Many see the world of cryptocurrencies as an amalgamation of digital currencies governed by blockchain protocols. While this sums up the situation, there exist several types of blockchains, all of which have their own sets of characteristics, strongpoints, and flaws. The blockchain trilemma, for instance, is a concern Bitcoin is well known for having, in that it struggles to maintain security and decentralization while attempting to scale appropriately.
The Algorand project, touted as one of the most exciting endeavors the crypto sphere is currently working on, aims to re-imagine blockchain technology and to solve the scalability issue. Our Algorand guide gives you all you need to know about this very promising venture.
What is the Algorand (ALGO) cryptocurrency? Definition
First and foremost, it is important to note that Algorand was not created to be a mere altcoin. Instead, it serves as a blockchain platform which intends on providing a new blockchain, public and permissionless, to utilize decentralization towards a borderless economy. To put it simply, Algorand wishes to implement a fully open ecosystem based on practicality and clarity to which anyone may contribute successfully.
Its strength is in achieving the perfect trifecta of performance, scalability and decentralization. So far, even the most widely represented crypto assets have not been able to circumvent the scalability issue and to offer a convincing enough answer to encourage mass adoption. This is because at least one of the three aspects needs to be sacrificed in order to favor the other two. Algorand not only solves this problem but provides a fast, more cost-effective, perfectly secure and fully decentralized transacting system.
Algorand – The Network
To achieve these unprecedented specs, Algorand’s protocol allows developers to finalize blocks very quickly, which means that more transactions can be supported within a short amount of time. The network can handle as many as 1,000 transactions every second with a 5-second latency.
In terms of security, Algorand relies on the tried and tested Byzantine Agreement (which offers a verifiable secret sharing solution and a fail-stop protocol) optimized to be resilient on a very large scale. While Proof of Work reaches consensus by dividing hashing power (successfully so, provided that no single entity holds more than 50% of the total hashing power), Algorand is the first to use a Pure Proof of Stake protocol. This means that each user influences block choices based on the number of tokens they hold. Security therefore relies on the honesty of the greater majority instead of delegating the safety of the entire economy to a small subset of users.
Algorand – The Token
As the very first Pure PoS (Pure Proof of Stake) platform, the Algorand Foundation sees the ALGO Token as a means of managing decentralization responsibly and ensuring maximum growth to the system over time. Beyond their use as a central part of how the protocol operates, tokens are also put towards encouraging infrastructure-building projects, applications that utilize the Algorand network and various research initiatives.
When the project launched in June 2019, a Dutch Auction ICO was held in order to determine a realistic market value for the ALGO Token. On that occasion, 25 million tokens were sold at $2.40 each, totaling $60 million. As Algorand evolves, more auctions will take place until all 10 billion ALGOs are in circulation.
While this means that, for the moment, the Foundation holds most of the available currency, they will never be able to participate with more than 49% of the supply in circulation. This strategic decision was made to mitigate the risk of attacks on the still considerably young network. As more ALGOs are released, the company’s holdings ration will diminish when compared to the circulating supply at a rate of 600 million tokens per year.
How does Algorand work?
Pure PoS is a consensus algorithm, which means that Algorand’s network is secured by a majority of honest users. While slashing (a common form of sanction) is routinely enforced in the context of Delegated Proof of Stake, Bonded Proof of Stake or Liquid Proof of Stake, Pure Proof of Stake instead makes cheating impossible for a minority. As for the majority, they would gain absolutely nothing by being dishonest.
Two steps are necessary to create a block within the Algorand network. These actions are randomized thanks to “cryptographic sortition”, a process by which security is ensured without requiring additional verification time.
During the proposal phase, a cryptographic algorithm randomly selects a token, whose owner gets to propose the next block. Only once the information is actually propagating on the network does the identity of that person become known. This implies that by the time anybody could even consider interfering, the selection would already have been made.
The voting phase involves a committee of 1,000 randomly selected token owners whose role is to approve the proposed block. This committee is replaced each time – unlike in Proof of Work or Proof of Stake – which means that it would be impossible to target an attack.
This system does away with energy-greedy mining farms and reduces fork probabilities by ensuring no divergent views are tolerated on confirmed transactions. Truly innovative, Algorand guarantees the upgradability and the decentralization of its network by having a large pool of randomly selected validators and a protocol which can be modified to fit the needs of the community.
Why use Algorand?
Algorand’s blockchain lends itself to a variety of uses, many of which have to do with scalability. On par with the expectations of those who wanted a more accessible solution without having to sacrifice security and decentralization, its Pure Proof of Stake protocol allows both developers and businesses to harness the advantages of blockchain technology. Algorand offers point-of-sale speed, which makes it an acceptable option in a context where transactions need to happen quickly and uncomplicatedly. It also ensures the immediate finality of transactions by guaranteeing its blockchain never forks.
How to buy Algorand (ALGO) on Bitit?
For those interested in buying ALGO without having to go through a complicated cryptocurrency exchange platform, this token is part of Bitit’s offer. This allows users to purchase Algorand (ALGO) using a credit or debit card, cash or a wire transfer.
Having created an account in just a few steps, you may access a drop-down menu on Bitit’s Dashboard where you can select ALGO, along with your own fiat currency. Simply enter the amount (Bitit will display the amount of ALGO this will get you based on real-time prices) and proceed to payment.
How to store ALGO?
There exists an official Algorand wallet in the form of a mobile application, whose security can now be enhanced thanks to a Ledger Nano X Bluetooth integration. This provides a cold storage option by creating an offline solution to store private keys. Very user-friendly, the app sports a clean design and includes in-app conversion as well as a comprehensive view through which holdings from several accounts can be displayed at the same time.
Algo tokens may also be stored on the Ledger itself for those who prefer a completely offline storage method. Trustwallet, Atomic and MyAlgo Wallet are among some of the other reliable options.