Algorand was created in 2017 by a team led by Silvio Micali, a cryptography specialist and computer scientist, as a solution to address the crypto trilemma of scalability, security, and decentralisation in the blockchain ecosystem.
It introduced an innovative approach to consensus mechanisms called Pure Proof of Stake (PPoS), which is designed to create a robust, efficient blockchain ecosystem that processes transactions incredibly quickly.
What exactly is Pure Proof of Stake?
Unlike traditional Proof of Work (PoW) or even Proof of Stake (PoS) mechanisms, Algorand's PPoS aims to provide decentralisation, security, and efficiency without compromising scalability.
Algorand approves blocks immediately without multiple rounds of voting. The committee chosen to validate the next block is selected randomly every round via Verifiable Random Functions (VRF). This lottery is weighted by each validator's stake and is mathematically provable to be sufficiently random. This is in contrast to delegated PoS which relies on a small subset of the same validators. This ensures the network achieves consensus with every block, enabling rapid transaction finality.
All of this gives Algorand remarkable speed and cost-effectiveness. It boasts speeds of over 10,000 transactions per second, with a less than 3-second confirmation time and minimal fees.
What else makes Algorand unique?
The Algorand ecosystem has something called the Algorand Standard Asset Protocol (ASA), which functions similarly to Ethereum's ERC20 protocol, serving as a standard for creating and deploying new tokens on the network. However, any token created with the ASA standard is a native asset on Algorand and therefore a first-class citizen. This is in contrast to assets on other chains, like Ethereum, where an asset and its functionality are implemented on a smart contract.
Algorand also prioritises decentralisation by empowering all participants to engage in the consensus process by providing relatively low hardware requirements compared to other cryptocurrencies and allowing community members to vote on changes.
Their Community Governance program lets you commit your ALGO for 3 months and become a governor to vote on community proposals and earn rewards. This inclusive governance model and transparent decision-making mechanisms create a community-driven ecosystem where ALGO coin holders have a voice in shaping the platform's future.
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