Algorand

Last updated
Algorand
Algorand mark.svg
Denominations
SymbolALGO
Development
Original author(s) Silvio Micali
White paper https://arxiv.org/abs/1607.01341
https://eprint.iacr.org/2017/454
https://eprint.iacr.org/2018/377
Initial releaseApril 2019
Code repository go-algorand
Development statusActive
Written in Go
Developer(s) Algorand, Inc.
Ledger
Ledger startJune 2019
Supply limit10,000,000,000 ALGO [1]
Website
Website algorand.com

Algorand is a proof-of-stake blockchain and cryptocurrency. [2] Algorand's native cryptocurrency is called ALGO.

Contents

The SEC has filed several lawsuits [3] [4] [5] [6] alleging ALGO is a security which is subject to regulation under U.S. securities laws, along with a few other crypto assets.

Algorand may also refer to the private corporation based in Boston, [7] [8] as well as to the nonprofit Algorand Foundation Ltd., incorporated in Singapore. [9] [10]

History

Algorand was founded in 2017 by Silvio Micali, a computer scientist and professor at the Massachusetts Institute of Technology (MIT). [11] [12]

Algorand's test network was launched to the public in April 2019. [13]

The main Algorand network was officially launched in June 2019. [14]

Design

Algorand can only be forked intentionally through soft forks and source code forks. [15] [16]

Consensus algorithm

Algorand uses a Byzantine agreement protocol that leverages proof of stake, [17] [18] [19] which contributes to its energy efficiency. [11] [20] It is a competitor to blockchains such as Ethereum. [21]

The Algorand Foundation funded an article which claims Algorand's overall protocol frame-work is sound under certain conditions. [22]

Cryptographic sortition

The core principle of Algorand consensus is the cryptographic "self" sortition. The sortition procedure runs locally and privately, on each node of the network participating in the consensus protocol, without a centralized coordination. [2] The goal of the sortition algorithm is randomly selecting a subset of users participating in the consensus protocol (committees) ensuring two properties: the sortition's result can be easily verified once it is published, while it can not be determined ahead of time by malicious adversaries. The number of selected users in the sortition (committee size) is defined as a statistical expectation on the outcome of a pseudo-random process. The likelihood that a given user will be selected (in the committee) is influenced by the number of ALGO tokens held by that user (the stake). [15] [18] [19]

Consensus steps

Algorand's consensus steps are: block proposal, proposals filtering (soft vote) and committing the block (certify vote). Each step relies on an independent run of the cryptographic "self" sortition, to elect a voting committee with different sizes (statistical expectations on the sortition outcome) and voting thresholds. [23]

Block proposal

In the first step the cryptographic sortition selects a subset of users (proposal committee) which assemble and propose a block for the next round of the protocol. At the end of the step there will be a few block proposals (the protocol is tuned with a statistical expectation of 20 proposals) with different random priorities. After determining if a user is on the proposal committee, that user can build a proposed block and gossip it to the network for review/analysis during the second phase. The user includes the result of the VRF (h) and cryptographic proof (𝜋) in their block proposal to demonstrate committee membership. [18] [19] [23]

Proposals filtering

In the second step the nodes in the networks wait for an adaptive period of time (𝜆), measured by nodes' local clocks, to be sure that the block proposals gossiped in the previous steps have been observed. [23]

A new cryptographic sortition selects a subset of users (soft vote committee) to vote and reach a Byzantine Agreement (called "BA*") on the proposal with highest priority. When users have determined that they are in this second-phase voting committee, they analyze the block proposals they have received (including verification of first-phase committee membership) and vote on the highest priority one. [18] [19] [23]

Certify block (commit)

Once a threshold of votes is reached in the previous proposals filtering step, the third and last step of the protocol begins. A new cryptographic sortition selects a subset of users (certify committee) to vote and reach a Byzantine Agreement on the content of the proposed block with respect to the state of the ledger (e.g. the block does not contain double spending, overspending or any other invalid state transition between accounts). [23]

