What is cryptocurrency Algorand (ALGO) and how does it work?

What is Algorand (ALGO)?

Algorand is a decentralized open-source network that uses a unique Proof-of-Stake mechanism to facilitate a two-layered architecture and enable a functional coexistence between decentralization, scalability, and security. Achieving scalability, security, and decentralization in one blockchain network is a difficult task for most cryptocurrency projects. Algorand aims to enable full decentralization with top security and scaling while achieving 1,000 transactions per second and fast block finality.

Algorand launched in 2019 as one of the most recent prominent projects in the blockchain sector with the goal of providing the foundation for emerging and existing businesses in a decentralized economy. ALGO is the native cryptocurrency of the Algorand system and is designed to support the decentralized economy and enable equal participation within it. Algorand participants can enjoy the perks of instant transactions with ALGO and can earn rewards. The system is based on ALGO holders and ALGO block producers, i.e. node runners.

Algorand users can deploy smart contracts to create new tokens and decentralized applications (dApps). Algorand presents an alternative to Ethereum’s smart contract functions while offering more efficient scaling with Pure Proof-of-Stake. With the Algorand Standard Asset (ASA) feature, users can deploy new tokens to the network or transfer existing assets to the Algorand ecosystem and join Algorand’s decentralized economy.

How Does Algorand Work?

The Algorand network achieves security, scalability, and decentralization in one place by using a Pure Proof-of-Stake consensus mechanism that employs a Byzantine agreement protocol. Thanks to the protocol, even if a node were to be compromised, the staked ALGO balances owned by the network participants would be protected with unique keys created through automation.

The network is secured through the Pure Proof-of-Stake protocol and depends on a system that only enables users with the majority of ALGO funds to engage in malicious activities that could compromise the security of other users and the network. However, even though some users may have that power, the system is based on the codependency of network participants. In the case that a majority holder decides to engage in malicious activities, ALGO value would deteriorate and the users funds would be devalued, which is why malicious activities don’t pay off.

Thanks to its efficient scaling, ALGO transactions are final and instant, with the potential of having 1,000 transactions processed in a second. The total supply is limited to regulate the supply and add an anti-inflation mechanism to the decentralized economy. All existing ALGO in the total supply were minted at genesis and are distributed to ALGO holders and network participants with each new block created. The problem of storage in blockchain is resolved in the Algorand system as each new user starts participating in the network storage as soon as they join the decentralized economy. With the employment of these features and protocols, Algorand facilitates a two-tiered decentralized network with diverse utility.

Who Are the Founders of Algorand?

Algorand (ALGO) was created by a seasoned cryptography expert, Silvio Micali, who is a professor at the Massachusetts Institute of Technology (MIT). Silvio Micali co-created many of the well-known cryptographic technologies that are used in some of the top blockchain projects, like Cardano. Micali co-created zero-knowledge proofs, verifiable random functions, and other cryptographic protocols, and has been working in the field since the 1980s.

Algorand was founded in 2017 by Micali and is supported by the Algorand Foundation, with the aim of solving the trilemma that scaling, decentralization, and security issues represent across numerous blockchain networks. The idea was to create a borderless economy. Like the majority of altcoins, Algorand was created to address the shortcomings of Bitcoin. As Micali was studying Bitcoin in 2015, he decided to create his own blockchain network that would enable more efficient scaling, security, and complete decentralization. After testing the system for 2 years, Algorand finally launched.

In 2019, the Algorand testnet was open for participation, while the launching of the mainnet followed shortly afterwards.

What Makes Algorand Unique?

What makes Algorand unique is its original approach to enable security, scaling, and decentralization to function simultaneously in the same blockchain. As a result, Algorand enables faster transactions with the capacity to process around 1,000 transactions in a single second and seamless creation, development, and deployment of dApps.

Users can create and deploy their own tokens as network participants are building a decentralized economy with a variety of applications and crypto assets. Through the use of Pure Proof-of-Stake, Algorand ensures that all network users can participate in the governance of the network and that all network users, including node runners and ALGO holders, are rewarded for their participation. With unique features and novel technology, Algorand is set to become one of the biggest decentralized economies and one of the fastest blockchain networks.

What Gives Algorand Value?

Algorand is valuable by virtue of its technology and functions, as well as adoption, network utility, and other specific factors that can influence Algorand value and its market price.

One of the factors that gives Algorand value is its finite supply. Algorand has a limited supply of 10 billion ALGO, which was minted at the inception of Algorand. These funds are distributed as participation rewards to node runners, end user grants, and the Algorand Foundation.

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The market value of Algorand is defined through buying and selling activity, market trends, and other specific factors that may influence the price of ALGO.

How Many Algorand (ALGO) Coins Are in Circulation?

Out of the limited supply of 10 billion ALGO, less than a third is in circulation. The number of circulating ALGO is 3.038 billion as of May 2021. Once the max supply is exhausted, no new ALGO coins will be created. The existing max supply of 10 billion ALGO coins was minted at genesis. The finite supply acts as an anti-inflation mechanism, much like with Bitcoin.

