Algorand: Crypto Enthusiasts Love this “Ethereum Killer”

Algorand: crypto enthusiasts love this “Ethereum Killer”. At least in the Indian crypto environment. The crypto project behind the ALGO token is not as well-known as Bitcoin, Ethereum, Cardano, or Solana. But it is one of the many projects to keep an eye on in the coming months. For example, the ALGO token was trading at 110 on WazirX. At the time of writing, having swung between 132 and 140 in response. To the recent crypto downturn, in contrast to larger currencies that saw significant decreases. On the exchange, the token is ranked as the 40th most valuable.

It is also one of the few projects that has its own investment arm, called Borderless Capital. Which is a subsidiary of the parent company. Earlier this month, the Miami-based venture capital firm announced. The launch of a new $500 million fund to invest in the Algo DeFi ecosystem.

What is Algorand?

Algorand, like all public blockchain platforms, is a decentralized network. A solution to the ‘blockchain trilemma’. This one addresses the three major issues of today – speed, scalability and security. Silvio Micali, MIT professor and Turing prize winner, launched it in 2019.

Micali designed Algorand to be a payments-focused network, similar to Bitcoin. But with the potential to process more transactions. 1,200 TPS — and an impending version that adds ‘instant finality’ to the network. Compared to Bitcoin, Ethereum can manage around 13 TPS.

This is a crucial trait for scalability, which is why some call ALGO the ‘Ethereum Killer’. Existing payment systems like Visa and Mastercard can only process 1,700 and 5,000 transactions per second. Respectively, and transactions can take a long time to process.

It also uses a ‘pure-proof-of-stake’ consensus method. Which means only a few miners are paid for completing transactions. Cardano and Solana already employ this mechanism. And Ethereum is going towards it to reduce network gas prices.

Speed and cheap transaction fees are required. To make public blockchain networks global payment systems.

Algorand is also deflationary, as there is a finite number of ALGO tokens on the network. Only 10 billion ALGO tokens will be available in the first five years. With 25 million being auctioned off upon launch. 1.75 billion will go to miners as rewards. While 2.5 billion will go to relay nodes (a type of mining node supported by Algorand).

2.5 billion more for the Algorand Foundation and Algorand Inc to manage and maintain the network. The remaining 0.25 billion will go to end users.

How does Algorand work?

Although the Algorand network employs the proof-of-stake (PoS) consensus method. The mining techniques employed by the Algorand network are significantly different. From what you may be familiar with in terms of PoS. As an alternative, the network relies on a technology. It is known as pure-proof-of-stake (PPoS), which is a more equitable method. Than proof-of-work (PoW) and is intended to avoid the “rich growing richer” situation. In essence, whereas PoS compensates miners who have the most stake in the system. PPoS selects miners at random and regardless of their position in the system.

Nodes in the network can divided into two categories: participation nodes and relay nodes. It is the responsibility of the relay nodes to act as network hubs. Ensuring that the link between Algorand’s and all of the other nodes. In the system maintained.

Participation nodes are the ones who actually donate processing power. To the process of transaction validation. And they are also those who receive the greatest amount of reward. The participation nodes rely on the relay nodes to communicate. With one another and to keep track of the ledger information.

The Algorand protocol allows anyone to run a relay or a participation node. However, while participation nodes compensated for their efforts. Relay nodes not permitted to essentially “mine” ALGO for themselves. Instead, the Algorand Foundation has established a reward scheme for relay nodes. Which will become fully operational in two to five years after installation. They use a virtualization software called Algorand Virtual Machine (AVM). To connect to the Algorand network, which they run on their computers.

The Algorand network has its own method of managing smart contracts. That is a feature of leading blockchain networks developers. To construct decentralized applications (DApps) on top of them.

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