Algorand (ALGO): What is It and How Does It Work?

Mike Harry
Mar 2023
4 min to read
Fact checked

Introduction: Algorand is a permissionless, proof-of-stake blockchain that is designed to be simple and secure. It is based on a Byzantine Agreement protocol and uses a novel consensus algorithm, which allows it to scale to millions of users. Algorand also supports smart contracts, and its Algorand Standard Assets (ASA) allows users to tokenize real-world assets and trade them on the blockchain.

Table of Content

  1. What is Algorand (ALGO)?
  2. Algorand ALGO Token
  3. Is Algorand a good investment? 
  4. ALGO price prediction
  5. How to buy ALGO?

What is Algorand (ALGO)?

Algorand Website
Algorand Website

Algorand was founded by Silvio Micali who received the Turing award in computer science. Algorand was launched to market in 2019 as a permissionless, pure proof-of-stake protocol with the mission to build a scalable blockchain for global trade. 

Algorand’s consensus algorithm is based on the Byzantine Agreement protocol that uses a cryptographic sortition mechanism to randomly select the validator set. This Verifiable Random Function (VRF) ensures that transactions are processed in a fair and consistent manner and allows Algorand to reach up to 6,000 transactions per second. Algorand also includes an "observation layer" which is used to increase scalability and security by allowing only the most important transactions to be validated and stored on the main chain.

  • Block Finality Time: 5 seconds
  • Low transaction fees: $0.0015
  • Transactions Per Second (TPS): 6,000
  • Validator Nodes: 120
  • Nakamoto Coefficient: 13

Algorand (ALGO) Token

The ALGO token is the native token of the Algorand blockchain. It is used to pay transaction fees on the Algorand blockchain while also serving as the governance token for the network.

The ALGO token has a fixed supply of 10 billion tokens that are used among other things to provide a 6% staking reward to validators and delegators for securing the network. 

The ALGO token is also used as an incentive to fund new development on the Algorand blockchain.   Developers can submit proposals to the ALGO DAO that decides which teams can receive funding.  

ALGO Tokenomics:

  • Outstanding Supply: 7.1 billion
  • Maximum Supply: 10 billion
  • Current ALGO Price: $0.24
  • Current ALGO Fully Diluted Marketcap: $2.4 billion
  • Staking APR: 6%

Is Algorand ALGO a good investment? 

Algorand Ecosystem
Algorand Ecosystem

While the Algorand Hub is responsible for creating world-class, free, open-source products like the Algorand SDK, Tendermint and IBC, the question still remains how the Hub and the ALGO Token will manage to accrue value over time. We are bullish on ALGO because the team has proven they can develop software that has achieved product market fit with the Algorand ecosystem rapidly growing.

The Algorand Hub is now focused on building additional features such as shared security which will, if successful, enable the Hub to play a crucial role in in the growth of the ecosystem while also capturing some of that value. 

Below we have outlined some metrics to keep an eye on to help you decide if to invest in the ALGO token. 

  1. Is Algorand TVL growing? 
  2. Are the number of dApps growing? 
  3. Are Algorand’s daily active users growing?  
  4. How much code is being shipped on Algorand? 
  5. How many new developers entering the Algorand ecosystem?
  6. Are investments in the ecosystem increasing? 

Algorand Price prediction

Algorand has as of yet not really impressed in terms of the number of dApps built, TVL or the growth of its developer ecosystem. An uptick in all of these metrics is a must for Algorand to have a chance of regaining and surpassing its all-time high of $2 and $20 billion dollar fully diluted market cap.

We recommend reading Illuminating the dark age of blockchain: Algorand by Arrington Capital which has invested 10s of millions of dollars in Algorand and its ecosystem

How to buy Algorand (ALGO)? 

If you wish to buy ALGO, we recommend buying through Kraken and eToro as they are both FinCEN regulated and safe.

Buy ALGO on eToro

After making a purchase (on any exchange), we recommend withdrawing your funds to a hardware wallet like Ledger to secure your assets from possible exchange hacks or insolvencies.

Secure your assets with a Ledger Wallet

Buy Algo on eToro
Mike Harry
Mike is a passionate crypto enthusiast who bought his first Bitcoin in 2016. With a natural curiosity and a love for learning and tinkering, Mike is always trying out new DeFi applications. Mike excels at breaking down difficult concepts into easy-to-read guides for beginners.

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