What is the Algorand blockchain, and how does it work?

What is Algorand?

Algorand was created by Silvio Micali in 2017, a MIT professor who won a Turing Award for his cryptography work. Algorand allows anyone to create applications and transfer value using a decentralized, permissionless blockchain protocol. Algorand is powered by a unique consensus algorithm that allows for fast, secure, and scalable transactions.

Algorand addresses common problems that older blockchains face, especially in terms of scalability as well as consensus. Pure proof-of–stake (PPoS) is a consensus protocol that randomly selects validators based on the weight of their stakes in ALGO coins.

What problem is Algorand trying solve?

The Algorand protocol was created to address three of the most important problems blockchains have: security, scaling and decentralization. The Algorand network, also known as the “blockchain trilemma”, claims it addresses the following three main issues.


The Algorand protocol is protected against malicious attacks. It’s ideal for transactions, high-value assets, and building secure enterprise software. It protects users’ accounts and ensures network security.


Algorand can process a large amount of transactions per second making it more scalable than Bitcoin and Ethereum. Algorand’s consensus protocol eliminates the need to use computational power in Bitcoin to solve cryptographic issues.

Instead, the protocol’s computation costs per user are used only to generate and verify signatures as well as simple counting operations. Algorand claims that it can scale to millions of users, sustain a high transaction speed and not incur significant costs to participants.


Algorand has no central authority and is completely decentralized. Participants in the network verify transactions and have equal rights to vote in decision-making. Algorand is a highly decentralized system.

Every user on the network has the chance to be part of the committee that approves each block. The selection process is confidential and random. It is not a fixed committee, and its nodes can be run by users from all parts of the globe.

What does Algorand do?

Algorand is unique among other blockchains because it uses PPoS, which is a consensus algorithm that utilizes a Byzantine agreement protocols. If a node is compromised, the native token ALGO would be staked by participants in the network. This token would be automatically protected with unique keys.

Proof-of-work (PoW), Bitcoin’s consensus mechanism requires large amounts energy and computing power in order to create new blocks and validate them. PPoS allows for faster creation and validation of new block in a more efficient way. Randomly selecting ALGO holders is used to validate and approve each block within the chain. Each block is assigned a new committee or group.

The PPoS protocol limits users who have large amounts of ALGO to engaging in malicious activities that may compromise the security of other users. Because the system relies on participants being dependent, malicious activity could also lead to a decrease in their ALGO. This would mean that any majority holder would not be rewarded for such malicious activities.

Algorand is capable of processing 1,000 transactions per second. All transactions will be finalized and immediate. Algorand has a fixed supply 10 billion tokens that can be used to add an inflation-resistant feature to its network. These tokens are largely locked up and have not yet been distributed.

Structure of the lgorand protocol

Three fundamental concepts are the basis of the Algorand protocol:

Transactions: These are the fundamental unit of account within the Algorand Network. They can be used to transfer value, and they are verified by all participants in the network. It also rewards those who take part in its operation.
The lgorand Staking Mechanism: A pure proof-of-stake

Algorand’s PPoS method, the user’s influence on choosing a block to be built is proportional the tokens they hold in the system. Also known as their stake, Every user is eligible to vote and has the chance to propose a block.

Randomly selected users are secretly chosen to vote on block proposals and propose blocks. This method ensures that the network’s security depends on the honesty of its users. The system will be secure as long as the majority of the money remains in the hands of honest people.

This is contrary to other consensus mechanisms such as PoW, DPoS and BPoS which have small groups of economic actors responsible for security. These approaches can be used to prevent others from transacting, but only a few users can do so.

Algorand’s method makes it nearly impossible for smaller holders to cause harm to the entire network. The majority of holders wouldn’t dare act maliciously either, since such actions would result in the currency’s buying power being reduced and their assets devalued.

lgorand block production in PPoS

Algorand’s PPS mechanism allows for two phases of construction of new blocks. A single token is randomly selected during the first phase. This token’s owner is the user who proposes the next block.

1000 tokens will be randomly selected from all tokens during the second phase. These token owners make up the phase-2 Committee. They are responsible for approving blocks proposed by users in phase 1.

Related: What exactly is cryptocurrency? The beginner’s guide for cryptocurrency

A committee member can be elected more than once. This means that members can have more than one vote when the next block is approved by the committee.

Algorand’s second stage of block production was created to counter any bad actors. The majority will choose 1000 tokens randomly to defeat the evil intentions of these bad actors and follow the rules for the wellbeing of the network.

lgorand’s native cryptocurrency ALGO

ALGO is the native currency of Algorand. ALGO tokens can be used to pay transaction fees or reward users who take part in the consensus process.

ALGO transactions take less than four seconds regardless of how many transactions are performed in a given day. Transaction fees are also very low. Algo transactions are much cheaper than Ethereum, which has a reputation for charging high gas fees.

How do I purchase ALGO cryptocurrency?

You can purchase ALGO in many ways. It can be purchased directly from an individual or via the internet.

You can also look for ATMs near you that offer ALGO. Crypto ATM rates can be prohibitive and it’s not possible to guarantee that you will find a counterpart willing or able to trade with you.

A cryptocurrency exchange is the best way to purchase ALGO. Binance, Kraken, and Coinbase are some of the most popular exchanges that offer algo. These exchanges allow you to buy ALGO using a debit or credit card.

First, you need a crypto wallet in order to store the ALGO. Pera Wallet and My Algo are some wallets that support ALGO.

After you have set up your wallet you can fill it by searching for an exchange that supports ALGO.

If you don’t have one, create one on the exchange and get it verified. To start your trade, select “Algorand”, from the list. Before you submit, enter the fiat amount that will be used to purchase ALGO coins.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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