The "Purest" Proof-of-Stake Chain: Explaining the Algorand Cryptocurrency 

The smart contract revolution began on Ethereum (ETH), but it didn't stop there. Today, blockchain developers have dozens of alternative platforms offering the option to build pre-coded smart contract commands and launch decentralized applications (dApps)—some of which have faster speeds and lower average fees than the Ethereum blockchain. 

For example, Algorand (ALGO) is a young crypto project aiming to offer all the functionalities of Ethereum without high transaction costs or scalability concerns. To overcome these hurdles, Algorand's developers created a unique consensus framework and dual blockchain architecture to provide users with a seamless smart contract experience.

Despite Ethereum's place in the smart contract realm, projects like Algorand continue to attract attention from traders, institutions, and even governments. Explore what sets Algorand apart and why more people are tracking the Algorand coin price. 

Algorand’s history

The cryptographer and MIT scholar Dr. Silvio Micali has been the driving force behind Algroand since its inception. In 2017, Micali co-authored Algorand's whitepaper with Stony Brook's Dr. Jing Chen, and the team immediately set to work raising funds for the company Algorand Technologies to build their blockchain. After multiple funding rounds and years of development, the Algorand blockchain went live in 2019, and it continues to welcome third-party developers to build dApps on top of its network. 

Over the years, Algorand partnered with multiple institutions like the United Nations and countries like the Marshall Islands, further boosting the project's visibility in the crypto market. The non-profit Algorand Foundation now coordinates education initiatives, fundraising efforts, and development to expand the Algorand ecosystem further. 

How does Algorand work?

Algorand uses a variation on the standard Proof-of-Stake (PoS) consensus model it calls "Pure Proof-of-Stake" (PPoS), which incorporates extra randomness into the transaction validation process. Similar to standard PoS, computers (aka nodes) on the Algorand blockchain lock (or "stake") the native cryptocurrency ALGO onchain to get the chance to publish new transactions and receive crypto rewards. 

A distinguishing feature of Algorand's blockchain is it constantly uses Verifiable Random Functions (VRFs) to select unique leaders and "committees" of nodes to vote on transaction blocks. This feature reduces the number of nodes needed for validation without sacrificing decentralization, allowing Algorand to achieve a max speed of 6,000 transactions per second (TPS).

Another unique trait of the Algorand blockchain is it has a native dual-layer architecture. Unlike blockchains like Ethereum, which have separate layer 2 scaling solutions on top of a foundational chain, Algorand internally separated its blockchain to enhance scalability efforts. Algorand's Layer 1 takes care of the PPoS transaction validation process, while Algorand's Layer 2 focuses on processing more complex automated smart contract commands. This dual-chain architecture prevents the main Algorand blockchain from getting clogged with excessive demands, maintaining a reliably fast transaction throughput.

Algorand FAQs

What is the ALGO coin? 

The price of Algorand listed on Algorand price charts reflects the market value for the blockchain's native ALGO cryptocurrency. Anyone interested in using the Algorand blockchain needs ALGO in an Algorand-compatible wallet to pay transaction costs (aka gas fees), exchange for virtual goods, or set up smart contracts for a dApp. Algorand's ALGO also plays a vital role in decentralized onchain governance and network security.

What makes Algorand fast? 

Combining a dual-chain infrastructure and PPoS consensus algorithm helps speed up Algorand's average transaction finality. PPoS reduces the number of nodes needed to confirm each transfer, while the split between Layer 1 and Layer 2 takes heavy computations out of the PPoS transaction process to avoid potential bottlenecks.

What dApps are on Algorand? 

There's no limit to the types of projects building in Algorand's ecosystem, but a few popular categories include decentralized finance (DeFi), blockchain gaming, and collectible non-fungible token (NFT) markets.   

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