DeutschAlgorand (ALGO) is a 3rd generation cryptocurrency and a topic of conversation in the crypto world. With its technology, it wants to end the blockchain trilemma. But can the company really change something with its currency and what are the chances of success in the long term, so that it would be worth jumping on the bandwagon?
Historical Background of ALGO
The basic problem of cryptocurrencies like Bitcoin is the blockchain trilemma. Only two of three levels are achievable from security, decentralization and scalability, which can be maximized. The improvement of one has the consequence of worsening the other level.
This is what Algorand wants to fix, and there are other advantages that come with this approach. With this in mind, Silvio Micali started working on Algorand in early 2018. Today, the cryptocurrency is managed by the non-profit organization Algorand Foundation, which is based in Singapore. However, Micali is still one of the leading minds there today.
Origin of Algorand
In May of the same year, the latest protocol was then published, which was based on the pure Proof-Of-Stake blockchain (Pure Proof of Stake, PPoS). This is said to be highly efficient and fast. After that, TestNet was launched and later in October 2018, the first open source code of the project was published for the random function of staking, which makes Algorand suitable for millions of users. Co-financed by 4 million US dollars from its own campaign, which was later increased by another 62 million by a global investment group. In December 2018, the launch of a fund of 100 million USD was announced, which should promote the development from then on.
In the following months, more and more code was released and in mid-April 2019, the TestNet was finally made public, so that everyone could participate from this point on. After a few partnerships, which still hold today, it was announced in mid-2019 that ALGO is now officially launched and is now fully available as Open Source. From then on, the mainnet was available for Algorand.
Functionality in Relation to Staking
Algorand is based on staking and is therefore not dependent on strong computer performance like other cryptocurrencies, but on the trust of users and their ideas of ALGO. By holding the coins in your own wallet, the process can work. Whoever holds the most coins has a greater chance of being selected for the process of adding to the blockchain. Because the process runs absolutely passively and does not have to be actively contributed to by contributing computing power, a passive income can be generated. Income that continues to rise when holding higher sums and can therefore grow faster.
There are different types of staking that the user can fall back on. These include normal staking, as described above, but also two other types. A staking pool and cold staking can also be considered. They offer further advantages, but of course also disadvantages.
A staking pool is a pool to which any user can contribute in order to greatly increase their chances of participating in the process. Since the Algorand protocol rewards larger amounts (i.e. with more tokens) with a higher chance, it is more likely that you will participate. This is especially useful for beginners of the respective cryptocurrency, as no large minimum balance is required for this, as you can also participate with a smaller amount. Participating in such a pool can involve a fee, which is often not too small and requires some of the staking rewards received.
Through cold staking, the money is kept on a hardware wallet, where it is safe. However, this also makes it impossible to receive staking rewards.
Transaction Costs and Transaction Time
With around 1,000 transactions per second, Algorand is very efficient. There are no long waiting times until the money has actually arrived and the process is complete. With Algorand, we are talking about an average rate of less than 5 seconds. The transaction costs are adjusted to the price and value of Algorand by being billed directly in ALGO. If an ALGO is currently worth more, a transaction is more expensive and if it is worth less, it is cheaper. In general, however, the costs are not particularly high. It is a fraction of an ALGO, namely 1,000 microalgos. For comparison: 1 ALGO is 1,000,000 microalgos. This minimum rate is then increased by a specific amount, which increases proportionally with the increase in the amount.
Current Algorand Price
In the CoinMarketCap database, Algorand is currently listed in 49th place and is falling in terms of price over the last few weeks. Before that, there was an increase in the summer months. The general trend was falling shortly after the start, but has since stabilized somewhat and has also been able to increase several times. Initially, however, it was above the 3 US dollar mark, but this was not maintained for long.
- Algorand
(ALGO) - Price $0.273
- Market Cap
$2.37 B
An Outlook on Algorand and its Price
The future of Algorand is difficult to assess. It is conceivable that Algorand will be very successful due to its technology, but it is just as possible that it will not prevail. After all, the trend since the start was initially falling, then stable with some highs in the last 10 months.
Due to its usability for almost everyone and many partnerships with successful companies, the chances are of course good that a stable currency with a future will develop from this. After all, this is also one of Algorand’s biggest promises, as it repeatedly assures its users that it wants to be successful in the long term. The stable course basically shows exactly that, but the initial crash should not be forgotten. The market places a lot of hope in Algorand and therefore a lot of responsibility, which it tries to implement and maintain, but will the effort be enough for a real success in the end? Ultimately, the investors decide on the success of Algorand. It is possible that many new users will participate in the processes, but for this the interest must be high enough to really invest money in the currency. If it is not, Algorand has no chance in the long term.
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