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What Is Algorand?
Algorand is a cryptocurrency and smart contract platform that was created with the goal of solving the "blockchain trilemma," which claims that a blockchain cannot increase security, scalability and decentralization without decreasing at least one of the other aspects. Algorand aims to maximise all three of these properties while also allowing for fast and cheap transactions.
Algorand was founded in June of 2019 by Silvio Micali, who is a professor of computer science. At the time of this writing, Algorand is the number-43 cryptocurrency by market cap and is able to processes more than 1,000 transactions per second. Algorand's smart contracts are already being used for many different purposes, but they are primarily used for finances.
"Algorand builds technology that accelerates the convergence between decentralized and traditional finance by enabling the simple creation of next generation financial products, protocols and exchange of value."
— The Algorand Website
What Does Algorand Offer?
The Algorand network doesn't only offer a digital currency, but it also supports smart contracts and has a strong focus on decentralized finance, also known as DeFi. Algorand has a growing ecosystem that already includes NFTs, stablecoins and many other tools that allow it to be used both for traditional finance and decentralized finance.
Ethereum, the largest smart contract network at the time of this writing, is currently facing many issues with transaction speed and cost. They are hoping to solve their problems by converting to a proof-of-stake consensus. Algorand is already running with proof-of-stake, which makes it faster and cheaper and allows it to use less electricity.
Algorand makes it possible to create digital assets and tokenize real-world things. The platform already has plenty of different use cases in many different sectors. This includes NFTs that are being used by SIAE, one of the largest rights management companies, to represent ownership rights. Another use is Meld Gold, which tokenizes gold so that it can be traded like a cryptocurrency. Algorand is even being used by the Marshall Islands to create their national cryptocurrency; this is the first instance in which a nation has its own cryptocurrency.
How Does Algorand Work?
Algorand's architecture uses two layers for its transactions. One layer is used for simple transactions, while the other layer is used for smart contract executions. Instead of adding the entire process of the smart contract use to the blockchain, it is calculated off the chain so that only the result is added to the chain. This makes the layer-two transactions much faster than would be the case on many other smart contract platforms. This is how Algorand is able to operate 1,000 transactions per second and finalize a new block every four seconds.
Algorand uses a proof-of-stake consensus to process its transactions. Bitcoin uses a proof-of-work consensus where all mining computers compete against each other. This wastes a lot of electricity and is very slow and is unfair because rich people and institutions can afford better hardware than poor people, meaning that they have more control over the network and the supply of new coins. Another problem is that two competing computers can finish the next block simultaneously, which can lead to an accidental fork, which can compromise the safety of the network and make transactions uncertain.
Instead of mining, Algorand uses staking. Instead of competing against each other, random coin holders are selected to process a transaction and earn a reward. This makes the network much faster and also lowers energy consumption, which is why Algorand is scalable. It also protects the blockchain from accidental forks, making it much safer than some of its competitors. Lastly, staking keeps the blockchain decentralized because everyone can earn rewards—not just the people and institutions with the best equipment.
ALGO is the native cryptocurrency of Algorand. It can be used for payments much like like Bitcoin, Litecoin and similar crypto. However, ALGO transactions are nearly instant, and the transaction fee is less than a cent. This makes ALGO much more suitable as a digital currency than Bitcoin.
ALGO is also used for every smart contract execution, so for everything that you do on the network, you have to pay a small amount of ALGO. The coin is also necessary for staking, which keeps the network running. Soon, the coin will also give users governance rights over the network, making it similar to a stock for Algorand. They can be held and staked on the official Algorand wallet.
Currently, there is a circulating supply of 1,091,509,900 ALGO, and there is a max supply of 10,000,000,000 ALGO, which will continue to be created until 2030.
The Future of ALGO
ALGO had its ICO in June 2019 for a price of $3.10 per coin. Since we were in a crypto bear market then, the price quickly fell down to about $0.30 and stayed there until the bull market after December 2020 pushed the price up to around $1.37. ALGO seems to be a solid project in the crypto world. Volatility isn't unusual for the crypto market, which is why you should never invest more than you would be willing to lose, even if you have faith in a particular cryptocurrency.
However, the more people and institutions use Algorand, the higher the demand for ALGO will become. Since the ecosystem is growing, ALGO could be a good long-term investment.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2021 Krypton Currency