Algorand is yet another blockchain start up with direct competitiveness to the Ethereum Network. Founded by renowned MIT professor Silvio Micali, Algorand was established with the idea of creating the building blocks for a financially "borderless" economy through the utilization of the proof-of-stake protocol for blockchains. While smaller than competitors such as Ethereum, Cardano, Polkadot, and others, Algorand is actually already an industry leader in transaction speeds, costs, scalability, energy efficiency, and even actual utility
The Basics of Algorand
Algorand utilizes a governing protocol they refer to as Pure-Proof-of-Stake (PPoS) which is a direct relative to the traditional Proof-of-Stake models other blockchains use. PPoS is built in accordance to Byzantine consensus meaning the system is designed in a way to withstand byzantine failures in the system. A byzantine failure would be the algorithmic equivalent of nodes on the Algorand network either failing to report on the network or acting maliciously. The Algorand network ensures security by utilizing this system through PPoS.
PPoS operates by having each user's influence on the network proportional to the stake in which that user has in the system. Block proposals and voting is conducted through a random selection process proportional to the user's stake. The token that is used on the Algorand network is the ALGO, which can be staked to receive the benefits described above.
Key Network Advantages
Algorand holds some very distinct, highly robust qualities that allow the network to stand out convincingly against competitor networks. For one, Algorand has nearly instant transaction speeds that are estimated to be under 4.5 seconds. This allows costumers to bypass traditional methods of wire transfers, heavy transaction fees, and long waiting times in between transactions. Additionally, Algorand being a distinct digital currency, it can also support micropayments which enables the possibility of generating novel money lending and creation services. Micropayments refers to payments in very small amounts (ex: 0.00001 ALGO).
Algorand also have very low transaction fees to operate on the network due to the network's already highly adaptable ability to scale to larger user bases. The Algorand network is already capable of handling potentially billions of users or addresses on the network. Due to the robust scalability of Algorand, transaction fees are never slowed down due to more users operating on the network.
Between the low transaction fees, network speeds, and overall scalability, transparency, and security of the network that Algorand already possesses, it puts this protocol in a great position to compete with even the likes of Ethereum as the network continues to grow and expand.
Long Term Algorand Tokenomics
Before choosing to join or invest in a project like Algorand, it is always imperative to understand the tokenomics that Algorand utilizes. With the creation of the genesis block on the Algorand Network (the very first block on the blockchain), 10 billion ALGO were officially minted. These 10 billion ALGO are the maximum amount of coins that will ever exist for Algorand.
Nearly 20% of this supply has already been released into circulation since the network was launched officially back in 2019. The remaining ALGO left to be delegated out will be released periodically over the next several years, ending with a complete supply of 10 billion ALGO by 2030.
ALGO can be earned in a variety of ways, including participation or staking awards, early relay node backing, and other incentives. Currently on Coinbase, ALGO can be purchased and staked just by owning it on the exchange. Additionally, Algorand is paying out 6% APY which comes from the participation rewards.
The more ALGO that someone is able to accumulate now, the more influence that individual will have over the network as it continues to grow and evolve over time.
Other Advantages of Algorand
Not only is the Algorand network fast, secure, efficient, and scalable, but Algorand is actively becoming a popular choice for developers to build decentralized applications (dApps) as well as launch Non-Fungible Tokens (NFTs). These developments are allowing Algorand to take its stake in these new emerging markets.
Finally, arguably the most important and impressive quality of the Algorand Network is the fact that it is now going carbon NEGATIVE. Algorand is already net zero carbon, putting it absolutely worlds ahead of Ethereum, Cardano, and more. This is made even more impressive by Algorand's ability now to move towards a carbon negative footprint. This means that Algorand actually removes more carbon than it creates. This is a monumental advantage for Algorand should investors such as Elon Musk truly prioritize environmental impact when making investment decisions in cryptocurrencies.
Currently, Algorand is experiencing a rally off the lows from the May 19th market correction. Due to some very positive news coming out about Algorand recently, it is up nearly 20% in the past 24 hours but still sets well below its all time high around $1.80 USD per ALGO. The most recent news coming out about ALGO was the investment announcement of $25 million USD to fund new Miami-based blockchains start ups being built on the Algorand Network. You can read more about that here.
The Algorand Network, though only a few years old, already holds key advantages over well known competitors. Algorand offers a blockchain that guarantees fast transaction speeds at low costs, security and transparency in the network, the ability to earn passive income through staking, and is already highly efficient, becoming one of the first networks to not only achieve net zero carbon status, but have the ability to go carbon negative.
This isn't financial advice. While I aim to provide my insight as accurately and bias-free as possible, please do your own due diligence before choosing to invest in anything, including Algorand.