Algorand Review 2023: Pros & Cons

Algorand is a project first launched in 2019 and quickly became one of the most talked about in the crypto industry. Until now, it is positioned as one of the promising projects in the crypto space and borderless economy since its main goal is to achieve unprecedented scaling in the history of the blockchain.

To achieve this goal, venture capitalists from the crypto market pour a lot of money into the project, and top science doctors are directly involved in implementing this idea.

Other peculiarities of Algorand are the following:

• easy maintaining smart contracts;
• low electricity consumption;
• understandable staking process (with high staking rewards);
• over 1,000 transactions per second, etc.

In this Algorand review, you will learn about the main features of the decentralized blockchain, its pros or cons, the history of development, and much more.

Advantages of Algorand

The main advantage of this blockchain lies in the speed with which transactions occur. It is what distinguishes the blockchain from other similar projects. Even though it is currently 1000 transactions per second, this number will be significantly increased in the future. Moreover, in the course of work, Algorand never splits into several chains when consensus is violated. It means that such operations can also be completed much faster compared to other crypto-currency networks. Also, thanks to the pure Proof-of-Stake model (or simply “pure proof”), Algorand significantly increases its efficiency.

It is worth mentioning, Algorand implements a tiered approach to scaling that has a lot in common with the plan for Bitcoin. However, unlike the approach used on many blockchains, Algorand works without trying to fit as much data as possible into the base layer. Instead, a combination of the first-layer network with a more limited scripting language and a complex second-layer system is used. As a result, achieving high reliability for complex smart contracts is possible.

Separately, it is worth mentioning the trust in this blockchain. The fact is that there are many similar projects, but few of them can boast of such a pace of capital growth and expansion of the investor audience. It was made possible thanks to the impeccable reputation of Micali.

Disadvantages of the Algorand Platform

Like any blockchain project, Algorand Inc. has its shortcomings, which are listed below.

• increased costs of the first-level blockchain with an increase in the speed of transactions;
• the main source of funding is the Algorand Foundation;
• non-sufficient liquidity of the Algorand standard assets may affect the cost of the transaction fees when depositing or withdrawing funds.

History of the Algorand Blockchain Technology

Algorand blockchain platform has first launched in 2019 thanks to the work of MIT professor Silvio Micali. Initially, this blockchain was intended for making payments since its functionality allowed it to complete the operation in no more than five seconds. Currently, Algorand aims at over 1000 transactions per second.

This blockchain platform is still in the niche of not too popular and is funded mainly by the Algorand Foundation (a non-profit organization). Most of the funding is used to train and improve the skills of new developers working on solving problems in various top universities. In addition, this foundation regularly sponsors webinars and hackathons designed to expand the audience of interested people who would potentially join the development of this blockchain.

In 2020, the Algorand Foundation sponsored a series of acceleration programs in Asia and European regions. As part of its funding, the Algorand Foundation raises funds from investors such as Union Square Ventures.

Algorand Network

High speed is the main feature of the Algorand protocol. In theory, the blockchain developers and Algorand crypto asset holders have already achieved the best speed because they finalized the blocks in one round of voting.

Thanks to this, each of the blocks is completed almost instantly. As a result, throughput increases, that is, the number of operations that the Algorand mainnet per second can perform. As mentioned above, currently, it is about 1000 transactions per second with a delay of fewer than 5 seconds.

As you know, the crypto community evaluates the high speed of various operations. The same situation is with Litecoin, Ethereum, Bitcoin mining, etc. At the same time must always be accompanied by a high level of protection. Otherwise, it is useless.

To achieve this, Algorand developed a special mechanism that allows blockchain to withstand long network partitions and quickly recover. As a result, it can eliminate several potentially possible multi-vector attacks in the real world. However, you can face it in some secure large-scale systems and computer networks.

A network partition is a special layer attack that makes it difficult or blocks user interaction. Unfortunately, no blockchain is currently completely secure from network attacks. No blocks in the chain can be created whenever a malicious artist can maintain a network partition for a long time. As a result, the network is practically shut down, and participation nodes can not reach transaction finality.

The only counteraction to this is to increase the value of Algorand’s standard assets until the moment when the hacker can not resist. Blockchains Proof-of-Work in the above situation shows itself the worst.

In this case, it forms two separate chains (one in each section). After closing one of the sections, the smaller chain disappears and completely transfers all transactions to itself. A separate threat is a network attack aimed at specific messages in advanced cryptographic protocols. It makes it difficult to find the network partition.

Algorand Consensus Protocol

Speaking of the Algorand consensus algorithm, in this case, the Byzantine agreement is used. However, it is customized and optimized for high performance and mass scale. This principle works as long as a fair majority is more than two-thirds. There is no need to synchronize all participants.

If the leader being elected is 100% honest, then consensus can be reached in two steps. However, if the situation is reversed and the leader is malicious, several steps may be required to reach a consensus.

With this superior technology, the system achieved higher stability of secure protocols (including arbitrary network sections of unknown size). It is worth noting that the network recovers quickly after the partition is resolved (it is one of the core principles). It, in turn, does not benefit the attackers, making stopping the network costly and unjustified.

An instant vote would occur if an honest leader initiated the process of creating blocks. In this case, the block is distributed to all participating nodes and approved after one round of voting.

This public blockchain introduced a mechanism based on verifiable random functions to extend this mechanism to the maximum number of nodes. With it, it is possible to check whether you are selected to participate in the next block agreement. You can then include selection confirmation in your network messages.

At the same time, the blockchain does not require the owner of the assets to maintain any private state (except private keys). It allows the network to replace participants after sending the blockchain message. This mechanism avoids many attacks that target individuals after their identity is known.

Algo Tokens

As you know, Algorand held an ICO at the Dutch auction in the summer of 2019. The result exceeded the expectations of the developers because the blockchain attracted more than 60 million dollars of investments and sold about 25 million tokens. At that time, the cost was about $ 2.40 apiece. Moreover, the date of the ICO successfully coincided with the launch of the long-standing Algorand network.

Soon, the network’s creators announced that such indicators were just the beginning and that they would sell about 600 million tokens per year. At the same time, it was planned to use the same scheme as the Dutch auctions. According to open data, the total number of tokens was 10 billion ALGO.

However, there were some negatives as well. The fact is that those who purchased tokens at $2.40 faced the problem of insufficient digital currency support during the whole summer. Subsequently, the price of the Algo token decreased and reached $0.39. At the same time, the token dropped to 47th place with a market capitalization (of about $113 million).

At the time of writing, the capitalization of ALGO was significantly higher (over 2 billion dollars ), but the price of the coin has not changed much (about $0.33).

Algorand Community

The Algorand team always communicates with the public and immediate asset holders. To do this, specialists conduct active activities on popular social networks (mainly Twitter, Facebook, and Telegram). In addition, the Algorand team has its blog on the Medium platform, where they regularly publish news for the community. Particular attention is paid to describing the company’s technical activities to give users a complete picture and increase the project’s credibility.

The company currently has over 12,000 followers on Twitter and about 800 followers on its Facebook page. As for the Telegram channel, there are more than 10,000 active users.

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