When it comes to cryptocurrencies, there are a few major issues facing the technology. And the main one is that it is nearly impossible to have full decentralization along with full security and full scalability. All one has to do is look at the scalability issues affecting Bitcoin to know this is only a problem which will continue to grow as the user base for cryptocurrency continues to expand. This problem, also called a trilemma, has led rise to a new project trying to become to cryptocurrency solution to everyone’s problems. And this solution in a blockchain known as Algorand.
Algorand is a global blockchain project based on a pure proof of stake protocol. Not unlike Ethereum, Algorand can be used to build and execute dApps, as well as to build new NFTs and basically anything else you can use blockchain technology to do. What sets Algorand apart is that it runs on a system which is more democratic than that of Ethereum. Ethereum requires users to hold at least 32 ETH to be part of its proof of stake protocol, and if you look at the price of ETH when this announcement was made, you’ll find that this means someone must have been able to afford almost $18,000 in order to participate. And with the current ETH prices this investment would cost over $37,000. Algorand on the other hand, allows each user, regardless of investment, to be able to participate in the protocol. This means that if you hold any ALGO, the coin native to Algorand, at all, you will be able to stake transaction.
Not only that, but when new blocks are created in the Algorand blockchain, the proceeds are distributed to all users. So anyone using the Algorand system can earn money off of their original investment. Even better is the fact that this upgraded proof of stake consensus requires much less computing power than the one used by Ethereum. This keeps energy costs low and keeps the blockchain efficient. And because the system is fully decentralized, there is no need to ask for permission to join, and in order to be part of the group staking transactions all you have to do is opt in.
As of the writing of this article, Algorand can process 1,000 transactions per second, making it much more efficient than most blockchains, putting it on almost the same level as Visa, which processes 1,700 transactions per second.
If you’re starting to think that this blockchain project is sounds pretty cool, you aren’t alone. The inventor of Algorand, Silvio Micali is not only a professor at MIT (Massachusetts Institute of Technology) but he also received the 2012 Turing Award to recognize his important contributions to the world of computer science. He was awarded this award because he helped to make cryptography a more precise science which in turn has helped to make cryptocurrency what it is today.
Micali wrote the Algorand whitepaper along with Jing Chen in 2017. The initial funding in the project was received from a Singapore-based corporation called the Algorand Foundation, and they received some ALGO coins in exchange for their investment. The current project is run by Micali, Steve Kokinos, and W. Sean Ford. The ICO launched in 2019 raising a reported $60 million USD from the public sale, in addition to about half a billion dollars in private funds it received from venture capital firms around the world.
Although there was additionally a lot of energy surrounding, and involved, in the Algorand project, since they were so new, they quickly fell out of favor for being unable to show immediate proof of concept. This doesn’t mean that Algorand isn’t a good investment however, and on June 10th 2021, Arrington Capital announced it would be investing $100 million dollars to invest in Algorand based initiatives.
In an interview asking why they decided to invest so much capital in the Algorand blockchain, Michael Arrington, a partner at Arrington Capital, said that the Seattle based company was excited to be involved in a blockchain project that they truly believed was the future. They also liked the idea that Algorand is carbon-negative—this means it has much less of an impact on the environment when new blocks are being made than other similar projects.
Many companies have already begun to build on the Algorand blockchain, the most notable being Exodus, MAPay (Bermuda’s Healthcare System), Bnext, and SAP. And Arrington Capital believes this number is only going to increase and that Algorand really is the cryptocurrency project everyone has been waiting on.
As far as cryptocurrency projects go, Algorand does look amazing on paper. It looks as if it has the potential to solve a lot of the issues present in the larger chains like Bitcoin and Ethereum. It also has numerous additional features to keep it functioning smoothly (like a vault and digital signature system) and it plans to offer atomic swaps in the future, combining the usability of almost every DeFi product on the market into one technology.
But this doesn’t mean that Algorand isn’t too good to be true, in fact several investors have shied away from Algorand stating that it has very little proof of concept. Now the project is new, so this could change in the future, but as it stands right now, several investors are waiting to see where the technology goes before the invest their hard-earned money.
During the research for this article, the Algorand website was found to be user friendly, easy to use, and a good representation of the project—something which isn’t always true when it comes to alt coins.
Overall, if you believe in the technology Algorand is creating, or in Micali himself, there is no reason not to invest in Algorand, after all, it really could be the technology of the future. Just remember that any cryptocurrency investment is inherently risky, and it is possible that you could lose your investment in its entirety.
This article was brought to you by the BitRocket Game of Skill. Originally posted on MintDice's Cryptocurrency News Source.
