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Connecting the bits: Algorand + Blockstack + Bitcoin

By Andrzej_0xa0 | Strong Fundamentals | 15 Oct 2020


What I love most about the Crypto Ecosystems is when they are connecting the dots or bits, when great projects instead of fighting each other, complement each other, not only expanding common base of users, but also leveraging the fundaments built by one, to build even more robust and complete features by another. This is what I see looking at Blockstack, Bitcoin and Algorand. All three are interconnected to some extent, all different but at the same time together building something great. 
Let me take you through my story with these three players.

 

Bitcoin : the security layer!

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I think I don't have to introduce Bitcoin too much, but let me give it a short try to make it simpler and clearer for people new to this crypto movement. 

Bitcoin is a decentralized digital currency (no single entity controlling it) designed in a way that can be sent from user to user on the peer-to-peer basis,  without the need for intermediaries in this process. Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain. Bitcoins (BTC coins) are created as a reward, in a process known as mining. They can be exchanged for other currencies, products, and services in a real world or in a crypto world.

Bitcoin has been praised and criticised. Some of the critics include:

  • price volatility : 10%-20% price change on a daily basis is not a surprise,
  • large amount of electricity used to secure the network (big city burns less energy than bitcoin),
  • expensive and slow transactions, the more users, the higher transaction costs and the slower transactions. The network is not scalable.
  • little utility in real life, other than HODL (holding bitcoin because of it's Store of Value attribute is still then main use-case for BTC)
  • transparency, all transactions recorded on the blockchain, are traceable and visible to everyone (this is both + and -)

On the other hand people praise Bitcoin for:

  • outstanding network security (thanks to a decentralisation and thousands of nodes securing the bitcoin blockchain),
  • limited supply, total number of bitcoins could never exceed 21 million BTCs, thanks to the way it is designed and implemented,
  • censorship-resistant, you can not stop or rollback transaction once it is processed,
  • Store of Value, Bitcoin is perceived as Digital Gold, because you can not "print" more than 21M Bitcoins, it accrues the value as the network effect grows.

There are hundreds of other projects trying to be the next Bitcoin, but these are typically not secure enough or are doing other shortcuts.

So I particularly appreciate projects, which are levering the fundaments built by Bitcoin, namely its security and store of value, but at the same time are adding more features on top, to get it mainstream ready.

Here comes: Blockstack and Algorand.

 

Blockstack : innovations on top of Bitcoin!

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Blockstack is an open-source, developer-friendly network for building decentralized apps and smart contracts. What is great about Blockstack is that it inherits Bitcoin's security through Proof of Transfer mechanism, so it is not trying to burn electricity again to secure the network, neither is trying to introduce another Store of Value coin. Blockstack takes what is the best in Bitcoin and expands it further.

Among other features, Blockstack is designed in a way that protect user privacy and ownership with decentralized data storage and accounts, everything your users do will be private and owned by them / so it is great step forward, comparing to bitcoin.

There are more add-ons by Blockstack, just to name a few of the core characteristics:

  • Stacks blockchain, The Stacks blockchain inherits the security of the Bitcoin blockchain through its consensus mechanism, Proof of Transfer.
  • Decentralized accounts, Users get a blockchain-generated key that unlocks their account and data storage in a private manner.
  • Encrypted data storage, Data is stored independently from your app, in a place controlled by the user's key. 
  • Easy-to-use SDKs, Build decentralized apps using JavaScript, TypeScript, or any of your preferred frameworks like React or Angular.
  • Clarity smart contracts, is Blockstack’s and Algorand's language for writing smart contracts that has been adopted by multiple projects in the space. Clarity is designed by top computer scientists from MIT and Princeton to be secure and reliable.

Clarity is one of the connectors of Blockstack and Algorand to a broader crypto ecosystems. Let me expand it in a while, talking Algorand's platform, but even on Blockstack itself we have over 400 apps running already. In a way they leverage security of Bitcoin and will add utility to Bitcoin blockchain.   

How does Algorand fit into this picture?

 

Algorand : borderless economy enabled!

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Algorand, led by Turing award-winner, professor at MIT Silvio Micali and a prominent team of cryptographers, engineers, and mathematicians is committed to the ongoing development of interesting solutions for borderless economy. Algorand built open source, permissionless, pure proof-of-stake blockchain protocol, for the next generation of financial products. Algorand is powering the DeFi evolution by enabling the creation and exchange of value, bringing assets on-chain and providing responsible privacy models.

