Why use Algorand Blockchain

In this article, we will discuss how Algorand has evolved and why it should be used in the Blockchain Industry for DApps.

Algorand Overview

The Algorand Blockchain was created by Silvio Micali and a team of leading scientists as an ecosystem that is more open, inclusive, scalable, decentralized, and secure than other blockchains on the market.

The Algorand blockchain uses a decentralized Byzantine agreement protocol that uses pure proof of stake (PPOs). This means that it can tolerate malicious users, achieving consensus without a central authority, as long as a supermajority of the stake is in non-malicious hands. This protocol is very fast and requires minimal computational power per node, giving it the ability to finalize transactions efficiently.

Why Algorand

The purpose of decentralized platforms for transactions is to enable speed, scalability, and security. Algorand being the first-ever permissionless pure proof of stake protocol on the Blockchain, the performance is phenomenal. Unlike other Blockchain protocols that have very high costs of transactions, Algorand makes it comfortable and cheap with low transaction costs.

Algorand is a smart contract platform that is similar to Ethereum, but different with some key differences and advantages over others.

Smart Contracts enable the disruption of economies and the creation of new business models across different industries with efficient and automated transactions and applications, allowing for a trustless execution of an agreement.

Advantages of Algorand Blockchain over others

Algorand provides pure decentralization, speed, scalability, low transaction fee, and security. Algorand’s pure proof of stake has been a game-changer in the industry.

Where or how does Algorand make the difference?

  • Every token holder with at least 1 Algo in their account can choose to participate, in which case they can be randomly chosen or selected to propose and add new blocks to the chain.
  • The more tokens one holds, the more likely it is to be chosen to vote
  • To participate in a consensus, one only needs to keep their Algos in their official wallet and declare availability through a special transaction, in other words, it is called “Going Online”

Let us take a look at how Algorand’s Pure Proof-Of-Stake has made a major difference.

  • It enhances security, an attacker cannot know which block is beforehand, therefore making it impossible to trace and hack
  • It promotes decentralization, no complex calculations are needed so anyone can participate in the consensus process without needing specialized equipment’s or high energy usage
  • Algorand transactions are fast and less expensive, taking about 5 seconds to confirm transactions with an average fee of less than $0.001, unlike other Blockchain protocols that can take up to 15 seconds for transaction confirmations and about $15 dollars for transaction fee which is outrageous. Algorand is both faster and cheaper.

The fact that transactions are immediately final and by splitting the smart contracts into two layers:

Layer-1 is used for simple On-Chain smart contracts, Atomic transfers, and Swaps. Some examples of Algorand smart contracts at Layer-1 called ASC1 include:

  • Post and Sale transactions
  • Securitized Loans

  • Accredited-only transactions and;
  • Multi Multi-sig Wallet

Algorand’s Smart Contracts (ASC1s) are trustless programs that execute on chain, where users can be confident that the program was run without error and the results were not tampered with. They are integrated into Algorand’s Layer-1, inheriting the same powerful speed, scale, finality, and security as the Algorand platform itself, and are cost effective and error-free. ASC1s have the ability to automatically enforce custom rules and logic, from simply defining how assets can be transferred to complex application logic and flow. 

ASC1 Unique Functionality:

  • Stateless and Stateful Implementation, with stateless executing transactional approvals while stateful allows for the building of complex applications using TEAL
  • Scalable, Fast & Secure Execution, ASC1s operate at over 1,000TPS and are final in under 5 seconds on a platform that is verified not to fork
  • Reduced Risk with instant Settlement through trustless execution
  • Low cost to execute with transactions that have the same fee as any other transaction on the Algorand blockchain at .001 Algos
  • Low barrier to entry and increased speed to market with easier development and simplified templates for stateless smart contracts and examples of different complex custom DApps for Stateful Smart Contracts (i.e. dApps for Voting, Stablecoins, Auctions, Crowdfunding)
  • Flexible Implementation where ASC1s can be applied to specific transactions, all transactions from an account, or fuly powerful rich dApps

Algorand has implemented a new universal architecture for Layer-1 written in a brand-new language called TEAL (Transaction Execution Approval Language). This universal architecture simplifies the creation of smart contracts or new tokens called Algorand Standard Assets also known as ASA, this works just like the native token Algo.

Algorand Standard Assets (ASA) provide a standardized, Layer-1 mechanism to represent any type of asset on the Algorand blockchain. These can include fungible, non-fungible, restricted fungible and restricted non fungible assets.

In today’s economy, there remain many issues when it comes to the digitalization of assets. These challenges include:

  • Access to global, digital markets
  • 24x7 transferability
  • Instantaneous settlement
  • Ease and enforceability of asset control
  • Efficiency of administration, such as compliance and reporting

The universal architecture also removes other malfunction risks and also guarantee that the execution of the smart contracts does not impede the performance of the blockchain.

Let us take a look at some of ASA’s unique functionalities:

  • ASAs are incredibly fast and secure, as they are built directly into Algorand’s Layer-1
  • ASAs are low on cost of execution, due to Algorand’s miniscule transaction fees
  • Easy and simple asset issuance for developers and enterprises
  • Universal interoperability of all assets issued on Algorand

Example of Asset types:

ASAs most exciting use-case:

  • Asser tokenization

  • Democratize access to investments
  • Disintermediate cross border transactions

For more complex smart contracts that often require longer execution time or access to Off-Chain data (Layer-1 Off-Chain), these smart contracts are executed in Off-Chain in parallel with the Block creation. Once they are executed, only the results and a certificate validating them is added to the chain. The block production speed is unaffected.

Algorand also has something interesting called Co-Chains, Co-Chains are private Blockchains built on the Algorand Protocol, they can be utilized by organizations that wanted their Blockchains. It is accessible only by its members. This Co-Chain idea already exists in other Blockchain protocols, but the implementation usually leads to the isolation of the users of the private Blockchain, Algorand solves this problem by having built in the ability to communicate with the other Co-Chains or the Main-Chain and the world at large, In this way, what needs to remain private does, but at the same time, the Co-Chain users can also transfer information to other chains around the world.

Some Examples of Applications that can be Built with ASC

Let us take a look at some of the Applications that can be built using the Algorand Smart Contracts:

  • Automating sales that anyone can purchase from you without requiring any involvement from your side
  • Make a loan secured by the collateral of the borrower. If the borrower fails to pay, then the lender takes over the collateral
  • Conduct an automated crowdfunding project with a preset limit
  • Multi Multi-sig wallets that can be managed by multiple groups

We have earlier talked about some of the advantages of Algorand with its new consensus protocol (Scalability). Algorand Scalability offers a lot, and as such here are some of the advantages:

  • No computation resources wasted solving Cryptographic puzzles
  • Only a small subset of users selected to participate each time a new block is created
  • The number of selected users does not change as the total number of network users increases
  • Users do not need to communicate with others to determine whether they are selected
  • The total communication cost of the network scales linearly
  • Blocks typically finalize within seconds

Algorand Blockchain Use-Cases

Let us take a look at some of the use-cases of the Algorand Blockchain:

  • Payment Processing
  • Supply Chain
  • Real Estate
  • Health Care
  • Government

  • Digital Voting
  • Immutable Data Backup


The Algorand Blockchain as we have seen is a big achievement, improvement, and advantage to the Blockchain adoption. With so many use-cases and partnerships, we can say that Algorand solves so many existing Blockchain problems and as such more people adopt the Algorand Blockchain Protocol.