Algorand defines itself as the “world’s most powerful and sustainable blockchain.” Algorand is a blockchain platform along with being a digital currency. It can be understood as a decentralized network that expert professionals have crafted to bring a solution to the blockchain trilemma of transactions being able to have high-speed security and be decentralized simultaneously. The Algorand platform has been constructed to process many transactions without much hassle. It can be considered very similar to major payment processors such as MasterCard or visa. This platform can host other blockchain-based projects. ALGO, the platform’s native currency, is used to secure the Algorand blockchain and pay processing fees for Algorand-based transactions.
Algorand is an open-source blockchain, meaning anyone can view and contribute to the platform’s code. Algorand uses an operating protocol called pure proof-of-stake (PPoS), which recruits network operators from the entire pool of ALGO coin holders. Algorand has made the market more efficient and scalable as a platform, allowing people to finalize their transactions without delay instantaneously.
The Background Story of Algorand
Algorand is a proof-of-stake blockchain cryptocurrency. It is a platform that was founded in 2017 and launched in June 2019 by Silvio Micali, a professor at the Massachusetts Institute of Technology and a very noted Cryptographer. It is not only a foundation but also runs as a renowned company and is a relatively young protocol. The organization is a nonprofit organization named the Algorand Foundation and oversees the business and development front of Algorand Inc., based in Boston. The Algorand foundation also takes control of an entire ecosystem growth along with research and development initiatives. Even though it is relatively new within the blockchain compass, Algorand has already proven itself as an effective platform with robust Technology innovations and advancements along with development support and real-time use in cases. Since its establishment, the Algorand foundation has also successfully sponsored various events such as blockchain seminars, Hackathons, educational classes regarding blockchain management, and student certificates and courses. The Foundation has also established more accelerator programs in the year 2020. These are the Algorand Asia Accelerator and Algorand Europe Accelerator. These are specialized in helping the progress of the already ongoing projects while also assisting the developers in building Algorand.
How Does the Algorand Protocol Work?
The Algorand protocol Structure has been built on three major concepts:
- Transactions- Transactions are considered to be the primary or basic unit of account in the Algorand network. They are used for transferring the value and are checked and verified by all participating nodes in the blockchain network.
- Blocks- These can be referred to as the cumulative transaction groups that are collected into a singular unit and encrypted by the consensus algorithm.
- Consensus: This is mainly required for verifying and encrypting the blocks and ensuring that all the requirements have been met according to the Algorand protocol. When the users participate in completing the separation, they are adequately rewarded.
Algorand has removed any technical barrier that has been a disadvantage to traditional blockchain adoption. It has created a permissionless consensus mechanism and uses the pure Proof of stake method, the best possible method. The protocol is robust because it allows all users to participate with full protection and speed.
Pure Proof of Stake (PPoS)
The pure proof of stake or PPoS is the consensus protocol and helps develop the popular proof of stake mechanism utilized while solving the blockchain trilemma. Algorand uses this. This is a unique variation that is used by this organization solely. It can be understood as a highly democratized POS consensus mechanism with minimum staking requirements for participating and conveniently securing the network. For this to work out, only one ALGO coin is mandatory to take part. In this approach that Algorand has taken up, the influence of each user on a new block is extremely dependent on the user’s stake. The system is programmed so that it unknowingly and secretively selects a few users when it is required to form New blocks and vote for new block proposals. How do the users get chosen? This is dependent on their stake.
One major benefit of PPoS is that it makes blockchain mining more accessible to users who do not hold many resources required to participate in traditional blockchain mining. The user is only required to have a computer with a stable internet connection and Bitcoins without needing to employ expensive, energy-consuming hardware.
Features of Algorand
- ASAs are incredibly fast and secure and low-cost to execute due to Algorand’s minor transaction fees.
- It provides issuance for assets that is easy and simple for its stakeholders.
- Custody Providers like Associations, Exchanges, Banks, and Registered broker-dealers may benefit from Rekeying. Rekeying lets organizations create and set up or reassign accounts for their users when needed.
- They can keep their user’s spending keys cold all the time while needing just to manage a solitary Public Address key.
- They may also eliminate the chain of old Public Address keys from having to move funds after using the spending keys.
- Algo’s effective way of solving the trilemma of digital blockchain technology:
- Decentralization: Algorand selects validators randomly from all its token holders. The PPoS algorithm will automatically pick the nodes belonging to the next group for adding blocks. Everyone can be selected to be the next validator. Thus it maintains a unique form of decentralization on the platform.
- Scalability: Algorand processes over 1,200 transactions per second to process 3,000 transactions per second with instant finality.
- Security: Algorand is a blockchain very difficult to fudge with that enables a high level of security.
Algorand has the pure proof-of-stake (PPoS) algorithm built on a Byzantine agreement. A Byzantine agreement is a protocol for communication that allows the distributed system users to reach a consensus in the presence of malicious actors. It puts randomness to use to solve the blockchain trilemma efficiently.
The Algorand Foundation is a nonprofit organization with a goal of a frictionless, borderless economy with blockchain technology that is public and decentralized. The Foundation has built its blockchain technology in partnership with Algorand Inc.
