What is Algorand (ALGO)?
July 22, 2022
3 min read
Algorand (ALGO) is a blockchain that allows for decentralized applications (dApps) as well as other blockchains to be built on top of it–similar to Ethereum’s (ETH) Layer -1 capabilities. In fact, having been launched only in 2019, Algorand is part of the wave of blockchains that were designed to compete with Ethereum such as Solana (SOL), Elrond (EGLD) and Near Protocol (NEAR). These networks were developed to address network congestion and increase processing speeds and in part, to compete as well with non-blockchain payment channels such as credit card companies like Visa and Mastercard.
Compared to legacy blockchains such as Bitcoin and Ethereum, Algorand is impressively fast. It is able to process 1,000 transactions per second (TPS), with developments underway to increase it by as much as 42,000 TPS in the near future. Such speeds also mean that processing fees can be reduced to almost insignificant numbers–less than a fraction of a cent–according to Algorand developer documentation.
ALGO runs on a Proof-of-Stake (PoS) consensus protocol, which means that ALGO tokens do not make use of energy-extensive mining practices, but instead validate their transactions through staking. Algorand also claims to have improved upon the staking mechanism, calling it “Pure Proof-of-Stake” (PPoS) and that their blockchain is fully sustainable and carbon neutral.
Similar to Ethereum’s ERC-20 protocol, Algorand employs its own token standard, Algorand Standard Asset (ASA) for launching Algo-based tokens and even non-fungible tokens (NFTs). Currently, Algorand is gaining traction with over 440 dApps already running in its ecosystem, including decentralized finance (DeFi) applications and blockchain games.
What is ALGO for?
ALGO, the blockchain’s native cryptocurrency is used to power the Algorand ecosystem. Primarily, ALGO is used for paying the processing fees that keeps the network running and allow for the development of dApps and the creation of smart contracts.
ALGO can also be staked via a number of exchanges and wallet service providers to earn passive rewards.
ALGO has a maximum supply of 10 billion tokens, of which 6.95 billion are currently in circulation. It is currently valued with a market cap of $2.16 billion and ranked 28th overall as of July 2022.
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