What is Algorand?
In this we post will get back to the basics for anyone new and not familiar with Algorand - what is Algorand, what are the benefits of Algorand, and what makes Algorand superior to other cryptocurrencies. If you're already familiar with Algorand it could be a good time to really nail the basics of it.
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What is Algorand? The Future of Finance!
Algorand is a blockchain that was launched in April of 2019. It was originally created by MIT Professor Silvio Micali with other leading scientists. In the Algorand white-paper Micali envisioned Algorand to be not just a cryptocurrency, but also a blockchain which could properly leverage it's high security to be used as a platform for smart contracts and related assets, thus enabling it to be integrated in a wide-variety of use cases.
From the beginning the Algorand blockchain was created with 3 core characteristics in mind:
1. Security
2. Scalability
3. Decentralization
The above mentioned points are something known as the blockchain trilemma - where it has been previously considered impossible to achieve more than 2 out of 3 properties without one consequently suffering. In addition with the way Algorand works (see following information) it also offers rapid transactions speeds, low transaction costs and carbon-negative environmental impact.
At the same time Micali also set up the non-profit organization Algorand Foundation in order to promote global development and reach of its blockchain technology, funding beneficial development in the community with ex. Algorand Foundation Grants.
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How Does Algorand Work?
Algorand works on a method called Pure-Proof-of-Stake, which unlike Proof-of-Work (like Bitcoin or Etherum) is not validated by solving advanced mathematical problems with high computing work. Instead it validates transactions and new blocks by randomly selecting Algorand holders who validate and approve the transactions just by owning Algorand in their official Algorand Wallet. Users are rewarded with a given percentage (APY) for keeping their Algorand in the wallet. In addition, there are independent individuals and agencies running Algorand Relay Nodes in order for the blockchain to have constant reliable verification guaranteed.
Want to know how Algorand works in greater detail?
Algorands transaction speed is approximately 5 seconds (compared to Litecoins 2.5 minutes) and the transaction fee is fixed at 0.001 ALGOs (or roughly 0.00024 USD at the time of publishing this post).
Algorand Use Cases & Utility
So, what is Algorand doing that other blockchains aren't? Well, Algorand can be used for fulfilling a wide variety of tasks since Algorand incorporates smart-contracts, ASAs (Algorand Standard Assets), and NFT's (Non-Fungible Tokens). In a nutshell, the Algorand blockchain technology can be used for verifying ownership of for example properties or digital items, it can be used to track certain exchanges or commitments (votes, deliveries), and ASA's can be created for specific usages i.e., to act as in-game currencies or loyalty-points in a given realm or ecosystem.
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How Many ALGOs Exists?
The total amount of existing ALGOs is 10 billion and there will not be any more created. However out of those 10 billion there are currently 7.1 billion are in circulation as of December 2022. The Algorand Foundation owns 2.5 billion Algorand, which is used to fund projects and further development of the eco-system. About 2.5 billion has been progressively rewarded over time to those running relay nodes.
Starting from October 1st, 2021, Algorand transitioned to its governor program and by March 2022 the general staking rewards were phased out. In essence governance means that everyone who owns Algorand can participate and vote on important topics and decisions that will impact the Algorands ecosystem. Governance was created to decentralize the project even further. Additionally, governors are rewarded for their participation if they vote on every topic presented during a given governance period.
Conclusion
This was a brief introduction, hopefully by now you understand what is Algorand and its ecosystem, and what benefits Algorand has over other blockchains. We hope you found it helpful in further increasing your knowledge about the blockchain and its purpose. If you like this article why not check out our post on "What is Algopay?".
Until next time. Algo and out!
AlgoDaddy
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