Algorand is a decentralized blockchain that started to be developed in 2017 by MIT professor Silvio Micalli. The blockchain's primary advantage is its scalability and that transaction costs are kept at very low levels thanks to its consensus mechanism through Pure Proof-of-Stake.
The blockchain has similar characteristics to Ethereum and thus can be used for smart contracts, tokens, NFTs and dApps. Algorand can be described as a basic infrastructure that various projects can be launched upon.
ALGO is the name of the cryptocurrency used on the Algorand blockchain. The cryptocurrency is used to pay transaction fees for transfers of cryptocurrency and interaction with smart contracts. Since the blockchain uses Proof of Stake, ALGO is also used within its consensus mechanism. Staking of ALGO is also required to be able to participate and vote on the development of the blockchain.
Even though Algorand has similar characteristics to Ethereum it’s technically designed to achieve faster and cheaper transactions. One important difference is that Algorand uses ´Pure Proof of Stake´ (PPoS), which in short means that anyone who holds ALGO and wants to participate, can be randomly selected to verify the blocks. This is in contrast to Ethereum where 32 Ether is required for staking to be able to act as a node. Another difference is that Algorand is structured in two layers: simpler transactions are handled in the first layer and more complex ones in the second.
Algorand is an environmentally friendly blockchain that has committed to becoming carbon negative. Its consensus mechanism requires very little energy and via smart contracts, ALGO is allocated from the transaction costs to buy carbon credits.
The price of ALGO is determined by supply and demand for the cryptocurrency. At the end of 2022, the supply was just over 7 billion and via annual inflation, the supply will gradually reach the maximum number of 10 billion.
The demand is primarily influenced by the success of the projects that are launched on the blockchain. The more people who hold ALGO, and use services on the blockchain, the more will the demand increase for the cryptocurrency.
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