Education • 4 min read
By Camilla Marziani
With the mission of solving the security-speed-cost “trilemma” of blockchain technology, Algorand wants to provide its users with a decentralised, scalable and secure blockchain protocol, all while being environmentally friendly and sustainable.
Founded in 2017 by Turing Award winner Silvio Micali, Algorand is a decentralised blockchain protocol of many talents. Now ranking in the top 20 cryptocurrencies by market cap, Algorand (ALGO) is permissionless, forkless and open-source, running on what its founder defined as a Pure Proof of Stake consensus mechanism to be among the first carbon-negative blockchain protocols in the world. Its goal is to provide frictionless finance across borders by solving the “trilemma” of delivering high security, high speed and low cost.
The Algorand network runs on a Pure Proof of Stake (Pure PoS) consensus mechanism. New blocks are finalised in two phases and within seconds, with the participation of users dependent on their stake in the network. ALGO is Algorand’s native token and can be used to pay DApp computations, to cover transaction fees as well as for staking and earning in the Algorand network.
Joining the club of altcoins bringing decentralised finance and smart contracts to the masses (see also Avalanche [AVAX] and Solana [SOL]), Algorand has many notable characteristics:
Permissionless: The Algorand blockchain is open to anyone, meaning anyone can join without the approval of a group of users or authorities.
Open source: Algorand is a transparent project. All information and developments are available to all interested parties.
Pure Proof of Stake: In this type of consensus mechanism, every user staking at least one (1) ALGO can participate in the creation of blocks. In full PoS fashion, miners are not required to have special computing hardware and, compared to the energy-intensive Proof of Work (PoW), the energy consumption of the process is limited. Unlike traditional PoS, block creators are not chosen based on their wealth but instead are randomly selected. With Pure PoS, the probability of being chosen is proportional, but not limited, to the total amount of ALGO staked. This consensus mechanism is meant to increase decentralisation, as low-stake requirements make participation easy from anywhere. Also, security is elevated, because random selection represents a great obstacle for attackers.
Forkless: One of the perks of Algorand’s consensus protocol is its immediate transaction finality. When one proposed block is chosen, the decision and the related transaction are final and can’t be changed. The mathematical likelihood of a fork has been proven to be so low that it’s not even worth considering.
Carbon negative: Running on Pure PoS instead of PoW already limits the carbon footprint of Algorand, but the protocol decided to take sustainability to the next level. Through its partnership with ClimateTrade, Algorand is compensating for its CO2 emissions and is now a negative carbon footprint blockchain.
You can buy Algorand through cryptocurrency exchanges like Bitpanda using fiat currencies, e.g. euros or U.S. dollars. It’s a good idea first to get familiar with the ALGO price history and the current exchange rate. Once purchased, your Algorand investment can be viewed and accessed in a digital wallet similar to a banking app. You then have the option to hold on to your ALGO or sell it again via the exchange.
Like other cryptocurrencies, Algorand is considered a highly volatile asset. Its price has fluctuated through highs and lows throughout its existence, and there’s no way to make a guaranteed ALGO price prediction. As always, it’s important to do your own research before investing in crypto.
Soon after its launch in 2019, the price of ALGO fell drastically, trading between €0.1 and €0.3 up until the beginning of 2021. The price rose again in 2021 but remained volatile, reaching its all-time high of €2 on September 12, 2021 and then dropping again. Currently, ALGO is trading at an average daily high of €0.3625 and an average daily low of €0.3506. The total supply of ALGO is limited to 10 billion.
Algorand’s feature-rich, secure and speedy network makes it a huge draw for developers and creators who want to launch their applications within the Algorand ecosystem. Algorand already hosts a bevy of project types across many different use cases, including:
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Bitpanda Tech • 2 min read
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