The Future Of Algorand

While Bitcoin and other cryptocurrencies have maintained their value as a medium of exchange, the underlying technology, Blockchain, has wreaked havoc on a variety of industries over the last decade, revolutionizing them to their core. The magnitude of Blockchain increases multi-folds in the financial world, especially with the advent of DeFi and stablecoins. While Fintech companies have already contributed to the global payment ecosystem by providing necessary innovative features, Blockchain is the missing piece that can provide even more benefits to the financial industry. With a better grasp of its capabilities, however, its overzealous nature in balancing the three essential characteristics of security, scalability, and decentralization has emerged as a serious flaw. That begs the question: can blockchain provide decentralization, scalability, and security all at the same time? Because these characteristics need to be present at the same time in order to truly revolutionize any industry.This loophole in the blockchain is called a Blockchain Trilemma where all the three fundamentals cannot be achieved without a trade-off. This is where Algorand challenges the status quo.

What is Algorand and How Does It Solve The Problem?

Algorand, dubbed the "future of finance," is an open-source, permissionless blockchain network designed to be a payment-focused network that anybody may build on. It has a two-tiered blockchain structure that it uses to speed up transactions and ensure that they are completed, along with utmost security. To put it another way, Algorand can presently process over 1000 transactions per second while completing them in less than 5 seconds. It addresses the Blockchain Trilemma problem by employing a unique type of Proof of Stake (PoS) consensus known as Pure Proof of Stake (PPoS), which relies on validators who are compensated to add new transactions to the network in exchange for commissions. This is accomplished by picking validator nodes at random to confirm transaction data, weighted by the relative size of their individual stake. The PPoS consensus algorithm does this by employing a two-phase block production process that includes proposing and voting. While the proposing phase assigns a block leader to propose the block using Algorand's verifiable random function (VRF), the voting phase ensures the block's verification by selecting a committee at random. Algorand's ecosystem is based on a simple logic that relates the network's overall security to the majority's honesty, making it difficult for minorities to influence the outcome. With that being said, Algorand is run by an award-winning team of blockchain enthusiasts who strive each day to reboot the financial systems of the world. And, unsurprisingly, Algorand is already at the forefront of developing and pioneering next-generation blockchain solutions for the financial future. However, before going into what Algorand's future contains, it's necessary to examine the company's history and goals, which are responsible for giving them a competitive advantage.

Algorand’s Recent History and Goals

Algorand went public in 2019 after its TestNet's success, raising more than $60 million from a global investment group. Meanwhile, its native token, Algo, was one of the first to be listed on Coinbase, paving the path for the network's Layer-1 technological concept to be implemented.Smart contracts, which were considered expensive holding barriers to scalability for real-world applications, were overcome by Algorands Smart Contracts listed in its Layer-1 protocol. These smart contracts allowed for the creation of new business models in a variety of industries because they provided not only faster, scalable, and cost-effective solutions, but also the ability to provide the same level of security as the consensus protocol itself. Algorand’s Layer-2, on the other hand, is reserved for the development of more complex smart contracts and dApp development. Fundamentally, the technological interventions of Algorand are centered on helping decentralized projects work along with the unexploited markets by building a borderless economy and providing an open-door platform to promote innovation from the end of user profiles. Considering Algorand's role in creating financial products and protocols, hundreds of companies, from fintech to startups, to DeFi, are already building on this network to enhance the long-term vision for the future of finance.

Algorands Use Cases

Quite recently Yieldly.Finance developed the world’s first borderless and interconnected DeFi platform on Algorand to reimagine how the value is exchanged on the chains. As an industry leader backed by long-term operators like LongHash Ventures and CMS Holdings, Yieldly is on a mission to empower the next billion crypto users with the ability to exchange value without the well-known security and gas limitations. As a result of Yieldly's link between DeFi and Algorand, its users can pool, swap, and stake Algorand Standard Assets (ASA). In addition, it encourages developers to use Algorand's high-performance and cost-efficient blockchain infrastructure to innovate ASA-based projects that will offer greater liquidity, faster development, and easier access to users. The Algorand network can be leveraged not only in the DeFi space, but also across other industries like supply chain, financial services, gaming, insurance, and agriculture. Algorand's recent partnerships with Circle, Meld Gold, PlanetWatch, SIAE, are only some of the examples where users are able to get the most out of the ecosystem without compromising on speed, scalability, or security.

Algorand’s Future

In terms of the future vision set by protocol, this is just the beginning. In the near future, DeFi solutions are expected to facilitate tens of millions of daily transactions without any significant transaction fees as the protocol grows rapidly and regularly updates its smart contract capabilities. Algorand intends to improve the block size from 5,000 to 25,000 without compromising decentralization or security. Additionally, the protocol aims to reduce the time it takes to add a new block to the chain from 4.5 seconds to 2.5 seconds while simultaneously utilizing block pipelining to boost TPS from 1,000 to 46,000.In essence, the long-term model laid by Algorand for 2030 and beyond will focus on the programs around community reward systems and decentralization of decision-making. As a matter of fact, Algorand doesn't mess around with just the fundamentals of blockchain. Algorand's growth and adoption rely heavily on sustainability, and partnerships such as PlanetWatch and ClimateTrade are stepping stones towards sustainable growth. Algorand's non-forkable advantage, which assures the block etched on the network remains there forever, should also be taken into account for the future of Algorand. Businesses and developers are always searching for ways to make digital payments more seamless, and Algorand has been at the forefront of this effort. Bluemi Pay, for example, is a non-custodial e-commerce crypto payment system that has incorporated Algorand's network. In fact, more than 200 nations have already benefited from its expansion, making it one of the fastest-growing platforms for customer payment choices. Authentium, on the other hand, is a step towards transforming global agricultural supply chains and in order to guarantee that the loopholes in blockchain fundamentals do not influence the aim of returning economic power to farmers, they have counted on Algorand's ecosystem. In order to give farmers a smooth financial mechanism, Authentium connects all stakeholders in the ecosystem with a trust-based system of links.

Final Words

Despite being relatively new in the blockchain space, Algorand has already proven to be a robust platform in terms of innovation, developer support, and real-world use cases. After launching two accelerator programs, Algorand is continuously assisting its community with end-to-end support for ongoing projects to help its ecosystem grow at maximum speed. The recent news of El Salvador choosing Algorand for its infrastructure is just the beginning of the world realizing Algorand’s benefits as a scalable, secure, and decentralized digital environment.