Algorand was founded in 2017 by Silvio Micali, a renowned MIT professor and Turing Award recipient. Micali identified the need for a scalable and secure blockchain platform that could maintain decentralization, providing the crypto space with a solution that addresses the limitations of existing platforms like Bitcoin and Ethereum.
Algorand, a relatively recent addition to the blockchain landscape, aims to enhance scalability while preserving decentralization, an issue faced by earlier-generation blockchains like Bitcoin and Ethereum. The groundbreaking Pure Proof of Stake (PPoS) consensus mechanism is Algorand's most prominent feature, offering an ideal combination of scalability, security, and decentralization. This unique approach has garnered the attention of numerous prominent institutions and corporations seeking a blockchain infrastructure that can effectively tackle real-world challenges with scale, speed, and cost-efficiency.
What is Algorand?
Algorand, established in 2017 by MIT computer scientist and Turing Award laureate Professor Silvio Micali, is a trailblazing blockchain network and project. Micali, a pioneer in contemporary cryptography, introduced the mainnet network and its native cryptocurrency, ALGO, in June 2019. With a focus on enhanced scalability, Algorand also supports smart contracts. The network is a public, decentralized blockchain utilizing Pure Proof-of-Stake and accommodating custom layer-1 blockchains, enabling the development of specialized blockchains for various applications. By addressing the trilemma, Algorand's technology proves to be especially beneficial for financial services, decentralized finance (DeFi), fintech, institutions, and the creator economy.
What is Algorand Foundation?
Established in 2019, the Algorand Foundation is a non-profit organization dedicated to nurturing and financing the Algorand ecosystem. It plays a crucial role in the community, research, and governance aspects of the blockchain.
Among its initiatives, the Foundation imparts education to developers in academic institutions and backs Algorand projects through accelerator programs. While the private company Algorand Inc. is responsible for technical development, the Algorand Foundation holds a significant amount of ALGO, utilizing it to fund its operations.
How does Algorand work?
Algorand's impressive scalability stems from its innovative Pure Proof of Stake (PPoS) consensus mechanism, which enables rapid transaction processing without compromising decentralization. While Proof of Stake (PoS) blockchains offer scalability, they often lead to a few validators with large stakes monopolizing block approvals. Similarly, Proof of Work (PoW) blockchains face challenges with dominant mining pools consistently winning the race to generate new blocks.
Contrastingly, Algorand's PPoS consensus mechanism selects validators and block proposers at random from those who have generated a participation key. The likelihood of being chosen is directly proportional to the participant's stake relative to the overall staked amount.
Though smaller holders have a lower chance of being selected compared to larger holders, Algorand does not require a minimum stake, thus eliminating a significant entry barrier for average users. The network's security is more decentralized, as every staker running a node can potentially become a validator, unlike Delegated Proof of Stake (DPoS) systems that rely on a predetermined set of validators.
At present, Algorand's PPoS protocol achieves block finality instantly, averaging 3.7 seconds per block, and can handle up to 6,000 transactions per second (TPS).
What is ALGO?
ALGO is the native token of Algorand, ALGO has a capped total supply of 10 billion coins, slated for distribution by 2030. ALGO serves three primary purposes within the ecosystem:
- ALGO is used to cover transaction fees on the Algorand Network. Boasting lower fees than networks like Ethereum (ETH) and Bitcoin (BTC), Algorand charges a mere 0.001 ALGO per transaction. As of October 2022, this equates to a cost of only $0.0003 per transaction.
- ALGO can be registered for the opportunity to be chosen as a block proposer or validator.
- ALGO enables participation in the Governance Program, where users can vote on critical decisions concerning the protocol's future and receive rewards for their involvement.
The third use case offers significant incentives for average users investing in ALGO, as they can participate in Governance without needing to interact with a decentralized application (DApp).
Numerous projects adopting Algorand's technology are listed by the platform, many of which necessitate the use of ALGO.
Algorand is a groundbreaking blockchain platform that successfully addresses the challenges of scalability, security, and decentralization. Its innovative Pure Proof-of-Stake consensus mechanism, combined with its support for smart contracts and diverse use cases, make Algorand a promising solution for a wide range.