A Turing Award-winning cryptographer at MIT thinks he has the key to making digital currency transactions faster, cheaper and energy-efficient.
Silvio Micali's answer to the challenges faced by current cryptocurrencies is Algorand, his Boston-based startup that is developing a "scalable, secure and decentralized digital currency transactions platform." To support development, the company has raised a $4 million seed round from local venture capital firm Pillar and Union Square Ventures, the New York-based firm that has backed a number of big-name companies, like Twitter and Etsy.
The financing was announced on Thursday.
"Silvio is a world-class cryptographer, and he's attracted an exceptional core team and advisors," Jamie Goldstein, founding partner at Pillar, said in a statement. "Algorand is a sophisticated approach to addressing existing blockchain challenges — scale, settlement times, and cost. The company has the potential to fulfill the promise of a truly decentralized world."
Algorand said its public currency and permissionless blockchain, the decentralized ledger technology that powers cryptocurrencies like Bitcoin and Ethereum, can confirm transactions within seconds and that transfers are made immediately. They will also require "trivial computational power and electricity," regardless of the network's transaction volume.
"For three decades Shafi and Silvio have been leading the field of cryptography by asking fundamental questions about how we share and receive information."
This is achieved, the company said, through a new open-source protocol co-authored by Micali that, unlike Bitcoin and Ethereum, doesn't require the solving of cryptographic puzzles. To process transactions, the protocol "randomly and fairly selects a small, one-time committee of users to achieve consensus" on a transaction. These one-time committees will always remain the same size, and the users' identities will be hidden until the transaction is confirmed as a way to protect against attacks.
"Just as the strength of the Algorand network comes from the diversity of its participants, the strength of the Algorand community comes from the diversity of its contributors,” Micali said in a statement. "We are an open community bringing together end users, developers, and researchers in cryptography, economics, and computer science."
Slow transaction speeds and high fees have been two big problems plaguing cryptocurrencies running on the blockchain, raising questions as to whether the technology can truly scale. This became hilariously apparent late last year when the popularity of Cryptokitties, an Ethereum-based game, slowed down the entire network, prompting the game's creators to increase transaction fees. Bitcoin has also dealt with "skyrocketing" fees.
If Algorand can solve these problems, as well as the issue of the massive energy costs of blockchains, it could show a formidable way forward for the future of blockchain transactions.
Micali certainly has the credentials to make it happen. A computer science professor at MIT, the Italian native is the co-inventor of zero-knowledge proof and is also known for his early work on public-key cryptosystems, digital signatures and secure mutliparty computation, among other things. He and Shafi Goldwasser, a fellow professor at MIT, won the prestigious Turing Award in 2012 for their "transformative work that laid the complexity-theoretic foundations for the science of cryptography."
“For three decades Shafi and Silvio have been leading the field of cryptography by asking fundamental questions about how we share and receive information," Daniela Rus, director of MIT's Computer Science and Artificial Intelligence Lab (CSAIL), said in 2013.
