The cryptocurrency market is certainly not suffering from a lack of new concepts. The technology associated with this industry is also developing at a dizzying pace. Since the launch of bitcoin, we have seen the emergence of many cryptocurrency projects of varying utility. One of the newer and thriving projects is Algorand, which has caused quite a stir in the crypto world. 

If you are wondering what is Algorand (ALGO) and how does it work? Is it a cryptocurrency or a blockchain? Where to buy algorand tokens? And what changes has it brought to the crypto world? Be sure to read the text below. 

What is Algorand and when was it created? 

Algorand is a decentralised blockchain network launched in June 2019 with a native algorand cryptocurrency called ALGO. Its project was born back in 2017 on the initiative of Professor Silvio Micali, who is considered one of the most distinguished people in terms of the creation of blockchain technology. Among other things, he became famous as the creator of the Zero Knowledge Proofs technology. 

It can be considered that the project related to the Algorand network is divided into two main pillars. The first is the Algorand Foundation, a non-profit organisation also founded in 2019. It deals with the funding and development of the Algorand blockchain. The second pillar is Algorand Inc.-a software company based in Boston that focuses its work on the technical development of the network. 

Algorand is considered to be a unique blockchain in many respects, as it has the features and capabilities of layer one, or layer 1, solutions. This allows smart contracts to be built on the blockchain. Jednk also has the functionality of layer two, or layer 2, solutions.

What is Algorand and what is its focus? 

The Algorand project focuses on solving the so-called blockchain trilemma problem (blockchain trilemma). This refers to the belief that it is impossible to combine in a single blockchain network its three ideal characteristics, scalability, security and decentralisation. 

This is a common problem faced by many cryptocurrency projects. Given that security is always considered a priority, the need to choose between scalability and decentralisation arises. The former refers to the ability to handle a large number of transactions per second. The second, on the other hand, means that blockchain can be operated by a distributed computer network, instead of one central entity.

What was the aim of the originators behind the Algorand network? To build a platform that is secure, decentralised and provides fast transactions using minimal costs. The creators of the technology associated with Algorand also believe that it is useful for financial services or Decentralised Finance (DeFi). In addition, Algorand is also being used as a network to build decentralised applications (Dapps) with the help of smart contracts.

What is Algorand and how does it work?

Why has algorand cryptocurrency become popular? Why has Algorand been recognised as a unique network? Is it just a combination of the three ideal features a blockchain can have? Algorand seems to have been particularly recognised for basing the network on the innovative Pure Proof of Stake (PPoS) consensus mechanism. 

How does PPoS differ from the already well-known Proof of Stake mechanism?

The introduction of PoS has been a success due to dealing with the scalability problem. However, this does not change the fact that PoS-based blockchains can be monopolised by users of a given network holding large amounts of tokens. Consequently, this has a negative impact on decentralisation. 

In contrast, the PPoS consensus mechanism works in such a way that validators are selected randomly. This approach ensures that network participation is equally available to all users.

How does it work? All Algorand users participate in voting via participating nodes, which place votes on the network. By making each participant node running a possible validator, the security of the network is more decentralised. Algorand bases all security on trusting the majority, because it is the majority that will care about the correct and uninterrupted operation of the network. 

A particularly important piece of information seems to be that Silvio Micali has developed a tool called Verifiable Random Function. With this solution, each time a block is created, a new committee is appointed at random from all the users of the Algorand network, responsible for verifying that the next proposed block can be added to the main chain of the network. 

How does this randomisation work? Each Algorand token (ALGO) held by a lottery participant constitutes one ticket. Naturally, a higher number of tokens means an increased chance of becoming a lottery winner. Selected lottery participants then vote for the proposed blocks using ALGO tokens. Consequently, the one that receives the most votes is added to the main chain.

Algorand token (ALGO)

What is an algorand token? ALGO is primarily a native cryptocurrency based on the Algorand network. This token has not yet gained as much popularity as the leading cryptocurrencies, but it is relatively easy to purchase. Where to buy Algorand? It is made available by quite a few of the world’s cryptocurrency exchanges. It also seems relevant that ALGO has a maximum supply of 10 billion coins for distribution by 2030. 

As with other tokens, ALGO also has several basic functions. Among other things, it can be used to pay for transactions on the Algorand network. Interestingly, these fees are extremely low compared to popular networks like Ethereum and Bitcoin. ALGO tokens can also be stored in a cryptocurrency wallet, allowing, among other things, the acquisition of rewards for each block committed to the main chain of the network. Additional benefits also come from the fact that ALGO generates passive income opportunities. 

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