Unlocking Blockchain Technology’s Potential: Secure, Decentralized, and Scalable

Algorand employs a unique architecture by Professor Silvio Micali at MIT to provide a secure, decentralized, and scalable blockchain.

The Republic of the Marshall Islands, a country of approximately 50,000 people, is spread over 1000 islands in remote parts of the Pacific Ocean. Cross-border trade and finance are a significant part of the country’s economy. This can make it difficult for citizens and businesses to access certain financial services and goods.

The federal government wants to be the first to use blockchain technology to create a national digital currency. Officials believe the move will help citizens avoid high transaction fees, simplify compliance with international partners, and protect against inflation (the money has a fixed supply rate).

The new currency will use blockchain technology that Silvio Micali (Ford Professor of Engineering at MIT’s Computer Science Artificial Intelligence Laboratory (CSAIL) developed and commercialized by Algorand, Micali’s startup.

Blockchain technology and its associated cryptocurrencies have been the subject of much hype. They could revolutionize the way money and other assets travel around the globe. Skeptics say blockchain technology needs to be more sustainable and efficient to be adopted in mass quantities.

Algorand believes it has solved these problems using a unique, scalable architecture that doesn’t compromise the traditional benefits of blockchain technology, such as decentralization and security.

Algorand is being used by many people for many purposes, including creating carbon credit markets, expediting real estate transactions, and creating new legal tender in the Marshall Islands.

“The advent of blockchain technology has opened up a world of opportunity for small nations like ours,” Marshall Islands Minister-in-Assistance to President David Paul said when the country announced its plans. The Marshall Islands will be able to connect to the global financial system by issuing a currency that’s not physically embedded in cash. It can travel around the globe immediately and is completely secure.

Start from scratch

Micali has long recognized his work in security and cryptography. Since 1983, he has been a member of MIT’s faculty. In 2012, he was awarded the Turing Award with Shafi Goldwasser, a fellow MIT professor.

Micali has worked with other people to create new ways for parties to reach an agreement on a value or strategy, even if they are corrupt (the so-called Byzantine Agreement), and a method to securely send information to one another in a way that can be later verified by the public (called verifiable Random Functions).

Many of Micali’s works were done long before the advent of cryptocurrencies and the hype surrounding blockchain. Micali said that he knew verifiable random functions would be helpful but needed help figuring out how to use them.

Even though Bitcoin was the first blockchain-linked cryptocurrency in 2008, Micali avoided learning about blockchains for many years. He finally entered his lab, asked his graduate students for help, and then finally got up to explain the concept to him.

Micali recalls that “I had two main reactions.” It’s a beautiful idea. It’s a highly inelegant solution.

Micali was particularly interested in a problem that Ethereum’s founder raised. According to the founder, blockchains can only guarantee security, decentralization, and scalability.

“The idea that something is impossible attracted my attention because in cryptography and MIT more broadly, our business was to prove the impossible possible,” Micali states.

Micali also attributes the MIT ecosystem to helping him launch Algorand. Eight of his ten first hires were from MIT.

Micali states, “It’s not just the tech. It’s also the entrepreneurial spirit and the fact we don’t hesitate to take on challenges.” Algorand and I believe that the most critical resource at MIT is the people.

Micali began from scratch in 2017 to create a better blockchain.

Blockchain refers to information stored in blocks that can be added to form chains. Each block includes an abbreviated version from the previous block and time-stamped information such as transaction data. The added blocks become more difficult to alter and provide a secure record of transactions. Many public blockchains are associated with cryptocurrencies or digital assets. Information about cryptocurrency transactions is kept on the blockchain ledger.

Micali states that the challenge lies in who can add the following block to the blockchain. “Because I can declare common knowledge, I have lots of power. Who should have this power?

Some blockchains allow users to select blocks and have them add or validate them. This will enable them to devote their computing power to solving cryptographic puzzles. This approach has been criticized for needing to be more efficient, energy-intensive, and efficient. Other blockchains allow users to use the associated cryptocurrency power to validate new blocks for everyone. This approach is criticized for being too centralized since relatively few people own the majority of cryptocurrencies.

Algorand also uses cryptocurrency as a means to verify new blocks. Algo coins are the company’s currency. Algorand does not give the ability to validate new blocks to those with the most coins. Instead, the owners of 1,000 tokens from the 10 billion currently in circulation are randomly selected to validate the next block.

The selection of tokens takes only a few seconds and requires very little computing power. Random selection makes the blockchain safer by not giving hackers a clear target. This helps Algorand solve the “trilemma” presented by the Ethereum founder with a secure, scalable, and decentralized blockchain.

Algorand’s community also has additional features that can be tailored to specific functions like smart contracts. These smart contracts can execute themselves based on predefined conditions within their code. Sometimes, this eliminates the need for intermediaries such as lawyers and central authorities.

Algorand developed a programming language called Transaction Execution Approval Language (TEAL) to make intelligent contracts run more efficiently on its blockchain. TEAL returns actual or false values depending on whether certain conditions are met. This simplifies the process of creating and executing contracts on the blockchain.

Since then, the contracts have facilitated financial transactions, created a marketplace for small gold purchases, and collected small-scale investments into startups.

Blockchain’s potential

After artists were organized to avoid exploitation, the Italian Society for Authors and Editors (ISAE) was established in 1882. Since its inception, a lot has happened. Conglomerate streaming services now have enormous power over content such as music and movies. This has created a complicated copyright ecosystem in which publishers, lawyers, auditors, and other intermediaries can reduce royalties for artists.

Today, more than 100,000 artists can trade or sell their digital copyrights at public market prices on Algorand’s blockchain. Artists can grant permission to use their songs in certain situations while retaining their copyrights.

Micali states, “We love artists but often don’t give them the credit they deserve.”

This use case is a fulfillment of a critical promise of blockchain. It allows people to exchange goods without the need for centralized authorities. This use case also illustrates what has been a significant source of business for Algorand thus far: the tokenization of digital assets, also known as non-fungible tokens or NFTs.

Micali is also happy that the solution has reached his homeland of Italy.

Micali states that it shows how you can regain ownership of your information. This is a massive trend because to make your information accessible, you must often give your rights to another person, who will then have your information. Although it’s easy for you to argue that this shouldn’t be done, technology is needed to make it possible. Decentralization is the only way forward.

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