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Algorand: scalable and eco-friendly blockchain

Algorand is a curious blockchain. While other networks restrict the participation of users in the creation of blocks and other decision-making processes, such limitations are minimal on Algorand. Moreover, the system boasts incredible scalability and high throughput thanks to the local consensus mechanism — Pure Proof-of-Stake.

On this foundation, Algorand created a blockchain that enables the fast and cheap creation of decentralized solutions of all stripes. That includes apps, finance solutions, bridges, exchanges, and more. The throughput of this network is 7500 TPS, compared to Ethereum’s 20-30 TPS. There is a lot to unpack here.

About Algorand

Algorand is an eco-friendly zero-carbon network, created in 2019. It was one of the earliest attempts to create a fully sustainable blockchain. While not completely green, it uses sound strategies to reduce its impact on the environment. As a result, their gross total carbon emissions are negligent.

The blockchain’s main goal is to create a low-cost, sustainable, and scalable environment for easy and cheap access to decentralized technology.

As such, Algorand users can utilize these capabilities to create decentralized apps and other solutions. For instance, some DeFi solutions built on Algorand include Folks Finance, Gard, and Yieldly. All of them run on smart contracts, ensuring a high level of decentralization, scalability, and security.

ALGO token

ALGO is this network’s governance token. It’s used in the consensus mechanism, as part of the ICO of local dApps and to pay processing fees.

It’s also listed on various exchanges, where it performs in a largely stable fashion, even if the overall trend has been a negative one since its creation. It is one of the top-50 cryptocurrencies by market cap. This reflects and popularity and acclaim of its mother platform — it’s large, but not one of the big names.

It’s prudent to keep a steady supply of this currency on hand if you mean to use blockchain services often, aim to create applications, or simply want to participate in governance. The tokens can be purchased, but the main source is the rewards you get for participating in decision-making.

Consensus mechanism

The consensus mechanismThe consensus mechanism is called the Pure Proof-of-Stake (PPoS). It’s an offshoot of the earlier Proof-of-Stake, currently used by Cardano, Polkadot, Solana, and, recently Ethereum. It’s becoming a dominant variety, implemented in the majority of new blockchains.

PPoS isn’t as widespread. It’s mostly just used by Algorand among the big networks. It’s part of the continuous trend of improving the old PoS, which admittedly has many drawbacks in relation to scalability, throughput, and security. As such, there have been several attempts to make it better, including PPoS itself.

PoS explained

First of all, it would be beneficial to understand the relation.

Proof-of-Stake is best illustrated in contrast to Proof-of-Work, the original and most widely known consensus protocol. The latter is used on the Bitcoin blockchain, for instance. There, new blocks are created by solving mathematical puzzles, which is accomplished by allocating computational power to the task. It consumes time and lots of energy, which is why Proof-of-Stake was soon introduced.

The older PoW was selected for Bitcoin because it was the most convenient way of determining who gets to add a new block. Whoever solves the puzzle gets the honors. However, it soon became detrimental, and PoW lost pace with the needs of the community. PoS, by contrast, requires no computational power.

On PoS, people instead stake tokens to determine who among them deserves the honors. The number of blocks a validator (the equivalent of a miner here) can create and the amount of rewards they receive is directly proportional to the size of their stake. So, it’s more sustainable and scalable, but can still be abused.

PPoS vs. PoS

There are several big differences in the way PPoS works. It’s still a PoS at heart, but it goes the extra mile to ensure that the blocks are created fairly and fast. Here are some of them:

  • Selection of participants. With PoS, the participants of the block-creation process are selected based on the size of their stakes. With PPoS, the selection is completely random and made from the pool of people who consent to participate.
  • Reduced time consumption. There is always a fixed number of signals required to finalize the decision-making. As such, the process is streamlined and takes little time and power. This, in turn, improves throughput and decreases the operational cost.
  • Fairness. The problem with PoS is that a limited number of people can dominate the decision-making. Since the size of stakes determines how much sway you have during the procedure, particularly wealthy individuals can overrule anything. On PPoS, the participants are selected completely at random, which ensures fairness.

In many ways, the Algorand consensus scheme is superior. It doesn’t allow the same continuous growth of wealth as other networks do, but the blockchain benefits hugely from it as a whole. As a result, everyone enjoys equal freedom of participation (even if random), low cost, and high scalability.

Scalability and sustainability

These two words are of particular note when talking about Algorand. They are two main principles of the blockchain, which define its very nature.

Scalability refers to the capability of expanding your operation fast. It’s enabled by fast processing, low cost, and room for growth. On Algorand, the number of transactions per second that the system can process reaches 7500. It’s an incredibly high number, achieved only by several solutions.

The main reason why transactions are processed with much higher efficiency is due to bifurcation technology. The latter ensures that all workload is divided between two layers. Simple transactions are reserved for Layer 1, while more complex operations go to Layer 2. This way, the speed of processing is greatly reduced.

Sustainability refers to the idea that the creation of coins and the functionality of blockchains should be supported by sustainable means. In terms of blockchain tech, it means the reduction of carbon emissions. Algorand does it by demanding less power for all its processes and compensating the rest with carbon credits based on smart contracts.


As a result of these practices, Algorand takes as little as $0.0001 in transaction fees. Besides that, it’s also incredibly fast, secure, and fair. It doesn’t have especially good tools for app development, but the scalability benefits still make it a much easier job. In short, it’s a very convenient and sustainable blockchain that is great for developers and simple users alike.

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© – , updated 09/08/2023
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