If the certify committee achieves consensus on a new block, then the new block is disseminated across the network and appended to the ledger. [15] [18] [19]

Algorand funded a security audit [24] which claims their model also accounts for timing issues and adversary actions, e.g., when the adversary has control over message delivery. [25]

Recovery

The Algorand consensus protocol privileges consistency over availability (CAP theorem). [26] If the network is unable to reach consensus over the next step (or block), within a certain time, the protocol enters in a recovery mode, suspending the block production to prevent forks (contrary to what would happen in blockchains based on the "longest-chain principle", such as Bitcoin). The Algorand team claims the recovery mode of the protocol ensures that the block production resumes eventually, with no need of reconciliations or reorganization, if a Byzantine Agreement is reached again. [23]

Network

An Algorand network is a distributed system of nodes, each maintaining a local state based on validating the blockchain and the transactions therein. Nodes are spread geographically, communicating with each other over the Internet. The integrity and the consistency of the global network state and distributed ledger is maintained by the consensus protocol. Algorand nodes communicate through message gossiping (broadcasting) either in peer-to-peer or via relay nodes (which facilitate efficient broadcasting with minimal message hops and low latency). [15]

ALGO

The unit of account of the Algorand protocol is the ALGO. The protocol's supply of ALGO is limited to 10 billion units. One ALGO is divisible to six decimal places, the smallest unit is called microALGO (𝜇ALGO), equal to 1/1,000,000 (one millionth) ALGO. [1]

Adoption

Since 2019, Algorand has been a partner of World Chess. [27]

In 2021, Italia Olivicola, Italy's largest olive and olive oil producers' organization, partnered with Euranet to implement blockchain technology based on Algorand. [28] SIAE, the Italian Society of Authors and Publishers, also announced a project on copyright management using Algorand in the same year. [29]

In 2022, Algorand's blockchain was used by Robert Irwin and the Australia Zoo for a series of NFTs. [30] [31]

In 2023, Italy's 'Fideiussioni Digitali' initiative to reduce fraud in bank and insurance guarantees, selected Algorand as its blockchain. [32]

In 2024, CNBC-TV18 reported that Algorand's blockchain was being tested for use in a digital identification to help women in India access public health programs. [33]

The Algorand blockchain had its first tokenized money market fund launch in June 2024. [34]

Related Research Articles

A Byzantine fault is a condition of a system, particularly a distributed computing system, where a fault occurs such that different symptoms are presented to different observers, including imperfect information on whether a system component has failed. The term takes its name from an allegory, the "Byzantine generals problem", developed to describe a situation in which, to avoid catastrophic failure of a system, the system's actors must agree on a strategy, but some of these actors are unreliable in such a way as to cause other (good) actors to disagree on the strategy and they may be unaware of the disagreement.

<span class="mw-page-title-main">Silvio Micali</span> Italian-American computer scientist (born 1954)

Silvio Micali is an Italian computer scientist, professor at the Massachusetts Institute of Technology and the founder of Algorand, a proof-of-stake blockchain cryptocurrency protocol. Micali's research at the MIT Computer Science and Artificial Intelligence Laboratory centers on cryptography and information security.

A fundamental problem in distributed computing and multi-agent systems is to achieve overall system reliability in the presence of a number of faulty processes. This often requires coordinating processes to reach consensus, or agree on some data value that is needed during computation. Example applications of consensus include agreeing on what transactions to commit to a database in which order, state machine replication, and atomic broadcasts. Real-world applications often requiring consensus include cloud computing, clock synchronization, PageRank, opinion formation, smart power grids, state estimation, control of UAVs, load balancing, blockchain, and others.

<span class="mw-page-title-main">Cryptocurrency</span> Digital currency not reliant on a central authority

A cryptocurrency, crypto-currency, or crypto is a digital currency designed to work through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it.