Core features and characteristics of Algorand include:

  • Smart Contracts capabilities, that enable DeFi solutions and dApps that can scale to billions of users, tens of millions of daily transactions, with negligible transaction fees. Smart Contracts enable the disruption of economies and the creation of new business models across different industries with efficient and automated transactions and applications, allowing for a trustless execution of an agreement. Just to name some of the possible use cases:
    • Decentralised Exchanges,
    • Interfaces to off-chains data sources,
    • Transfer of Assets between multiple chains,
    • Programmatic debt solutions of various kinds.
  • Algorand Standard Assets are standard blockchain assets with customizable options, directly in Layer-1, will enable assent tokenisation, 3rd party asset issuance, or democratized access to investments. With ASA, following thing are made possible:
    • real estates tokenization,
    • securities tokenisation (like equities),
    • loyalty points or in-game items issuance,
    • tokenisation of commodities, gold, art and many many other. 
  • Atomic Transfers for secure transfers and immediate transaction settlement for multiparty transactions built in Layer-1. You can use tokenised asset and thanks to Smart Contracts and AT execute complex tractions, like:
    • Instantaneous settlement of complex multi party / multi asset transactions = real estate ownership transfer
    • debt settlement involving multiple parties,
  • Rekeying 1 solves operational inefficiencies of Blockchain, by allowing users to change their Private Spending key without the need to change their Public Address. To include a new possibilities, like:
    • Onboarding large user bases for projects that are moving to Algorand from other blockchains or more traditional technology platforms,
    • Advanced Custody solutions, high-security scenarios where the spending key must be kept cold, and transaction is needed from the account  
  • Co-Chains are private networks built on top of Algorand, interoperable with public Algorand chain, communicating, exchanging value and assets. This opens the gates for:
    • Enterprises to built proprietary solution but leveraging features of public networks where they need it,
    • Governments to built solutions for compliance and privacy, but also opening gates for transparency and traceability,
    • Supply chains, to exchange information in aa secure manner, but verifiable by public
    • any many more
  • Interoperability in Public Blockchain space : coming soon by Algorand,

 

What connects Algorand to Blockstack and Bitcoin?

Algorand works with Blockstack team on Clarity Language. Clarity is a decidable language for smart contracts, meaning you can know, with certainty, learn from the code itself what the program will do. Clarity is interpreted (not compiled) and the source code is published on the blockchain, so Clarity gives developers a safe gateway to build complex smart contracts in a secure manner. 

Clarity can be used for programming on other blockchain platforms, currently starts with Algorand and Blockstack, but there are not limitation to expand to Ethereum or others. Building with Clarity developers can come up with more advanced business use cases where some functionalities run on Blockstack, some are implemented on Algorand and some leverage Bitcoin as an asset. In the future these apps can interoperate in the broader crypto ecosystem (like Polkadot, Cosmos, Ethereum or Tezos).

I cover some of my thoughts in this video About Algorand, Clarity and Blockstack, and how it impacts Bitcoin. 

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Conclusion

Well.. we are yet very early with the cryptocurrencies and blockchain adoption. In my opinion some fundaments are already established (store of value and hight security chains) some new trends are  visible (dominating platforms for decentralized finance) and some are yet shaping (new languages and ways to build and interconnected solutions on these platforms). I don't believe in the concept of one big platform to rule them all. Simply put, the area is too complex, muti-dimentional, and business use cases require different features and parameters.

Promising projects like Blockstack (founded by Princeton Team), Algorand (founded by MIT team) and Bitcoin (founded by unknown team:)) joining the forces and figuring out how not to re-invent the wheel but go to the next stage, building this crypto automobile puts them on my TOP list. 

Cheers.

Andrzej_0xa0

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Andrzej_0xa0
Andrzej_0xa0

Running Crypto Ultramarathons


Strong Fundamentals
Strong Fundamentals

On this blog I share my thoughts, analysis and deep-dives into projects in Crypto space, which in my opinion are building an interesting technology, have a healthy ecosystem, promising tocenomics and strong team with high ethics. So in general I study projects in #crytp + #blockchain space with something what I call #STRONG_FUNDAMENTALS @Andrzej_0xa0

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