Algorand is a decentralized, permissionless public blockchain based on the Proof-of-Stake consensus and fueled by a utility token ALGO. The key target of the project is to enable a borderless economy based on the blockchain platform. It aims to build fast and scalable cryptocurrency while sticking to the principles of decentralization. The FAQ page on the project’s website describes the borderless economy as the system where anything of value can be traded between two or more parties in a totally frictionless way.
Just like many other blockchain projects that have emerged over the past years, Algorand targets to resolve the scalability problem inherent to Bitcoin and Ethereum. As these two most popular cryptocurrencies are based on the Proof-of-Work consensus algorithm, they are pretty stable and secure. But the architecture of these platforms allows BTC and ETH to process only 7 and 20 transactions per second accordingly. This results in high latency when the networks get congested. Algorand wants to find the perfect balance of security, decentralization, and scalability which is one of the biggest challenges for the blockchain industry to overcome.
In order to reach its goals, Algorand implements a unique consensus protocol called Pure Proof-Of-Stake (PPoS). This protocol allows the system to achieve consensus without having to rely on any centralized party and stand against any malicious attack from the outside. The chance for participants to create a new block is proportional to the size of their stakes, i.e. to the amount of ALGO tokens they possess.
The consensus protocol is perfectly suited to provide the highest level of security and protect the system from malicious attacks as block validators are selected in a random and secret way. There’s no way to find out who the next validator is until the block is generated, and the block itself protects the information it contains.
Unlike PoW-based cryptocurrencies, Algorand with the help of PoS eliminates the need for excessive electricity consumption and allows to process a much higher number of transactions per second without giving away decentralization. Also, Algorand never forks which helps it maintain stability and speed and prevents malicious attacks on the network. It’s worth noting that Algorand is not the only PoS-based project as a similar concept is implemented by Cardano, Zilliqa, QuarkChain and some other platforms.
Algorand has managed to raise 66 million USD from private investors such as Union Square Ventures and Pillar Venture Capital in the course of 2018-2019. In addition to that, the public token sale was launched on June 19th, 2019, and was conducted in a form of Dutch Auction which implies the gradual reduction of token price during a specified period. This helped the project raise 60 million USD more for its future development. On the same day, the Algorand mainnet was launched as well.
At that time, 25 million tokens were distributed, and Algorand plans to distribute via auction 600 million tokens more every year until the total supply reaches 10 billion ALGO. ALGO tokens can be stored on the native mobile or desktop wallet which is available for download on Algorand’s website. The mobile wallet is created to work on both Android and iOS devices. In addition, a desktop wallet Coinomi supports ALGO, but at the time of writing, it can’t be kept in either Trezor or Ledger hardware wallets.
In August 2019, Algorand announced a 200 million ALGO staking rewards program which implied distributing rewards over the course of 6 months among those participants who manage to register their wallets before the block number 1618450 (August 31st). In order to receive additional tokens, users had to pass the KYC (Know-Your-Customer) procedure and verify their identity within the following 6 months.
Algorand was founded by a cryptography pioneer and Turing award winner Silvio Micali in 2017. Silvio has a scientific background as he has been working as a Ford Professor of Engineering at the faculty of the Electrical Engineering and Computer Science Department at MIT since 1983. He has received his Laurea in Mathematics from the University of Rome, and his Ph.D. in Computer Science from the University of California at Berkeley. Among other members of Algorand’s team, there are many scientists and researchers as well. The project’s main location is Boston, Massachusets.
In October 2019, Algo Capital, Algorand’s key investor, lost roughly 2 million dollars in USDT and ALGO tokens after its CTO Pablo Yabo’s phone was breached. Algorand took full responsibility for the loss and claimed to reimburse the whole amount in 20 months. The Algorand network itself has never been hacked and neither it was affected by the breach as most of its funds were kept on cold wallets. However, after the incident, Yabo reportedly resigned from his position.