<span class="mw-page-title-main">Bitcoin protocol</span> Rules that govern the functioning of Bitcoin

The bitcoin protocol is the set of rules that govern the functioning of bitcoin. Its key components and principles are: a peer-to-peer decentralized network with no central oversight; the blockchain technology, a public ledger that records all bitcoin transactions; mining and proof of work, the process to create new bitcoins and verify transactions; and cryptographic security.

Proof-of-stake (PoS) protocols are a class of consensus mechanisms for blockchains that work by selecting validators in proportion to their quantity of holdings in the associated cryptocurrency. This is done to avoid the computational cost of proof-of-work (POW) schemes. The first functioning use of PoS for cryptocurrency was Peercoin in 2012, although the scheme, on the surface, still resembled a POW.

<span class="mw-page-title-main">Ethereum</span> Open-source blockchain computing platform

Ethereum is a decentralized blockchain with smart contract functionality. Ether is the native cryptocurrency of the platform. Among cryptocurrencies, ether is second only to bitcoin in market capitalization. It is open-source software.

A blockchain is a distributed ledger with growing lists of records (blocks) that are securely linked together via cryptographic hashes. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. Since each block contains information about the previous block, they effectively form a chain, with each additional block linking to the ones before it. Consequently, blockchain transactions are irreversible in that, once they are recorded, the data in any given block cannot be altered retroactively without altering all subsequent blocks.

Hyperledger is an umbrella project of open source blockchains and related tools that the Linux Foundation started in December 2015. IBM, Intel, and SAP Ariba have contributed to support the collaborative development of blockchain-based distributed ledgers. It was renamed the Hyperledger Foundation in October 2021.

A decentralised application is an application that can operate autonomously, typically through the use of smart contracts, that run on a decentralized computing, blockchain or other distributed ledger system. Like traditional applications, DApps provide some function or utility to its users. However, unlike traditional applications, DApps operate without human intervention and are not owned by any one entity, rather DApps distribute tokens that represent ownership. These tokens are distributed according to a programmed algorithm to the users of the system, diluting ownership and control of the DApp. Without any one entity controlling the system, the application is therefore decentralised.

A distributed ledger is a system whereby replicated, shared, and synchronized digital data is geographically spread (distributed) across many sites, countries, or institutions. In contrast to a centralized database, a distributed ledger does not require a central administrator, and consequently does not have a single (central) point-of-failure.

<span class="mw-page-title-main">Cardano (blockchain platform)</span> Public blockchain platform

Cardano is a public blockchain platform. It is open-source and decentralized, with consensus achieved using proof of stake. It can facilitate peer-to-peer transactions with its internal cryptocurrency, ADA.

<span class="mw-page-title-main">Bitcoin scalability problem</span> Scaling problem in bitcoin processing

The Bitcoin scalability problem refers to the limited capability of the Bitcoin network to handle large amounts of transaction data on its platform in a short span of time. It is related to the fact that records in the Bitcoin blockchain are limited in size and frequency.

In blockchain, a fork is defined variously as:

Hashgraph is a distributed ledger technology that has been described as an alternative to blockchains. The hashgraph technology is currently patented, is used by the public ledger Hedera, and there is a grant to implement the patent as a result of the Apache 2.0's Grant of Patent License so long as the implementation conforms to the terms of the Apache license. The native cryptocurrency of the Hedera Hashgraph system is HBAR.

A blockchain is a shared database that records transactions between two parties in an immutable ledger. Blockchain documents and confirms pseudonymous ownership of all transactions in a verifiable and sustainable way. After a transaction is validated and cryptographically verified by other participants or nodes in the network, it is made into a "block" on the blockchain. A block contains information about the time the transaction occurred, previous transactions, and details about the transaction. Once recorded as a block, transactions are ordered chronologically and cannot be altered. This technology rose to popularity after the creation of Bitcoin, the first application of blockchain technology, which has since catalyzed other cryptocurrencies and applications.

