Algorand, also known as ALGO, is a project which aims at expanding the way cryptocurrency is used while focusing on accelerating the speed in which transactions are made and greatly reducing the necessary time for them to be deemed final on their network.

Its design fully embraces their claim of being a payment-focused network and shows a strong focus on near-instant finality by a TPS (transactions per second) speed of over 1000 and finality in less than 5 seconds.

Algorand Explained

The platform has applications in and been used by microfinance experts, real estate agencies, and in some cases, in copyright as it enables its users to create smart contracts and tokens which can represent new and/or existing assets.

Its code is open source which by definition means that it can be copied, cloned or used in permissioned blockchains.

Algorand’s blockchain is craft in a way that enables other developers as to create different kinds of applications powered by cryptocurrency. It can host decentralized application (DApp) capabilities and provide scalability.

The ALGO cryptocurrency is distributed into the economy as every ALGO coin holder receives a certain amount with each new block.

As stated by the Algorand Foundation, only 10 billion units of their own cryptocurrency will ever get to be created.

The History Behind ALGO

ALGO was created by Silvio Micali, a computer scientist, MIT professor and 2012 Turing Award winner. In 2017, Algorand’s white paper was published by Micali and Jing Chen, a professor in Stony Brook University. Funding was possible due to the Singapore-based corporation, The Algorand Foundation.

Algorand officially launched in 2019 and quickly raised around $62 Million USD in funding.

The Inner Workings of Algorand

Algorand’s blockchain features a two-tiered structure. Its base layer is where smart contracts, asset creation and atomic swaps find support, and where security and compatibility are ensured.

Users can use the first layer as a platform to create ASAs, representing new or existing tokens, as well as Algorand Smart Contracts (or ASC1s) have the same level of security as its consensus protocol.

The second layer is intended to be used for more complex operations such as smart contracts and dApp development.

By use of a bifurcation, smart contracts happen off-chain which, in turn, make the processing of simple transactions effectively faster as the blockchain doesn’t become clogged.

The Pure Proof of Stake Mechanism

Algorand’s Pure Proof of Stake, often referred to as PPoS, is a democratized PoS with absolute low staking participation requirements as only 1 ALGO coin is needed.

Any user can stake ALGO in order to have his proposal up for voting. To do so, one must generate a participation key to become a Participation Node.

The PPoS is a two-phased process for block production and it consists of the proposing stage and the voting stage.

Block leaders are randomly selected on the first phase by means of a VRF (verifiable random function) and can propose the block. The VRF will then supply the block leader with cryptographic proof of his role so that his status can be verifiable.

After the block proposal stage comes the voting stage in which participation nodes will randomly elect a committee whose responsibility is to avoid overspend and double-spend.

The quorum needs to agree that the right procedures have been followed in order for the block to be added to the blockchain. If wrongdoing is found, the process goes back to stage 1 with a new leader, while the block is discarded.