On the Algorand platform, all users can expect to get rewards promotional to their stake for every block committed to its chain. This encourages users to join the platform and accelerate to a decentralized future.
The Algorand Foundation, the nonprofit organization that oversees the funding of the development of the protocols, has claimed that only about 10 million units of ALGO will ever be created, increasing its value and want among investors in users who are regular to the cryptocurrency exchange. Algorand has also successfully created a block explorer that has been keeping count officially of the circulating supply of ALGO.
The ALGO Token
ALGO is the native currency of the Algorand network. When a user is trying to pay the transaction fees or Algorand rewards the users who actively participate in the network’s consensus processes, it utilizes its tokens called ALGO. The ALGO transactions are fast-paced and take place in approximately 4 seconds. The time for each transaction remains the same even though a user can participate in making multiple transactions in a day. The fee the user needs to pay for this transaction is also extremely minimal, which gives ALGO the upper hand over the other tokens in the market like Ethereum, which have high-cost fees. The platform’s goal is to use its native token to oversee the growth of the Algorand ecosystem. The ecosystem’s governance also rewards those who commit to voting as part of the governing process. Algorand (ALGO) can easily and securely be traded at an exchange like Coinbase. The total max supply of ALGO is 10 billion for the moment. Cryptocurrency experts do not forget to mention the future estimated price of Algorand in their forecasts. It is primarily thought that ALGO will be traded somewhere between $3.44 and $4.23 in 2028. And its average cost is also expected to be around $3.54 during the same year.
There are various ways of purchasing ALGO tokens. Like any other cryptocurrency, ALGO can be bought over the internet or from another person. It can also be purchased from a crypto ATM that offers ALGO. The most convenient way of buying ALGO is using credit or debit cards on a cryptocurrency exchange. Popular exchanges that offer ALGO are Binance, Kraken, and Coinbase. You need to have a brokerage account and a crypto wallet first. Suppose you have the crypto wallet to hold the ALGO, for example, Pera Wallet, My Algo, Coinbase, and Ledger, which support ALGO. A brokerage is an online account authorized to access the cryptocurrency market. The account needs full trading capabilities and should have prior funding from the linked bank account or credit card. Afterward, you can place a buy order for Algorand on your trading platform. You can choose a good buying signal by observing how Algorand moves on a specific day. Place the buy order using the specific process by the broker. There could be various order types, but the two most common are market orders and limit orders.
Algorand calls itself “the Future of Finance” It has been noted that Algorand has a promising future. Algorand will provide new peaks of success for its users and investors. It has been predicted that in the long term, the currency of Algorand, ALGO, may prove to be an excellent investment for the ones who invest in cryptocurrency regularly. Predictions have also shown that in 2022, the ALGO prices will likely go up to almost $1.26. According to investment experts, the Algorand price and future holes are profitable statistics that may be traded for almost $6.740 by 2025. The cryptocurrency market’s average cost has been predicted to go up to almost $4.36 by 2025. We can understand that in terms of price, Algorand cryptocurrency has an excellent potential that will enable it to reach New heights exponentially. All predictions show that prices will increase, and the crypto experts and business analysts have also given an approximate prediction of ALGO going up to $59.90 by 2030.
ALGO is the native currency of the Algorand cryptocurrency. ALGO tokens can be used to pay transaction fees and as a reward for users who participate in the consensus system of the network. All ALGO transactions happen in less than four seconds, regardless of the number of transactions that happen in a day, along with minimal transaction fees. Algorand blockchain primarily enables other developers to create new applications fueled by cryptocurrency. Algorand authenticates transactions using a proof-of-stake protocol. Anybody with a minimum of 1 ALGO can stake their tokens, after which they are a part of the validation process. The protocol chooses participants to confirm blocks of transactions. The users receive participation rewards in return for validating transactions. This makes the network entirely decentralized with no singular locus of control.
The Algorand protocol constructs blocks in two phases under the PPoS mechanism. In the first phase, a single token is selected randomly, and the user proposes the next block. In the second phase, out of all the tokens in the system, 1000 tokens are selected at random, and the owners of these tokens make up a committee. They approve the block proposed by the user in the first phase.
Algorand is a comparatively new open to the public blockchain with comparatively new technology yet to be entirely realized by the users. One of the most significant features of Algorand is that when it distributes its native cryptocurrency ALGO, it is simultaneously introduced into the blockchain economy, with every new block to every user holding even a bit of cryptocurrency in their wallets.
Algorand also enables the users to create smart contracts with enhancing technology, a programmatic agreement for building decentralized applications, and tokens that can represent both old, new, and pre-existing user assets.
Algorand received a lot of success among its users as it was very attractive in how it ventured into the diversity among the investors. It also was successful in including the users in early private sales of ALGO conducted for funding the upliftment of the Algorand platform.
Algorand is also unique from other blockchain platforms such as Ethereum, which can be viewed as its competitor. What makes Algorand special and different from Ethereum is how the consensus mechanism of the particular blockchains works. While Ethereum is still using the proof of work method, (PoW) Algorand is way ahead of it by using the pure proof of stake method. Algorand is also approximately 75% faster than the other competitors. It is also an environmentally sustainable company committed to being a carbon-negative network.