This is an architecture allowing private permissioned blockchains to take advantage of Algorand's main blockchain's strengths such as high level of security.
Algorand Co-Chains might have predetermined validators, but use the same Pure Proof-of-Stake consensual algorithm as the main Algorand blockchain.
Difference between permissionless and permissioned blockchains
Public permissionless blockchains
Public permissionless blockchains like Bitcoin, Ethereum or Algorand store the transactions and information publicly. You can access them from all around the world, so, for example, you can check some past transactions in the blockchain.
For global payments and overall trust, the publicity and permissionless of blockchains is necessary. This enables to the individuals, organizations and even governments to reach security and efficiency at the same time.
Private permissioned blockchains
Unlike that, private blockchains are mostly permissioned and they do not publish all the data publicly as they are for example stored on the Bitcoin blockchain.
There are specific fields of the economy such as government data, business, banking, financial sector or health care, which must comply with regulatory requirements and also needs to control carefully who can access the stored data. In those examples, private blockchains make perfect sense and bring certain benefits. They also need a great level of security which can’t be reached by the centralized synchronized database, especially if the counterparties do not trust each other for 100%.
Private permissioned blockchains have generally defined clear rules on who can read and write specific information. They are not permissionless and decentralized, because there is an evident hierarchy of data control. However, they have still distributed in the meaning that a large number of nodes hold a copy of this permissioned blockchain at the same time. But they are shielded from the outside world for not being accessible externally.
For private permissioned blockchains its more sufficient to use a pure proof-of-stake algorithm due to its security and low-computing needs. The solution of Co-Chains for private blockchains competes with private enterprise blockchain platforms such as Hyperledger Fabric or Corda, which mainly uses the corporate world.
Algorand Co-Chains solution
Algorand Co-Chains is a permissioned blockchain solution, which will be self-contained from the parent Algorand blockchain. While the interoperability with Algorand main chain is ensured to provide all the transactions between the main chain and Co-Chain, users of the Co-Chain will have their transactions private.
The interoperability with the Algorand’s main chain is important for not being isolated on the permissioned blockchain. Important data are safe and users can use the transaction system by the interoperable public blockchain, which means this system uses advantages from both blockchain types.
Algorand co-chain:
1. Is totally independent from the public chain, shields its transactions from all outsiders, chooses its own validators, and runs its own Algorand consensus algorithm;
2. Interoperates with the Algorand main chain to transact with other co-chains, and everyone else, with the same ease and security with which the members of Algorand’s permissionless chain transact with each other; and
3. Enjoys, both in its internal and external interactions, the same atomic transactions, layer-1 smart contracts, and all other primitives and tools offered by the permissionless Algorand protocol. In fact, it automatically inherits all the improvements and upgrades that will be added to Algorand’s permissionless protocol.
Both permissionless and permissioned blockchains are needed and useful in our digital world. Algorand implemented the permissioned solution by Co-Chain architecture, which brings the advantage of the interoperability with the permissionless Algorand’s main chain that guarantees their synergy.
Algorand Co-Chains uses the security of the Algorand ecosystem, which is the highest benefit of it. And the high decentralization level is itself a main source of security.
The Algorand Co-Chain architecture was developed by Silvio Micali, Sergey Gorbunov, and Maurice Herlihy.
Final summary
Algorand is a very ambitious project, which can provide the necessary security, scalability and transaction finality to the public permissioned blockchain projects which can be then easily used in the government issues, health sector, financial sector, banking industry or business overall. The advantages of Algorand's main blockchain of the astonishing level of security can be then re-used in the so-called Co-Chains. This can help Algorand to reach their long-term goal, which is to bring the blockchain technology, that enables frictionless finance to the world!
BONUS: Q&A about Co-Chains with Silvio Micali
Next week on Tuesday at 7.4. There will be a Q&A webinar with leading Algorand Foundation members including Silvio Micali on Co-Chains. Here you can register for the webinar.
https://register.gotowebinar.com/register/8331164936233098251
About Algorand
Algorand is the blockchain smart contract platform that aims to solve the so-called blockchain trilemma of scalability, security, and decentralization. It is based on the pure proof-of-stake (PPoS) consensus algorithm. Algorand was founded by Silvio Micali, the Turing Award-winning cryptographer in 2017.
Join the Algorand Ambassador program and grab some ALGOs for your activity!
https://algorand.foundation/2020-ambassador-rewards-program
Resources:
- https://www.algorand.com/resources/blog/algorand-co-chains
- https://pixabay.com/illustrations/blockchain-cryptocurrency-money-3326155/