Other Technical Data

Thanks to the Pure Proof-of-Stake and the system protocol that Micali created himself, Algorand is planning implementation into decentralized finance, which is a fast-growing sector in blockchain. As the system relies on the aforementioned protocol, it requires less computing power to prove ownership over funds.

The system is designed to tolerate a few malicious users as long as the majority of stakers are legitimately working in favor of the financial ecosystem. The system has the ability to increase the number of transactions per second due to the employment of Pure Proof-of-Stake. Users are chosen randomly and offered a chance to write a transaction into a new block so network participation is equally available to all users. The odds of choosing participants are in line with the value of ALGO staked.

How Is the Algorand Network Secured?

The Algorand blockchain is secured through the use of Pure Proof-of-Stake where only users with the majority of ALGO staked can try to perform a malicious activity. The network automates tolerance to several malicious users as long as the majority of users are honest and work in favor of the Algorand blockchain.

Even if a malicious user had the majority of ALGO staked, the system would be compromised and with it the value of ALGO would deteriorate, thus compromising the value of the funds owned by the malicious user.

How to Use Algorand

Algorand is used as a network for creating decentralized applications through the use of smart contracts. Algorand achieves scalability, security, and decentralization in one blockchain, so users can enjoy the perks of fast finality and instant transactions. The Algorand blockchain aims to become an integral part of decentralized finance and enable a perfectly scalable environment for users and developers. ALGO is used as the native crypto on the network. Algorand (ALGO) can be used to send payments, create dApps, participate in staking, and it can also be traded in the market.

How To Choose an Algorand Wallet

Algorand (ALGO) can be stored in the official wallet launched by the foundation, Algorand Wallet, while there are several other options for storing, sending, and receiving ALGO.

Hardware wallets or cold wallets, like Ledger or Trezor, provide the most secure option with offline storage and backup. Hardware wallets can involve a bit more of a learning curve and are a more expensive option, however. As such, they may be better suited to storing larger amounts of ALGO for more experienced users.

Software wallets provide another option and are free and easy to use. They are available to download as smartphone or desktop apps and can be custodial or non-custodial. With custodial wallets, the private keys are managed and backed up on your behalf by the service provider. Non-custodial wallets make use of secure elements on your device to store the private keys. While convenient, they are seen as less secure than hardware wallets and may be better suited to smaller amounts of ALGO or more novice users. Among popular mobile wallets are Algorand Core Wallet, while MyALGO wallet is another common choice among Algorand users.

Online wallets or web wallets are also free and easy to use, and accessible from multiple devices using a web browser. They are considered hot wallets and can be less secure than hardware or software alternatives, however. As you are likely trusting the platform to manage your ALGO, you should select a reputable service with a track record in security and custody. As such, they are most suited for holding smaller amounts or for more experienced frequent traders.

Kriptomat offers a secure storage solution, allowing you to both store and trade your ALGO tokens without hassle. Storing your ALGO with Kriptomat provides you with enterprise-grade security and user-friendly functionality.

Buying and selling ALGO, or exchanging it for any other cryptocurrency, is done in mere moments when you choose our secure platform as your storage solution.

Algorand Proof of Stake

Algorand can’t be mined as the total supply of ALGO coins was minted at genesis. Instead, the Algorand blockchain uses a form of Proof-of-Stake, created by the founder and creator of Algorand. Proof-of-Stake consumes less computational energy than Proof-of-Work and relies on staking ALGO in order for the network to function properly.

Choosing Algorand

Algorand facilitates a perfect environment for developers and dApp users thanks to the clever use of PoS that enables scaling, security, and full decentralization. As a relatively new project with novel technology, Algorand is yet to showcase its full potential and the ability to integrate into decentralized finance.

Algorand offers a great alternative for developers who can transfer their tokens to the Algorand blockchain, or use the network’s smart contract features to create new tokens and decentralized applications. With the ability to process 1,000 transactions per second, Algorand is most certainly one of the fastest blockchain networks on the market.

Algorand FAQ

Is Algorand Worth Buying?

Algorand is one of the newest and most prominent crypto and blockchain projects in the market. Despite its volatility, Algorand could become a rather valuable asset considering its finite supply, technical features, and scaling capacity.

How To Buy Algorand

If you’ve been wondering how to buy Algorand, you will be thrilled to know that it is fairly straightforward. Buying ALGO is as easy as visiting Kriptomat’s how to buy Algorand page and choosing your preferred method of payment.

How To Sell Algorand

If you already own ALGO and hold it in a Kriptomat exchange wallet, you can easily sell it by navigating the interface and choosing your desired payment option.

Algorand Price

Algorand price is constantly changing as it depends on a range of factors that may influence its market value. These include a lot of the traditional factors such as project news and developments, market sentiment, the flow of cryptocurrency on exchanges, and the economy in general. The growth of the Algorand ecosystem will also likely be a factor.

The current Algorand (ALGO) price is EUR.

The 24-hour trading volume of ALGO is EUR. ALGO is currently ranked of all cryptocurrencies by total market cap, with a market cap of EUR. It has a circulating supply of ALGO.

Register now to begin your journey into the world of Algorand and cryptocurrencies with Kriptomat!

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