermediaries, however, are losing trust — 92% of millennials do not trust centralized financial institutions because the privacy of their data is being undermined or threatened by security breaches. Why should we rely on “trusted” third parties to orchestrate and facilitate transactions? Blockchain seeks to circumvent destructive and inefficient intermediaries that account for 6% of global GDP lost to the system in the form of transaction fees. While siloed and disparate third-parties lack interoperability, blockchain forms a peer-to-peer, transnational network that enables items of value to be sent directly over the internet. By leveraging easier accessibility and seamless connectivity, blockchain can help bank the unbanked. Many do not have access to basic financial services. Emerging markets can pivot to blockchain to foster a borderless economy that enables global financial participation and engenders lower transactions fees.
While the auspicious and nascent blockchain innovation space has potential to disrupt and upend conventional transaction processes, supply chain management, and capital formation, modern blockchains still suffer from a trilemma. Security, decentralization, and scalability are proportionately sacrificed at the hands of existing proof-of-work and proof-of-stake blockchains. Algorand’s pure proof-of-stake (PPOS) and message-passing Byzantine Agreement protocol (BA*) offer a solution to the trilemma and an underlying mechanism that ensures the whole network is not at the mercy of a small subset of network participants.
Algorand’s mission aligns with empowering all users in a pure governance and validation process. Purity, borrowed from Algorand’s pure proof-of-stake protocol, lends itself to randomness, liberation, and certainty. Algorand’s consensus protocol implements verifiable random functions (VRFs) to select players to participate in the block writing process. The block writing process is comprised of three disjoint steps — proposal, soft vote, and certify vote. Any node can enter his or her tokens to the lottery, facilitated by VRFs, to become a member of a committee. If selected, nodes are notified in secret to ensure a dynamic and powerful adversary does not corrupt those responsible for a certain step in the block writing process. Upon meeting voting quorums for each step, the block is eventually propagated across the network. The newly added block is immediately accepted as a canonical record of transactions, unlike modern blockchains that suffer from block ambiguity.
So how can you get involved in such an ecosystem? Algorand recently opened their testnet to the public. Any node with access to the internet can set up and run a testnet node on his or her device. Algorand’s developer documentationdirects you step by step on how to install a node. I look forward to having more professional and pragmatic blockchain education networks that teach users how to interact and develop on top of blockchain protocols. Blockchains and cryptocurrencies necessitate a large network of users in order to adequately distribute and decentralize consensus. I am hopeful that enhancing user accessibility, experience, and education will usher in a new epoch of blockchain mass-adoption.