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What Is Algorand (ALGO)?

Algorand is a self-sustaining, [decentralized], [blockchain]-based network that supports a wide range of applications. These systems are secure, scalable and efficient, all critical properties for effective applications in the real world. Algorand will support computations that require reliable performance guarantees to create new forms of trust.

The Algorand [mainnet] became live in June 2019, and was able to handle almost 1 million transactions per day as of December 2020. Algorand transaction metrics can be viewed [here]. Algorand [initial coin offering] (ICO) was held in June 2019, with the Algorand price of $2.4 per token.

Who Are the Founders of Algorand?

Silvio Micali is a professor of computer science at the Massachusetts Institute of Technology, and the founder of Algorand. He is a recipient of the Turing Award (in 2012) for his fundamental contributions to the theory and practice of secure two-party computation, electronic cash, cryptocurrencies and blockchain protocols. This makes him one of the foremost creators of crypto in the world.

What Makes Algorand Unique?

Algorand was invented to speed up transactions and improve efficiency, in response to the slow transaction times of Bitcoin and other blockchains. Algorand is designed so that there are lower [transaction fees], as well as no mining (like [Bitcoin's] energy-intensive process), as it is based on a permissionless pure [proof-of-stake] (PoS) blockchain protocol.

Algorand’s Compatibility with Ethereum

On Feb. 17, 2022, the Algorand Foundation announced a $10M grant to Applied Blockchain to develop the London Bridge, a trustless [bridge] that will bring [Ethereum] compatibility to the Algorand blockchain. Algorand has struggled to attract [liquidity] to its ecosystem, despite promising low cost transactions, low latency and high scalability. Having a bridge to Ethereum, which currently has the most robust [DApp] ecosystem, would allow Algorand to connect to these applications and attract more liquidity. In the long-term, the Algorand Foundation aims to have verification of other chains be performed on Alogrand’s [smart contracts], by incorporating state proofs in the form of Compact Certificates into the Algorand Consensus. The foundation’s goal is to eventually solidify the [DeFi] ecosystem on Algorand.

Related Pages:

Learn more about [Ethereum].

Learn more about [Avalanche].

Read more about our deep dive on [Web 3.0].

Want to keep track of Algorand price live? Download the [CoinMarketCap mobile app]!

Curious about the crypto space? Read our educational section — [Alexandria].

Algorand Staking Mechanism: Pure Proof-of-Stake

Algorand employs a kind of [Proof-of-Stake] known as [Pure Proof-of-Stake] ([PPoS]). PPoS is a highly democratized PoS consensus method with a minimal staking requirement for network participation and security: only one ALGO token is required to join. In comparison, Ethereum 2.0 needs a minimum stake of 32 ether (ETH), a substantially higher barrier to entry for consumers.

A low minimum staking requirement, on the other hand, may have a negative impact on network security since network users may be less inclined to behave properly when they do not have a significant value staked in the network.

Production of Algorand Blocks Through PPoS

Validator nodes are chosen at random in Pure Proof-of-Stake networks to confirm the transaction data in a block. The Algorand PPoS consensus method employs a two-phase block manufacturing procedure that includes proposing and voting.

By [staking] ALGO and establishing a valid participation key, every member of the Algorand network can participate in the proposing and voting procedure. A [relay node] is a form of Algorand network node that facilitates communication among [participation nodes] but does not actively engage in proposing or voting.

Algorand’s Native Cryptocurrency: ALGO

ALGO is the native coin of Algorand and a key component of its network topology. The benefits provided to validators for creating blocks are divided and dispersed among all coin holders, rather than being awarded just to [block producers], as part of Algorand's unique protocol architecture.

The distribution of rewards occurs around every 10 minutes. It is meant to encourage people to join the Algorand staking platform and smoothen the route to decentralization.

To make things easier, users are not required to lock their coins as part of the block manufacturing and validation process. If they want to earn incentives, they may simply keep ALGO its official [non-custodial] wallet, named MyAlgo Wallet. In this regard, Algorand has reached near automation, since stakeholders can hold ALGO while also supporting the network.

How Many Algorand (ALGO) Coins Are There in Circulation?

The genesis of the Algorand blockchain states that 10 billion ALGO was minted. The distribution of the fixed and immutable 10 billion ALGO will end in 2030, rather than the initial plan of 2024. For more information about Algorand’s tokenomics, see [here].

How Is the Algorand Network Secured?

The Algorand blockchain is a permissionless pure [proof-of-stake] blockchain protocol. Unlike [proof-of-work] (PoW) blockchains, where the root block must be validated by randomly-selected validators (using computing power), in the pure proof-of-stake approach all of the validators are known to one another and only have to agree on the next block in order to create a new block.