The Massachusetts Technical Institute is one of the well-known institutes in the world that is championing the use of cryptocurrencies and blockchain technology. On the 24th of January, a press release stated that MIT was working on a new cryptocurrency that would be based on the proof-of-stake protocol that was made famous by Ethereum.
Proof-of-work, Proof-of-stake, Ethereum And Algorand
Ethereum has been working on the proof-of-stake protocol for a while now. The Constantinople upgrade which was postponed by developers was meant to be the first step in a gradual transition from the proof-of-work consensus mechanism. According to the Ethereum core developers, this transition is going to happen anytime between 2019 and 2021.
Ethereum (ETH) Price Today – BTC / USD
Some time ago, Ethereum’s co-founder Vitalik Buterin used the term trilemma to describe a situation were a blockchain achieves security, scalability, and decentralization at the same time. Right now, Ethereum has security and decentralization but there is still a lack of scalability. The blockchain was built in such a way that the nodes store information in bulk and processes all transactions at once. While this procedure is relatively secure, it isn’t scalable. This is because the blockchain doesn’t have the capacity to process transactions in more than a single node at a time. So, the Ethereum blockchain processes about 7 to 15 transactions per second.
As seen in an article by smartereum.com, the Ethereum developers anticipated the scalability issues right from when the blockchain was created. This is why they created an entire roadmap aimed at solving this issue.
Algorand Blockchain Proposes A Solution To Scalability Issues
In the year 2017, the Algorand blockchain was presented to the audience at the Financial Cryptography and Data Security Conference. While Ethereum is still uncertain about when it would be releasing its PoS system, Algorand has announced that its PoS consensus mechanism will be ready for use before the end of the year. The team behind Algorand is creating a cryptocurrency called Vault.
The solution was presented by Silvio Micali, a professor at MIT. According to Micali, Buterin’s trilemma is a myth. In his words:
“The trilemma is a myth. It’s true that the 2000+ already existing blockchains were unable to achieve decentralization, scalability, and security at the same time but this doesn’t mean it is impossible. Algorand was created to solve this specific challenge. We are pushing the limits of blockchain technology through our technological breakthroughs like the pure proof-of-stake consensus algorithm.”
The team behind Vault promises that users will enjoy scalability because they will not need to download the entire blockchain. Only the part of blockchain that contains information about operations will be required. Micali continued:
“Vault is a blockchain compression technology that will ensure that Algorand doesn’t have any issues with bandwidth and storage like other blockchain protocols. This makes it a more viable blockchain solution. The best part is that Vault frees up space on nodes, distributes the cost for storage across the network and reduces the bandwidth that is needed to join the network because it doesn’t check every single block individually.”
According to the technical presentation of the project by MIT, the block size of Vault is 10 megabytes. This equates to about 10,000 transactions. Vault applies a unique data separation principle. While it stores transactions in a Markle tree like BTC, these transactions are divided into small fragments that are assigned to different groups of users. There will be no need to check all the blocks from the beginning.
Do you think Vault will beat Ethereum in the race to developing a proof-of-stake consensus algorithm? Share your comments.