- iDeveloped by a Turing Award-winner MIT Professor with considerable expertise in the crypto sector.
- The Transaction confirmation speed is very good.
- It is based on a unique PPoS system.
- The ALGO token is supported by the top crypto exchanges.
- It has a permission-less environment and recovery mode to overcome malicious block generation in the network.
- Several crypto sector projects based on the Algorand network are in progress.
- It supports the execution of simple and complex smart contracts.
- The Algorad Foundation is keen on training the developers.
- There are rival crypto networks that support faster transaction processing.
- The PPoS system makes staking easier but it may make the network less secure.
Some years back not many people outside the geek communities were much interested in cryptocurrency and related stuff. Cut to 2021 and that has changed radically. Not only there are so many newer crypto tokens but you can also find newer crypto exchanges and platforms popping up everywhere. Even the governments in various countries are shaking off initial reluctance to embrace cryptocurrencies and the same can be said about leading mainstream banks and financial entities. The newer generation cryptocurrencies and platforms backing those tokens are more feature-rich and they have been developed with some clear purposes. One such example is Algorand.
The basics and history of Algorand (ALGO)
Algorand has been developed with the purpose of fulfilling the gap existing between Blockchain technology and traditional finance. It is being used for making next-generation financial protocols. It can be used to develop products focused on speed, scalability, decentralization. In fact, its proponents are of the view it can be used to resolve problems that can’t be resolved by most competing Blockchains.
Algorand has the native token ALGO. This is a decentralized and open-source Blockchain platform to regulate global transactions in a fast and secure way. This network can be used for making complex decentralized applications. Algorand runs on PPoS consensus protocol. Its two-tiered structure helps enhance transaction speeds and the network can process up to 1,000 transactions per second. The transaction finality is less than 5 seconds. While this is faster compared to first-generation cryptocurrency platforms like Bitcoin, there are faster rivals around.
Algorand was developed by Silvio Micali, a computer scientist and MIT professor in 2017. He is known for his role in developing a number of cryptographic technologies and those are being sued in some major crypt projects, across the world. It was in the middle of 2019 that Algorand Foundation held the 1st auction and its official main net was inaugurated. In 2020, two accelerator programs were unveiled by the Algorand Foundation. These were meant for developing projects on the Algorand platform in many places.
Algorand is run by the Algorand Foundation and is a non-profit entity. The Foundation spends funding to train new developers and sponsor hackathons. In 2020, it kick-started a number of accelerator programs in Europe and Asia.
So, how Does Algorand Work?
The Algorand blockchain protocol is made up of 2 layers. The base layer 1 serves as the means to run basic smart contracts and it is also used for processing atomic swaps between various crypto-assets. On it, the Algorand blockchain users can set up ASAs. So, the smart contracts made using the Algorand blockchain are called Layer-1 Algorand Smart Contracts. Algorand’s ASC1 smart contracts are cost-effective and scalable. The ASC1 smart contracts are shipped with templates that non-technical users can use.
The Algorand Layer 2 is used for executing complex smart contracts and Dapps. The network division enables Algorand to process transactions so well and fast.
Algorand Blockchain relies on a specific decentralized Byzantine agreement protocol. This is a modified edition of the PoS consensus mechanism, referred to as ‘Pure Proof-of-Stake’. The protocol allows the members of the Algorand network to develop new blocks and gather rewards without getting into complications and there is no network delay either. The requirements are lighter compared to that of Ethereum.
The Pure Proof-of-Stake process
Algorand’s PPoS method is unique and it comes with some handy features:
- If a block gets written to the Blockchain, that cannot be changed.
- If the network finds a block to be malicious, it gets into recovery mode.
- A node does not get slashed for coming up with a bad transaction.
- Each block reward is given proportionally to the Algorand (ALGO) token holders.
- Algorand runs in a permissionless environment.
The Algorand blockchain system is based on 2 phase block production. These are the 1st block proposal phase and a second soft voting phase. There cannot be 2 blocks proposed simultaneously in the same slot. So, there is no need for a fork. Once a block is cleared, it has got consensus and so there is no network latency.
The ALGO token
Every cryptocurrency platform has its native token, and in the case of Algorand, it is ALGO. The Algorand Foundation deploys the ALGO token to ensure the stability of the system and it also plays a role in supporting the ecosystem. The ALGO crypto token is used for paying network fees. It is also useful for rewarding the stakes. It is supported by more than 100 crypto exchanges.
The block-producing rewards are distributed among each and every ALGO coin holder and not just block creators. The coins are however kept in one non-custodial wallet. Algorand is near-autonomous since the stakers can hold ALGO passively and they can support the network too. ALGO coin reward distribution occurs every 10 minutes. The capping of the total ALGO crypto token supply is set at 10 billion. There are pre-set distribution norms in place as well.
The usage cases of the Algorand network
The network of Algorand is already being used by several entities and that comprises some crypto sector players too. It is used by Tether (USDT) cryptocurrency. The first interconnected borderless Defi platform- Yieldly is powered by Algorand. Meld Gold and Opulous are two other entities that rely on Algorand’s advanced protocols. In fact, the first national digital currency of the world is being made by The Marshall Islands and it is called the Marshallese sovereign (SOV). It is based on the Algorand network as well.
The future enhancements
Algorand has become one of the top contenders in the cryptocurrency sector but the team is not sitting idle! The future roadmap for Algorand has been set. The proposals include a reduction in Block finalization time to 2.5 seconds and Finalized TPS growth to 46000 from 1000. Algorand is also going to introduce a community reward system. It is going to be better than the existing network reward system.
Summing it up
Algorand is among the young and well-designed cryptocurrency platforms and it has garnered enough support since its inception. The platform has certain advantages over its rivals, beyond doubt. The PPoS system has its merits and the platform is also useful for executing simple and complex smart contracts. The response it has got is largely positive and several crypto projects powered by the Algorand network are already in progress. The Algorand Foundation plays a key role in training develops and endorsing new projects.