Algorand (ALGO-USD) is a popular decentralized finance (DeFi) cryptocurrency. It has a market cap of about $5.6 billion as of Feb. 20. ALGO is ranked as the 28th largest crypto in the list of all the largest market cap cryptocurrencies kept by CoinMarketCap.
The crypto uses proof-of-stake validation rather than crypto mining to validate its transactions. This sets it apart from some very large cryptocurrencies like Bitcoin (BTC-USD) and even Ethereum (ETH-USD).
This leaves Algorand as one of a few eco-friendly cryptocurrencies. Its system does not use a lot of energy from electricity production to validate cryptocurrency transactions on its platform.
For example, one reason for this is the efficient Algorand blockchain design. It has a bottom-up architecture put together by a leading crypto expert, Silvio Micali.
Silvio Micali, Algorand’s Founder
Silvio Micali, a professor of computer science at the Massachusetts Institute of Technology (MIT), founded Algorand. He has been been a member of the faculty at MIT’s Electrical Engineering and Computer Science Department since 1983.
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Prior to starting Algorand in 2017, he was a leading cryptography scientist, researcher and critical thinker. He developed many of the protocols that are the foundations of modern cryptography.
He designed Alogrand to combine encryption with economic models to create an efficient and secure Defi blockchain system. The blockchain allows smart contracts and financial ledger technology to provide economic returns to users through Algorand based decentralized application (dApp) software.
How Algorand Is Uniquely Designed
In a revealing interview he gave to Forbes magazine last year, Professor Micali discussed the key feature of Algorand. He called it “cryptographic sortition.” He described this unique aspect of Algorand as its “secret sauce.”
Therefore, this gets around one of the key hackable problems with blockchains. This is that an adversary can know in advance who is going to generate the next block.
Most blockchains use a “round-robin” procedure to choose the next block writer. But Algorand uses “cryptographic sortition” to get around this issue, which is a more secure method.
As a result, Algorand can operate much more efficiently. It can function very well on a large scale, and without any issues relating to hackability. This is why it is so popular in the DeFi arena.
Recent Developments at ALGO
Recently, Algorand has been in the news for its cooperation with Koibanx, a leading Latin American asset tokenization, and blockchain financial infrastructure company. Koibanx is the company that signed a deal on Aug. 31, 2021 with El Salvador.
I wrote about this recently in my article on ALGO. El Salvador became the first country to adopt Bitcoin as legal tender using Algorand as the infrastructure blockchain.
This is also one reason why a major hedge fund in New York is backing Algorand as one of the potential winners in the crypto space.
Therefore, the bottom line is this: Algorand has a bottom-up design from a well-known crypto expert. It has huge potential to lead to major developments in the DeFi space.
As a result, long-term investors in the crypto space may want to pay attention to developments with this cryptocurrency.
On the date of publication, Mark R. Hake did not hold any position (either directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Mark Hake writes about personal finance on mrhake.medium.com and Newsbreak.com and runs the Total Yield Value Guide which you can review here.
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