What exactly is the Algorand blockchain, and how does it function?

The PPoS consensus mechanism used by Algorand distinguishes it from other blockchain networks that aid in the resolution of the blockchain trilemma.

What exactly is Algorand?

Algorand is a blockchain network founded in 2017 by Silvio Micali, an MIT scientist who received the Turing Award for his cryptography research. Algorand is a permission less decentralized blockchain system that anybody may use to build applications and move wealth. The Algorand protocol is powered by a new consensus algorithm that enables transactions that are quick, secure, and scalable.

Algorand addresses the most frequent concerns that most older blockchains have, namely scalability and consensus. The blockchain employs Pure proof-of-stake (PPoS), a consensus algorithm that chooses validators at random based on the amount of ALGO tokens they own.

What is Algorand trying to solve?

The Algorand protocol is intended to address three of the most pressing issues that most blockchains face: security, scalability, and decentralization. The Algorand network, dubbed the “blockchain trilemma,” claims to address the three key difficulties listed below.


Because the Algorand protocol is resistant to malicious attacks, it is suited for transacting, storing high-value assets, and developing secure enterprise applications. It ensures network and consensus protocol security while also safeguarding individual user accounts.


The Algorand protocol is more scalable than Bitcoin or Ethereum because it can handle a huge number of transactions per second. Algorand’s consensus protocol eliminates the requirement for computational capacity, which is required in Bitcoin to overcome cryptographic challenges.

Instead, the processing cost per user of the protocol is solely utilized to generate and verify signatures, as well as activities that require basic counting. It can “grow to millions of users and sustain a high transaction pace without incurring considerable expense to participating users,” according to Algorand.


Algorand is completely decentralized, with no centralized authority or single point of contact. Transactions are validated by network nodes, and each node has an equal vote in decision-making. As a result, Algorand is a highly decentralized system.

Because the selection is both random and confidential, everyone on the network gets an opportunity to be a member of the user committee that approves each block. There is no central committee, and its nodes are run by volunteers from all around the world.

How does Algorand function?

The usage of PPoS, a consensus mechanism that leverages a Byzantine agreement process, distinguishes Algorand from other blockchains. If a node is compromised, the native token ALGO possessed by network members is immediately safeguarded using unique keys.


Proof-of-work (PoW), Bitcoin’s consensus mechanism, necessitates a significant amount of energy and computational capacity to construct and validate new blocks. PPoS, on the other hand, enables for the faster and more efficient production and validation of new blocks. This is accomplished by picking ALGO holders at random to validate and approve each block in the chain. For each new block, a new group, or committee, is formed.

Only users with huge holdings of ALGO can conceivably participate in nefarious behaviors that could jeopardies the security of other users via the PPoS protocol. However, because the system is built on participant codependence, harmful behaviors would also result in a deterioration of their ALGO. As a result, such hostile action would be unprofitable for any majority holder.


Algorand is capable of processing 1,000 transactions per second, and all transactions are definitive and instantaneous. Algorand also features a fixed supply of 10 billion tokens to provide the network with an inflation-resistant mechanism. The vast majority of these tokens are currently held in reserve and have yet to be issued.

Structure of the Algorand protocol

The Algorand protocol is based on three key ideas:

  • Transactions: Transactions are the basic unit of account in the Algorand network. They are used to transfer value and are verified by all participating nodes in the network.
  • Blocks: Blocks are groups of transactions collected into a single unit and verified by the consensus algorithm.
  • Consensus: The consensus algorithm is responsible for verifying blocks and ensuring that they meet the requirements of the Algorand protocol. It also rewards users who participate in its operation.

The Algorand staking system is a pure proof-of-stake technique.

According to Algorand’s PPoS strategy, a user’s impact on the selection of a new block is proportional to the quantity of tokens they have in the system, commonly known as their stake. Each user has an equal chance of being picked, with the weight of their proposals and votes directly proportional to their stake.

Users are chosen at random and in secret for the purpose of proposing and voting on block proposals. The network’s security is thus linked to the honesty of the majority of its users in its economy. The system will stay secure as long as the majority of the money is in honest hands.

This method contrasts with other consensus processes such as PoW, DPoS, or BPoS, in which small parties within the economy are held accountable for the overall system’s security. In theory, a small number of users can prevent other users from using similar tactics.

Algorand’s method makes it nearly impossible for holders with minor stakes in the system to harm the entire network. Meanwhile, majority holders would not dare to act maliciously, as such acts would result in the devaluation of their own assets and a decrease in the purchase power of the currency.

Production of Algorand blocks under PPoS

Under Algorand’s PPoS method, new blocks are built in two stages. During the first phase, one token is chosen at random. The user in charge of proposing the next block is the owner of this token.

During the second phase, 1000 tokens are chosen at random from the total number of tokens in the system. The phase-2 committee is made up of the owners of these tokens, and they are in responsibility of accepting the block suggested by the user in phase 1.

A committee member may be chosen more than once. This also means that when it comes to approving the following block, a member will have more than one vote in the committee.

The second stage of Algorand’s block creation process was implemented to deal with any percentage of negative actors. By selecting 1000 tokens at random, the majority will override the bad actors’ harmful intentions and operate in accordance with the network’s rules.

ALGO is Algorand’s native cryptocurrency.

ALGO is the native money of the Algorand network. ALGO tokens are used to pay transaction fees and to reward users who help the network reach consensus.

Regardless of how many transactions you perform in a day, ALGO transactions take less than four seconds. Transaction fees are also kept to a minimum. Unlike Ethereum, which is infamous for its hefty gas prices, Algo transactions are extremely cheap.


How do I purchase ALGO cryptocurrency?

ALGO can be purchased in a variety of ways. You can buy it directly from another person in person or via the internet, just like you would any other cryptocurrency.

You could also hunt for a crypto ATM near you that supports ALGO. However, crypto ATM fees can be prohibitively high, and there’s no guarantee that you’ll be able to find a willing counterpart to conduct the exchange.


The simplest way to acquire ALGO is through a cryptocurrency exchange. Binance, Kraken, and Coinbase are some popular exchanges that provide ALGO. On these exchanges, you can purchase ALGO with a credit or debit card.

To do so, you must first obtain a crypto wallet in which to store the ALGO. Pera Wallet, My Algo, Coinbase, and Ledger are among wallets that support ALGO.


Once you’ve set up your wallet, you can now fill your wallet by finding an exchange that supports ALGO.


If you do not already have an account on the exchange, create one and get it validated. To begin your deal, choose “Algorand” from the list of assets. Input the fiat amount to purchase ALGO coins and preview your purchase before submitting it.

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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