What is Algorand?

Algorand is one of a number of new generation blockchains, whose aim is to solve the so-called “blockchain trilemma” – a blockchain that is decentralized, scalable, and secure. In this article, we’re going to take a look at some of the main features of the Algorand, and what sets it apart from other blockchains.

The Team Behind Algorand

Algorand has an impressive team. The blockchain technology was founded by Italian computer scientist Silvio Micali. Micali is a professor at MIT and one of the most respected individuals in the computer science community. In 2012, he received a Turing Award for his work in the field of cryptography. As well as this, he is a member of the National Academy of Sciences, the National Academy of Engineering, the American Academy of Arts and Sciences and Accademia dei Lincei.

What is Algorand’s Consensus Mechanism?

The Algorand network is based on a Pure Proof of Stake protocol. Pure Proof of Stake is slightly different from Bonded Proof of Stake, due to the fact that a person holding tokens does not have to lock up their tokens. Anyone who has the Algorand cryptocurrency in a wallet can stake their tokens and earn interest.

Users’ influence on the network is directly proportional to the number of tokens they hold and they have the ability to vote on consensus, as long as they are online. In addition, the selection of users to vote and choose blocks is completely random (hence the name “algo” (algorithm) and “rand” (random).

On Algorand block finality is reached in a matter of seconds and there is a guarantee of no forking.

ALGO – The Algorand Blockchain’s Native Cryptocurrency

ALGO is the native token of the Algorand blockchain. ALGO is used to reach consensus on the Algorand blockchain, as well as being the token that is used to pay for transactions.

ALGO is cheap to use (a fraction of a cent per transaction) and is very fast (transactions are executed in less than 4 seconds).

There is a maximum supply of 10 billion ALGO tokens. As mentioned previously, token holders get staking rewards for simply holding ALGO in their wallets. No additional lockup is needed.

Smart Contracts on Algorand

Smart contracts are essentially agreements that are executed automatically by code on a blockchain when certain predetermined terms and conditions are met. Smart contracts remove the need for intermediation in a myriad of circumstances.

Smart contracts are integrated into Algorand’s Layer-1 (i.e. native to the blockchain). This means that they are fast, scalable, and secure – smart contracts on Algorand can execute over 1,000 transactions per second and are final in under 5 seconds.

Algorand’s smart contracts are written in a new language called Transaction Execution Approval Language (TEAL)

Tokenization on Algorand

Tokenization is the digital representation of an asset on a blockchain. Essentially anything, digital or physical, can be tokenized, including gold, fiat currency, art, real estate etc.

Tokenization on Algorand is made available through “Algorand’s Standard Assets” (ASAs). ASAs are built on Algorand’s Layer-1 and provide a secure mechanism to tokenize various assets including fungible, non-fungible,
restricted fungible and restricted non-fungible assets.

For a deep dive into ASAs, you can find more information here.

Energy Efficiency

With all the focus on the environment and in particular the amount of energy needed for Proof-of-Work blockchains, the energy efficiency of networks has become an important topic du jour. Algorand has proven to be extremely energy efficient. A recent study by University College London concluded that Algorand was the second most energy-efficient Proof-of-Stake DLT and most energy-efficient blockchain.

In addition, Algorand is carbon neutral and is striving to become “carbon negative”.

Eco-system and Use Cases

Currently, there are hundreds of projects building on top of Algorand. Use cases include supply chain, identity, government, gaming, stablecoins and Defi.

Algorand was leveraged to build the first Central Bank Digital Currency (CBCD), the SOV for the Marshall Islands. This may mean that Algorand is an attractive choice for other nations that are in the process of building out their own CBDCs.

There is a healthy active developer community building on top of Algorand. The foundation is active at universities (the Algorand Foundation runs a Global University Program) and hosts a number of “accelerator programs”, which assist startups and developers who are building on top of Algorand. This is a good indication that the Algorand ecosystem and developer community will continue to expand.

Where to find out more about Algorand

You can keep up to date with the Algorand team on their blog, which is updated quite frequently. For a more technical perspective, read their whitepapers here.

Where to buy ALGO?

f you’re interested in investing in or trading ALGO, the native token of Algorand, it can be purchased on a number of cryptocurrency exchanges, including Binance.