We live in exciting times. Just decades after the dot com boom, we’re seeing a new kind of internet being built — Web 3.0. This development will usher in new ways of storing and distributing content, handling privacy and personal data, transferring assets, and much more. Thousands of applications are being built in every industry from finance and real estate to healthcare and the fight against climate change.
For Algorand, the mission is to facilitate the building of these applications and to oversee the launch of Web 3.0.
What is Algorand?
Algorand is an innovative cryptocurrency and Proof-of-Stake blockchain designed by MIT professor and Turing Award-winning cryptographer Silvio Micali. It aims to be the blockchain of choice for developers to build decentralized applications on top of, due to its speedy final settlement and unique consensus method. In doing so, Algorand hopes to usher in a new, more decentralized internet where “everyone creates and exchanges value efficiently, transparently, and securely.”
Algorand calls itself a “Pure Proof-of-Stake” blockchain network. Instead of the largest holders of the token having the most authority (as is the case with most PoS systems), each person staking has an equal say and influence on the network.
This is achieved through the consensus mechanism which selects small groups of those who have staked tokens at random to participate by voting on newly proposed blocks. Since participants are chosen at random, each staking participant shares an equal amount of influence, regardless of how many tokens they are staking on the protocol. Only requiring a small number of participants for each block also greatly increases the finality (irreversibility) time of each transaction.
Flexible Use Cases
Algorand is very flexible regarding its use cases. In fact, Algorand is based on the idea that blockchain systems should be flexible and adaptive to changes over time, this contrasts with the slow-moving and immutable nature of a blockchain like Bitcoin.
On Algorand, developers are encouraged to experiment and find their own unique uses for the chain. This can have some negative implications on the level of security (although Algorand hopes to mitigate this with its unique protocol consensus methods) but also greatly expands the potential applications for the blockchain.
Algorand Use Case: Smart Contracts and Decentralized Apps (Dapps)
Algorand is capable of producing Turing complete smart contracts which allow for developers to create decentralized applications on top of its blockchain. There are currently over 100 decentralized applications running or being built on Algorand.
These decentralized applications hope to form the basis of what has been called Web 3.0, a new iteration of the internet aiming to improve problems that exist with web 2.0 around identification, ownership, value transfer, and decentralization.
AIKON and Algorand
AIKON is a blockchain solution company creating a blockchain identity service on the Algorand chain. Created in 2017, their flagship product, ORE ID, utilizes Algorand smart contracts to allow enterprise customers to connect customers’ identities to the Algorand blockchain. ORE ID also contains an API allowing enterprises to match their existing clients’ emails and unique ID to corresponding Algorand wallets. On top of this, AIKON is also building a plugin to help make it simple for developers to migrate onto Algorand with their existing Dapps.
SIAE and Algorand
SIAE is an Italian copyright collection agency that is developing copyright management solutions on the Blockchain, utilizing Algorand. Ownership is a major issue that was poorly addressed in web 2.0. SIAE is taking advantage of Algorand’s smart contract capability to help enforce copyright law and protect creators. In addition to smart contract functionality, they have also launched over 4 million NFTs (see below) on the platform to represent the rights of over 100,000 creators.
Algorand Use Case: Decentralized Finance (DeFi)
Web 3.0 also involves a revolution in the way we transfer value between parties online. The traditional financial services industry is currently being disrupted by decentralized platforms that offer a wide range of financial applications in a trustless and decentralized way, open to everyone and fully transparent.
Examples of DeFi applications running on Algorand include:
Algodex is a decentralized exchange. Decentralized exchanges allow users to conduct near-instant trades with no intermediary third parties or permissions necessary. With an order book entirely on Algorand, Algodex features faster than average (4 – 8 second) trading times and claims to be one of the most decentralized exchanges in the world. Algodex is currently only available on testnet but will launch on mainnet in early 2022.
Yield farming is a popular way to earn yields on your crypto assets by lending them in a variety of ways. Yieldly is the first yield-farming platform built on Algorand. Its mission is to help users gain high yields on their digital assets without friction or risk, while utilizing Algorand. Yieldly is backed by many top venture capital firms like CMS Holdings and LongHash Ventures. In addition to yield-farming, Yieldly has also built a bridge solution that allows users to swap their assets between Algorand and other layer-one chains seamlessly.
Algorand Use Case: Algorand Standard Assets
Algorand encourages asset creation on the blockchain using Algorand Standard Assets. This allows users to tokenize virtually any asset including physical goods in a standardized and approachable way. Digital assets which can be created this way include digital securities, digital tokens representing ownership in applications built on Algorand, and even sovereign national currencies.
Meld Gold is a gold industry specialist leading the way in turning physical gold into a digital asset on the blockchain to make gold investments accessible to everyone openly and transparently.
Utilizing Algorand, Meld Gold is making physical gold traceable, fungible, transferable, and redeemable. Each token represents one gram of physical gold, and fractional ownership of gold is also made possible and easily trackable via Algorand Standard Assets.
The Marshall Islands and Algorand
The Marshall Islands are an independent country creating an open financial system by building a national digital currency (the SOV) on Algorand. The Marshall Islands chose Algorand for its scalability, low costs, speed, and security.
Algorand also allows nations to implement compliance controls into their digital currency, making it a great choice for national digital currencies to be built upon. The currency is already in use (alongside the U.S. Dollar), making the Marshall Islands one of the first countries to create their own digital currency on the blockchain.
Algorand Use Case: Non-Funbigle Tokens (NFTs)
Algorand also allows for the creation of non-fungible (meaning each token is unique) tokens. As NFTs continue to explode in popularity, Algorand aims to provide an alternative marketplace to Ethereum and other chains. To date, Algorand’s NFT’s are primarily being utilized for business applications.
Developed by an award-winning music distribution company (Ditto), Opulous allows artists to increase their access to capital in a peer-to-peer distributed way that does not depend on financial institutions.
One of Opulous’s primary methods of doing so is through the use of copyright-backed NFT’s, which allow musicians to create unique tokens representing ownership of the copyrights of their songs and albums while benefiting from Algorand’s low transaction fees.
A real estate company revolutionizing their industry by tokenizing real estate assets on the blockchain, Assetblock believes that tokenizing each unique property can result in more secure, accessible, and efficient investments.
Algorand is Asset Block’s chosen platform to build its vision upon. Records of ownership and related information can all be stored on the Algorand blockchain utilizing NFT’s. The non-fungible nature of the tokens means that each unique property can be represented according to its unique attributes.
Why Does Algorand Have Value?
Algorand’s value is tied to its continued growth as a blockchain of choice for developers and businesses. Algorand is also a bet on the unique innovations that its founder, Silvio Micali, has brought to the cryptocurrency and blockchain landscape, as Algorand utilizes many novel methods such as Pure PoS and random block participation selection.
The fact that Algorand has a supply cap of 10 billion also makes it more likely to hold its value over time, should it succeed since it adheres to a scarce supply. Algorand is admittedly much less scarce than Bitcoin with a much more liberal amount of coins, however, having a capped supply should still serve to benefit Algorand’s price over time.
In conclusion, Algorand is a dynamic and exciting blockchain project with a wide variety of applications including for developers and businesses. Investing in Algorand is a bet on dynamic Proof-of-Stake systems continuing to grow and adapt to unique use cases. It can also be seen as a bet on the ability of a Turing award-winning MIT professor to provide innovation in blockchain technology.