A Beginner’s Guide to Algorand (ALGO)
What is Algorand (ALGO)?
Most blockchains must strike a delicate balance between three key components: security, scalability, and decentralization, but they are technically limited to two. Blockchains that employ the Proof-of-Work (consensus mechanism in which miners solve computational hashes block by block to construct the chain) are known for their scalability limitations.
Existing Proof-of-Stake (consensus algorithm when the blocks are confirmed to be included in the chain by the members that put their balances at stake) blockchains are susceptible to centralization since the majority of voting power associated with a native currency is concentrated in the hands of the wealthiest or founders.
Centralized solutions are simpler to set up, but they must be trusted in the creator and are not substantially different from today’s exclusive and secretive financial system.
Algorand, an open-source blockchain initiative to eliminate the need to compromise in the blockchain trilemma, is attempting to do so. Its developers say it’s safe since it utilizes cutting-edge encryption technology, scalable because it is memory-efficient, and decentralized because all network participants distribute it.
How Does Algorand Work?
Algorand’s “pure-proof-of-stake” method is one of its most distinctive features. This isn’t the same as Bitcoin mining, where computers solve difficult math problems to produce new blocks and confirm transactions to maintain the blockchain. This is roughly how Bitcoin mining works.
However, while cryptographically secure, this technique relies on a significant amount of computer processing power and energy. According to environmentalists and supporters of alternative set-ups, The difference between proof of work and proof of stake is one of the most significant distinctions between cryptocurrency types.
Pure-proof-stake allows transactions and new blocks to happen more quickly and effectively. Each subsequent block is “verified and authorized” by a random selection of Algo owners. Every time there’s a new block, this group of people is chosen at random.
According to the network’s creators, this process allows Algorand’s blockchain to be global, decentralized, and secure. The more Algo, a user has, the more likely they are to be chosen to verify and validate new blocks and transactions. By doing so, the Algorand network can process and approve transactions in a matter of seconds rather than minutes with Bitcoin.
Algorand Protocol’s Structure
Algorand’s blockchain has a two-tiered architecture. Smart contracts, asset creation, and atomic trading are all enabled by the base layer. These activities take place on Layer 1 of Algorand’s blockchain, which helps to assure protection and compatibility.
On the Algorand network’s first layer, platforms and users can create ASAs representing new or existing crypto assets on the Algorand blockchain. This is similar to how ERC-20 tokens operate on the Ethereum network. In terms of security, Algorand’s simple, smart contracts operate as Layer-1 Algorand Smart Contracts (ASC1s), which means they have the same level of safety as the consensus mechanism.
The second layer of Algorand is assigned for more complex smart contracts and dApp creation. It’s this division between L1 and L2 that enables Algorand to execute transactions so quickly. With more complicated smart contracts taking place off-chain, simple transactions may be completed more quickly on Layer 1 without being slowed down by heavier, more complex smart contracts.
The Algorand blockchain system has its coin, ALGO. ALGO powers the borderless economy and incentive scheme. To promote the stability of the Algorand blockchain and support the Algorand community, ecosystem building, and research, the Foundation holds the token.
The Algorand blockchain’s distinctive characteristics, such as speed, scalability, trustworthiness, transparency, and security, have benefited the token. Since then, ALGO has held a prominent position among the strong and trustworthy cryptocurrencies accessible today.
Users may use ALGO to purchase and sell products or services, whether online or in person. Unlike with credit or debit cards, the payment is completed right away.
The process of sending ALGO to one person or many people is essentially the same digital activity, and it happens at the same speed. Money distribution to any number of individuals takes less than 4.5 seconds. It may also be broken down into smaller parts (for example, 0.0001 ALGO).
Pros and Cons of Algorand (ALGO)
The advantages of Algo at this time include a well-known and respected development team headed by a globally renowned cryptographer, as well as a brand name. Some people believe that Algorand is both faster and more efficient than other options. For example, Algorand’s transaction time is 5 seconds. Litecoin’s transaction speed is 2.5 minutes, while Bitcoin’s has been around 9 minutes for a long time.
Algorand, according to its creators, offers superior performance, scalability, system architecture, and governance as a blockchain ecosystem foundation. However, like with all things bitcoin-related, the proof is in the pudding.
There are a plethora of non-Bitcoin cryptocurrencies attempting to be the framework for all sorts of financial interactions and programs, including Ethereum, the second most valuable cryptocurrency, as well as a slew of rivals.
The main disadvantage of Algo and Algorand is their low rate of usage. Many cryptocurrencies provide the means to build apps or financial products on top of them, and Algo is just one among them.
Algo will almost certainly appreciate it, but only if more people use it. When originally sold it off, Algo had already hit the price it would reach when resold today, raising questions about its viability and future gains. Like any other cryptocurrency, Algo is subject to cryptocurrency regulations that are always vulnerable to change.
Algorand (ALGO) Price
After the initial (and as of writing, only) sale, ALGOs flooded the market; however, as seen in the graph, they were swiftly sold out at a high price. The ALGO ATH price was observed on June 21, 2019, when it was $3.28, and has decreased to around $0.20–0.30 by the end of 2019.
The currency debuted when the bearish sentiments were at their peak but had lately rebounded. The current (as of writing) price of ALGO is $0.449410, placing it 38th on CoinMarketCap with a market capitalization of $346,862,421.
Bitcoin is a form of digital currency, created and held electronically. It is mostly used to buy goods or services with no need for a central authority.
The network uses a digital currency called bitcoin as its method of exchange. It is also a cryptocurrency and worldwide payment system. It is called ‘digital’ currency because it is stored in the cloud and not on a physical medium (such as banknotes or coins).
Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud, or third-party interference.
These apps run on a custom-built blockchain, providing an encrypted secure, and fast transaction transfer system. Vitalik Buttersen created the Ethereum blockchain in 2013 out of a need to design and create something new.
Ethereum is a type of cryptocurrency conceived around the same time as Bitcoin. While there are many differences between Ethereum and most other cryptocurrencies, the most important distinction to make when first encountering the concept is ‘smart contracts. A smart contract is a set of conditions laid out in the code for a transaction, and when these conditions are met, a contract action occurs.
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Dogecoin is a cryptocurrency created as a joke, based on the ‘Doge’ meme, which features a funny picture of a Shiba Inu, a Japanese dog breed. The DogeCoin community has successfully made this meme into a real currency, with widespread acceptance by online communities, such as Reddit.
At one time, DogeCoin was the cryptocurrency with the highest market cap; however, that title has since been surpassed by ripple.
Algorand (ALGO) is a cryptocurrency with a permanently fixed money supply. It is based on the Proof-of-Stake consensus protocol, and its currency unit is the stakes.
Algorand (ALGO) offers a wide range of features that are desirable in a cryptocurrency. These features include a permanent money supply, fast transaction times, and the ability to create your custom cryptocurrencies on the platform. The emphasis on these features and their promotion on the website positions Algorand (ALGO) to be an ideal solution for cryptocurrency.
The permanent money supply of Algorand is a feature commonly seen in cryptocurrencies, as it prevents large inflation rates. However, while some desire this feature, it is not without its drawbacks. One such drawback is the permanency of these inflation rates. As a result, early adopters will have to pay subsidies to keep their stake in the currency. This is not an ideal situation, and it may lead to future problems with the currency.