Project LUCK Crypto Asset Exploration: Algorand (ALGO) Edition

Introduction

I am Sato, a member of Project LUCK! Project LUCK is a project launched within Mercury, Inc. (Representative Director: Satoshi Tsuki). The core members write various articles daily because we want to share what we have learned and communicate with our readers.

Theme of this article

Currently, various blockchain projects are emerging. Amidst this, "Algorand" was developed with the goal of becoming the "ideal blockchain."

In this article, I will explain what kind of project Algorand is and what kind of technology it possesses, in a way that is easy for beginners to understand, using analogies.

The Beginning of Algorand: A Genius Professor's Challenge

Algorand was created by Professor Silvio Micali of the Massachusetts Institute of Technology (MIT). He is a world-renowned authority on cryptographic technology who received the "Turing Award," often called the Nobel Prize of computer science.

Professor Micali wanted to solve the challenges faced by existing blockchains, especially the "trilemma." The "trilemma" refers to three important properties that a blockchain should have:

1. Security (safety)

2. Scalability (processing speed and capacity)

3. Decentralization (a mechanism where power is not concentrated)

This is the problem that it is extremely difficult to achieve these at a high level simultaneously. Algorand was born to take on this difficult challenge.

Pure Proof of Stake (PPoS)

The secret to Algorand's greatness lies in its unique transaction approval rule, "Pure Proof of Stake (PPoS)."

How does PPoS work?

In a blockchain, it is necessary to decide who approves transactions. With PPoS, anyone who holds Algorand's token, ALGO, can participate in this approval work without the need for validators or the like.

• Choosing representatives by lottery: Every time a new transaction is approved, a small number of representatives are chosen randomly and secretly from among those who hold ALGO, just like a "lottery."

• A chance for everyone: While the probability of being chosen increases slightly the more ALGO you hold, even if you hold a small amount, you have a chance to be selected. This prevents power from being concentrated in the hands of a few people.

What are the benefits of PPoS?

Thanks to this mechanism, Algorand achieves the following benefits.

• Ultra-fast & Low-cost: Transaction approval is completed in seconds, making it extremely fast, and fees can be as low as less than 1 yen, which is surprisingly cheap.

• High Security: Because representatives are chosen randomly and secretly, it is difficult for malicious actors to attack critical parts of the blockchain, such as the approval process.

• Peace of mind from "no forks": The blockchain almost never branches (forks). Since transactions are finalized immediately, you can complete transactions safely.

• True Decentralization: The barrier to entry for participating in transaction approval is set much lower than other blockchains, making it a system that is easy for many people to join.

Incidentally, Algorand is also characterized by the lack of penalties (slashing) for participants who make mistakes during the approval process, lowering the barrier to entry to make it easier for more people to participate.

What is Algorand used for?

Algorand is attracting attention, especially in the financial sector, by leveraging its technical capabilities.

1. Central Bank Digital Currencies (CBDC): These are digital versions of money issued by a country's central bank. Algorand is being considered worldwide as a technical foundation for CBDCs. For example, it has been used in projects with the Central Bank of Italy and as the foundation for payment platforms used to distribute humanitarian aid in places like Afghanistan.

2. Decentralized Finance (DeFi): DeFi allows financial transactions without intermediaries like banks. Services that allow for lending, borrowing, and token swapping are already running on Algorand. Its low fees and high-speed processing make it well-suited for DeFi.

3. Tokenization of Real-World Assets (RWA): RWA allows assets like real estate and artwork to be handled on the blockchain. On Algorand, platforms have emerged that allow users to purchase portions of real estate as tokens starting from small amounts.

4. Algorand Standard Assets (ASA): This is a mechanism that allows anyone, even without programming knowledge, to easily issue their own tokens (such as point cards, membership cards, game items, NFTs, etc.). This makes it easy to bring various ideas to life.

In addition, it is expected to be used in a wide range of fields, such as supply chain management for recording product production and distribution processes, and digital identity verification.

Algorand Ecosystem

The Role of the ALGO Token

The "ALGO" token is used within the Algorand network. Its main roles are as follows:

• Transaction Fees: Paid when conducting transactions on Algorand.

• Staking: By holding ALGO and participating in network operations, you can earn rewards.

• Governance: ALGO holders can participate in voting on the future of the network.

Algorand Foundation and Ecosystem

The Algorand Foundation plays a central role in promoting Algorand and supporting developers. By providing development tools and offering financial assistance to projects, they are creating an environment where new services can easily emerge on Algorand.

Algorand's Strengths and Challenges

Algorand's strength lies in its high technical capability (speed, low cost, and security) driven by PPoS. On the other hand, a challenge is that it still has fewer users and applications compared to other major blockchains. It needs to further increase its market awareness.

Summary

Algorand is an innovative blockchain founded by a brilliant MIT professor that aims to solve the 'trilemma'.

• Achieves fast, cheap, and secure transactions through its unique 'PPoS' technology.

• Expected to be a technology that shapes the future of finance, such as CBDCs and DeFi.

• Anyone can easily issue tokens with 'ASA'.

Algorand may play an important role in the digital society of the future. Keep an eye on its evolution!

Mercury Company Overview

Company Name: Mercury, Inc.
Representative: Satoshi Tsuki, President and Representative Director
Address:
150-6221
1-1 Sakuragaoka-cho, Shibuya-ku, Tokyo
Shibuya Sakura Stage, SHIBUYA Tower, 21st Floor
URL: https://coin-trade.cc/