<span class="mw-page-title-main">Avalanche (blockchain platform)</span> Layer-1 Blockchain

Avalanche is a decentralized, open-source Layer-1 blockchain that uniquely combines a tri-chain architecture with customizable Layer-1 networks, enabling diverse applications and sovereign blockchains within its ecosystem. It was developed by Ava Labs and launched in 2020.

ICON is a decentralized, open-source blockchain with smart contract functionality. ICX is the native cryptocurrency of the platform.

References

  1. 1 2 Daly, Lyle (2022-05-16). "What is Algorand (ALGO)?". The Motley Fool. Retrieved 2024-10-20.
  2. 1 2 Gilad, Yossi; Hemo, Rotem; Micali, Silvio; Vlachos, Georgios; Zeldovich, Nickolai. "Algorand: Scaling Byzantine Agreements for Cryptocurrencies". SOSP '17: Proceedings of the 26th Symposium on Operating Systems Principles. doi:10.1145/3132747.3132757 . Retrieved 2024-10-26.
  3. ↑ "SEC complaint against Bittrex" (PDF). SEC.gov. Retrieved 2024-10-26.
  4. ↑ "SEC complaint against Binance" (PDF). SEC.gov. Retrieved 2024-10-26.
  5. ↑ "SEC complaint against Kraken" (PDF). SEC.gov. Retrieved 2024-10-26.
  6. ↑ "SEC complaint against Cumberland" (PDF). SEC.gov. Retrieved 2024-10-26.
  7. ↑ "Algorand LLC". Bloomberg.com. Retrieved 2024-10-20.
  8. ↑ "Algorand, Inc". opencorporates.com. Retrieved 2023-05-29.
  9. ↑ "Algorand Foundation Ltd". Bloomberg.com. Retrieved 2024-10-20.
  10. ↑ "Algorand Foundation Ltd. : OpenCorporates". opencorporates.com. Retrieved 2023-05-29.
  11. 1 2 Zhao, Helen (2018-02-23). "Bitcoin and blockchain consume an exorbitant amount of energy. These engineers are trying to change that". CNBC. Retrieved 2021-04-03.
  12. ↑ "MIT professor debuts high-speed blockchain payments platform Algorand". VentureBeat. 2018-02-15. Retrieved 2021-04-03.
  13. ↑ "Algo VC Fund Raises $200M to Fast-Track Its Own Cryptocurrency". www.bizjournals.com. Retrieved 2021-04-03.
  14. ↑ "Bahrain's Shariah Review Bureau Certifies Blockchain Firm Algorand As Shariah Compliant". Crowdfund Insider. 2019-10-23. Retrieved 2021-04-03.
  15. 1 2 3 4 Lepore, Cristian; Ceria, Michela; Visconti, Andrea; Rao, Udai Pratap; Shah, Kaushal Arvindbhai; Zanolini, Luca (14 October 2020). "A Survey on Blockchain Consensus with a Performance Comparison of PoW, PoS and Pure PoS". Mathematics. 8 (10): 1782. doi: 10.3390/math8101782 . hdl: 2434/773710 .
  16. ↑ Arslanian, Henri (2022). "The Emergence of New Blockchains and Crypto-Assets". The Book of Crypto. Cham: Springer International Publishing. pp. 99–119. doi:10.1007/978-3-030-97951-5_4. ISBN   978-3-030-97950-8.
  17. ↑ Bartoletti, Massimo; Bracciali, Andrea; Lepore, Cristian; Scalas, Alceste; Zunino, Roberto (2020). "A formal model of Algorand smart contracts" (PDF). Financial Cryptography and Data Security 2021. arXiv: 2009.12140 .
  18. 1 2 3 4 5 Xiao, Y.; Zhang, N.; Lou, W.; Hou, Y. T. (28 January 2020). "A Survey of Distributed Consensus Protocols for Blockchain Networks". IEEE Communications Surveys and Tutorials. 22 (2): 1432–1465. arXiv: 1904.04098 . doi:10.1109/COMST.2020.2969706. ISSN   1553-877X. S2CID   102352657.
