Updated: Dec 20, 2019
Algorand is a secure, scalable and decentralized, blockchain-based, digital currency and a transaction platform. It is the first truly public, Pure Proof-of-Stake platform, which is entirely permission-less. There is no single point of control or a powerful central authority in the entire Algorand network. ALGO is the cryptocurrency used on Algorand, and any online user who possesses ALGO tokens is automatically eligible to take part in block consensus.
This guide will talk about what Algorand is designed for, the team behind it, the way it works, and its various uses and applications.
What Is Algorand Designed For?
Algorand was developed with a vision to create a public, permissionless, pure proof-of-stake blockchain developed open-source to serve a borderless economy. The system is created to achieve higher transaction volumes, compared to that of other large payment financial networks, over time.
Algorand is designed to eliminate all technical barriers, which have been hindering mainstream blockchain development since its inception. It is intended to be the world’s first blockchain to provide real-time settlement while being decentralized, large-scale and secure.
Who Is the Team Behind Algorand?
Algorand has an all-star team behind it, which is led by Turing Award winner Silvio Micali. Micali, who is one of the co-inventors of the famous Zero-knowledge Proof and also MIT's renowned cryptographers, is the project founder.
Micali won the Gödel Prize in 1993, which is the highest honor in theoretical computer science, the RSA Award in 2004, which is the highest honor in cryptography and the Turing Award recently in 2012, which is also dubbed as computing’s version of a Nobel Prize.
The team includes Chief Scientist Chen Wei, who has won the Career Award of the American Nature Foundation, Nickolai Zeldovich, a world-class expert in system security, and Yossi Gllad, winner of the 2017 IETF/IRTF Network Research Application Award.
It also includes Greg Colvin, core developer of the Ethereum Virtual Machine, and Dr. Tal Rabin, a member of the National Academy of Arts and Sciences and one of the 50 outstanding women in the global technology community of Forbes 2018, among others.
How Does Algorand Work?
Algorand uses a pure proof-of-stake (PPOs) consensus protocol, built on the Byzantine agreement. This basically means the system can achieve unilateral consensus, without a central authority and can also tolerate malicious users without a hitch, as long as, the supermajority of stake is in the hands of non-malicious participants.
A user’s influence on choosing a block is directly proportional to their system stake by way of ALGO tokens. Users are secretly and randomly selected to propose blocks and vote on the block proposals. Each online participant has a chance of being selected to propose and vote. The likelihood of a user to be chosen directly is proportional to the stake they have.
The power remains in the hands of the participants holding a stake in Algorand. Every user shall be rewarded proportionately to the stake that has been committed to the chain. This encourages more users to join the platform and make it truly decentralized.
The way Algorand works, participants are not required to gain the approval of any trusted authority to use the blockchain. There are no gatekeepers in this network and there is only a single class of users, unlike Bitcoin, which has a favored class of core miners. Every participant on the Algorand network, can read the blocks at the same time and get the opportunity to write transactions in future blocks.
What are Current and Future Applications of Algorand?
Algorand has multiple use cases and is designed to help others prosper, by utilizing the network and ALGO tokens. Developers can use the decentralized platform to create innovative, secure and reliable blockchain applications.
Enterprises can safely and openly embrace emerging markets, which would otherwise be beyond their reach or too expensive, on account of building infrastructure.
To make this a reality, Algorand has partnered with a diverse global group of organizations and institutions that represent venture capital, technology, financial services, and cryptocurrency community. Some of the more notable partners include Applied Crypto Ventures, Lvna Capital, Bixin Capital, BrainChild, Eterna, Hex Capital, Mozaik Capital, MetaStable, Spark Pool, and Kosmos.
The new PurePoS (pure proof of stake) consensus mechanism, proposed by the Algorand team, may be successful in resolving the blockchain trilemma for the first time, by balancing decentralization, efficiency, and security.
Algorand and the Algorand Foundation, together, have a vision of building the first borderless economy. The digital economy at the most basic level would be a marketplace or an exchange, where anything of value could be traded without the added friction of current financial networks.
According to the Algorand Foundation, the total circulating supply of ALGO tokens is expected to reach 10 billion, in the first 5 years of ICO. The total market cap based on its selling price of USD 2.4 million will be nearly USD 24 billion. This figure is very close to Ethereum, which is currently the second-largest market capital at USD 28 million.