What Is Algorand? All You Need to Know About ALGO

What Is Algorand?

One of the most important features of the blockchain is that, as a public and distributed ledger, it eliminates the intermediaries, which are typically required during transactions. However, in order to be efficient it must meet three requirements: security, scalability, and decentralization. The Algorand project claims to be able to process many transactions quickly without sacrificing any of those requirements.

Algorand is a public and open source blockchain based on the PPoS (Pure Proof of Stake) consensus protocol and is developed by the Algorand Foundation. Algorand was created by the famous cryptographer Silvio Micali, a leading cryptographic researcher and winner of the 2012 Turing Award. Micali focused on trying to find an answer to the ‘Blockchain Trilemma’. This term was first coined by Vitalik Buterin, the creator of Ethereum. The Trilemma says that decentralized networks, in order to be efficient, can only provide two of the three requirements of a blockchain: decentralization, security or scalability. The result is that we have blockchain protocols that guarantee security and scalability and others that guarantee security and decentralization. The former protocols, however, are centralized, and the latter ones are slow and in some cases expensive to perform. Algorand claims that it can fulfill all three requirements, and as a result is able to take Proof of Stake to the next level. In addition, the Algorand blockchain requires a minimal amount of energy to function, because it was built to have minimal environmental impact from day one. This feature makes Algorand one of the greenest and most eco-friendly blockchains ever created.

How Does Algorand Work? PPoS Consensus Mechanism

The key feature that makes Algorand highly scalable is its PPoS (Pure Proof of Stake) consensus mechanism. This protocol allows it to process several transactions quickly without sacrificing decentralization. Algorand chooses validators and block proposers randomly from anyone who has staked and generated a participation key. It basically constructs a new block in two phases:

1. A single token is randomly chosen with a uniform probability among all those in circulation, it proposes the block and spreads it.

2. Subsequently, another thousand tokens are chosen with the same mechanism, which is responsible for validating the block that was previously proposed.

This mechanism is called ‘Cryptographic Lottery’ and has been programmed to resolve itself in a microsecond. This is a very important factor, because it basically eliminates the risk of the validant of the chosen block being identified in time and therefore being exposed to corruption attempts by a malicious actor. Because of the fact that any staker can become a potential validator, the Algorand network’s security is more decentralized than with a chosen set of validators, which is what other types of Proof of Stake networks use.

In a nutshell, the Algorand protocol is:

• Safe, because it does not allow any entity to alter the chain, either directly or on behalf of someone else. The cryptographic lottery and the timing of the validation phases ensure that everything goes smoothly, in a fluid and linear way.

• Scalable, because the computation time is one microsecond regardless of the computer being used.

• Decentralized, because each token has the same power as another token, with no exception.

In Algorand, as only one block can have the required threshold of committee votes, all transactions are final as soon as they get added to a block. Once a block appears, you can count on it to be there forever and thus, transactions are instantly final. Therefore, the chances of the Algorand blockchain being forked are practically zero.

What Is the ALGO Token?

ALGO is the native utility token of the Algorand blockchain. It has a maximum total supply of 10 billion coins to be distributed by 2030. Like many other utility tokens, it is primarily used to secure the Algorand blockchain and pay very low processing fees for Algorand-based transactions. ALGO can be staked, in order to have a chance of being selected as a block proposer or validator. Unlike PoS blockchains, Algorand does not require a minimum stake, which is a significant barrier to entry for an average user.

Here are a few key features to know about the ALGO token:

• Utility: The primary use of the ALGO token is to facilitate transactions on the Algorand network. Users can use ALGO to pay for transaction fees.

• Staking: Users can stake their ALGO tokens to participate in the network’s consensus process and earn a share of the network’s transaction fees as a reward.

• Governance: ALGO is also used to give holders a say in the governance of the Algorand protocol. Algorand has a self-funding mechanism, it incentivizes token holders to vote on protocol upgrades and budget allocation.

• Use cases: The Algo token is being increasingly used for various use cases on the Algorand ecosystem like creating smart contracts, decentralized finance applications and also for trading on various exchanges.

Algorand Ecosystem

There are already numerous use cases linked to the ALGO token, ranging from the financial sector to the data protection sector. Some international companies have chosen to use the Algorand blockchain to develop innovative solutions. Some examples are listed below:

• Circle, a global financial technology firm that is at the center of digital currency innovation and open financial infrastructure. Circle is the issuer of the stablecoin USDC and Algorand is helping the company to create a foundation for developing a wide range of scalable, secure, and compliant financial applications.

• SIAE, a public economic institution and membership base for the management of copyright. SIAE is leveraging Algorand for the development of a new open ecosystem for copyright management that is made possible with Algorand’s decentralized and scalable performances.

• Algofi, a fast and low-cost crypto lending market built on the Algorand blockchain that makes decentralized lending broadly accessible.

Is ALGO a Good Investment?

Algorand’s Pure Proof of Stake could play a fundamental role in the evolution of the blockchain sector, as it is able to manage large amounts of money in a secure, scalable, and decentralized way. It could be a viable alternative to Ethereum if that turns out to not be scalable enough to handle all smart contracts efficiently. The Algorand Foundation made important partnerships and incentivized developers to build many interesting products, which increased the adoption of the Algo token. Fundamentals are solid, and it will likely manage to carve out a place among the top 10 coins in the crypto market.

How to Own ALGO?

One way to own ALGO is to go through a centralized crypto exchange, so the first step is to create a Gate.io account and complete the KYC process. Once you have added funds to your account, check out the steps to buy ALGO on the spot or derivatives market.

News on Algorand

As announced in May 2022, FIFA (Fédération Internationale de Football Association) announces partnership with blockchain innovator Algorand, to agree a sponsorship and technical partnership deal. As a result of the deal, Algorand will offer the official blockchain-supported wallet service and serve as FIFA’s official blockchain platform. Algorand will be a FIFA Women’s World Cup Australia and New Zealand 2023TM Official Sponsor as well as a FIFA World Cup Qatar 2022TM Regional Supporter in North America and Europe, for the sponsorship deal. In addition, a few months after the first news, FIFA announced the launch of an NFT collection on Algorand dedicated to the World Cup with the FIFA+ Collect platform, which is a new platform allowing fans to own and collect FIFA World Cup and FIFA Women’s World Cup moments.

Useful References

For the latest updates about Algorand, you can visit:

• The official website
• Twitter
• Discord
• Telegram
• Reddit
• GitHub

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