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As we have come to understand, one of the essential features of Blockchain is the decentralization of finance. Decentralized finance makes it possible for the majority of users to have access to finance instead of it being only accessible to a few people.

However, one problem with this system is the ever-presence of a malicious entity that could gain the majority of the computational power that is responsible for block generation.

As a result of this, and because of Algorand’s dedication to ensure that decentralized finance is possible without having to sacrifice security, Algorand came up with the new, improved Proof-of-Stake (PoS) system as mitigation.

In this article, we shall be emphasizing the Proof-of-Stake system by Algorand as a more guaranteed way of ensuring a majority of honest users.


The Proof of Stake (PoS) system serves as a more secure alternative to the widely popular Proof-of-Work (PoW) system that is used by the majority of existing blockchain technologies and cryptocurrencies, including Bitcoin. Achieving an honest majority of users at all times is the ultimate goal of every PoW system.

Generally, honest users are said to have reached a majority when a constant of the users higher than two-thirds are honest, controlling over two-thirds of the monetary value.

This PoS system, though improvement and safer alternative to the Proof of Work, could still experience the problem of forks by a malicious leader who assembles a new block. However, this is not the case with Algorand’s Proof of Stake; because the weights assigned by Algorand serves to prevent the attacker from amplifying his power by using pseudonyms, so long as he controls less than one-third of the monetary value. This system makes the probability of forks in Algorand very negligible.

Through the Algorand’s Proof of Stake system, it is ensured that two-third of users that have access to the chain are honest, leaving the adversary with less than one-third of the monetary value. The PoS system allows for the assigning of weight to users based on the amount of money they have. Thus, this system has made it possible for a guaranteed honest majority of users in a blockchain, ensuring secure transactions without forks.

Moreover, Algorand assumes that honest users will run bug-free software. Detection of bugs in a user’s software alerts the attention of Algorand, and Algorand can detect and punish malicious users when their identity is registered.

Algorand also makes use of standard cryptographic assumptions such as hash functions and digital public key signatures to separate malicious users from honest users.

These malicious users are assumed by Algorand to be able to corrupt target users but unable to bribe a large number of users holding a significant fraction of the money. This means that the amount of cash held by non-compromised users must remain at a majority threshold (i.e., above two-thirds). A way to ensure this is with Algorand’s Proof-of-Stake method.

To further prevent the manipulation of honest users by the adversary, Algorand has employed a gossip protocol of communication among these users.

This gossip protocol allows each honest user to select a small, random set of peers to gossip messages.Because each Algorand user has a specific private key, words cannot mutilated because each letter is signed with the private key of its sender.

Other honest users check that the signature is valid before they relay it. This makes it possible for legitimate users to submit new transactions without the knowledge of the adversary; thus, keeping the adversary’s control of monetary resources below one-third.

Moreover, users do not relay the same message twice over the gossip protocol. This is done to avoid forwarding loops. To mitigate pollution attacks, Algorand weighs peer selection based on how much money, further emphasizing on the Proof-of-Stake system.

Moreso, through the gossip protocol, honest users are able to collect blocks of pending transactions they hear about, should incase they are chosen to select the next block. The Byzantine Agreement protocol (BA⋆) is then used to reach a consensus on one of the pending blocks.

Because the establishment of an honest majority cannot be overemphasized, Algorand makes use of cryptographic sortition to determine which users are selected to propose a block in a given round. A small fraction of users are randomly selected, weighed according to the money in their accounts, and are provided with a priority which can be compared between users, with a proof of each user’s preference.

As a result of this random sortition, multiple users may be selected to propose a new block, the priority determining which block every other user will adopt. Chosen users are afterward, capable of distributing their blocks with pending transactions through the gossip protocol (as described earlier).

Final Words

Algorand method of weighing users based on the money they have, altogether with the processes of cryptographic sortition and gossip protocol, ensures that Algorand’s assumptions remain valid.

Thus, an honest majority of users is possible. And even with the presence of adversaries, the probability of forks occurring on a block is negligible.

This further reinforces the hype on Algorand as an emerging blockchain that guarantees its users secure transactions.

Meanwhile, Algorand’s commitment to ensuring a blockchain and cryptocurrency platform devoid of the unnecessary delays and insecurity is laudable. It is also worthy to note that since it’s emergence, Algorand has come up with several schemes and systems necessary to make blockchain transactions seamless.

With these consistent improvements and optimization of the Algorand system, it is expected that within the next few years, Algorand would become one of the leading cryptocurrencies.

Read about Algorand

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