  19. 1 2 3 4 5 Wan, Shaohua; Li, Meijun; Liu, Gaoyang; Wang, Chen (2020-11-01). "Recent advances in consensus protocols for blockchain: a survey". Wireless Networks. 26 (8): 5579–5593. doi:10.1007/s11276-019-02195-0. ISSN   1572-8196. S2CID   213063001.
  20. ↑ Alzoubi, Yehia Ibrahim; Mishra, Alok (2023). "Green blockchain – A move towards sustainability". Journal of Cleaner Production. 430: 139541. Bibcode:2023JCPro.43039541A. doi:10.1016/j.jclepro.2023.139541. hdl: 11250/3102853 .
  21. ↑ Sigalos, MacKenzie (2021-10-02). "Ethereum had a rough September. Here's why and how it's being fixed". CNBC. Retrieved 2024-10-20.
  22. ↑ Blum, Erica; Leung, Derek; Loss, Julian; Katz, Jonathan; Rabin, Tal (2023-11-15). "Analyzing the Real-World Security of the Algorand Blockchain". Proceedings of the 2023 ACM SIGSAC Conference on Computer and Communications Security. ACM. pp. 830–844. doi:10.1145/3576915.3623167. hdl: 1721.1/153140 . ISBN   979-8-4007-0050-7.
  23. 1 2 3 4 5 6 Chen, Jing; Gorbunov, Sergey; Micali, Silvio; Vlachos, Georgios (2018). "Algorand Agreement: Super Fast and Partition Resilient Byzantine Agreement". Cryptology ePrint Archive. Retrieved 2024-10-21.
  24. ↑ "Modeling and Verification of the Algorand Consensus Protocol" (PDF). GitHub.com. Retrieved 2024-12-08.
  25. ↑ Alturki, Musab A.; Chen, Jing; Luchangco, Victor; Moore, Brandon; Palmskog, Karl; Peña, Lucas; Roşu, Grigore (2020). "Towards a Verified Model of the Algorand Consensus Protocol in Coq". Formal Methods. FM 2019 International Workshops. Lecture Notes in Computer Science. Vol. 12232. pp. 362–367. arXiv: 1907.05523 . doi:10.1007/978-3-030-54994-7_27. ISBN   978-3-030-54993-0. S2CID   196471153.
  26. ↑ Lewis-Pye, Andrew; Roughgarden, Tim (2020-06-18). "Resource Pools and the CAP Theorem". arXiv: 2006.10698 [cs.DC].
  27. ↑ Bradshaw, Tim; Murphy, Hannah (21 November 2019). "World Chess announces plans for 'hybrid IPO'". Financial Times. Retrieved 2024-10-20.
  28. ↑ "Una blockchain avanzata per il settore olivicolo-oleario di ItaliaOlivicola". TeatroNaturale.It (in Italian). Retrieved 2024-10-20.
  29. ↑ Monaco, Daniele (2021-03-25). "Anche Siae sperimenta gli Nft". Wired Italia (in Italian). Retrieved 2024-10-20.
  30. ↑ "Robert Irwin announces Australia Zoo's first ever collectible NFT series". 7NEWS. 2022-06-12. Retrieved 2024-10-20.
  31. ↑ Venz, Sophie (2022-08-16). "Australia Zoo uses carbon-negative blockchain technology to release NFT collection". SmartCompany. Retrieved 2024-10-20.
  32. ↑ Hall, Ian (2023-01-04). "Public blockchain confirmed for Italian bank guarantees project". Fintech news for government and public sector professionals. Retrieved 2024-10-20.
  33. ↑ "AlgoBharat & SEWA Partner to Launch Digital Health Passport for Informal Sector Women". CNBC-TV18. 2024-03-06. Retrieved 2024-10-20.
  34. ↑ "First tokenised money market fund launched on Algorand". ThePaypers. 2024-06-27. Retrieved 2024-10-20.
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