Algorand review: pure proof of stake and fast finality

Algorand was founded by Silvio Micali, a professor at MIT and a winner of the Turing Award for his work in cryptography. Its main network launched in 2019.

Pure proof of stake

Algorand uses a consensus it calls pure proof of stake. In each round, a small committee of participants is selected at random, in proportion to their stake, using verifiable random functions — a cryptographic lottery whose result each participant can prove without revealing it in advance. Because nobody knows the committee ahead of time, it is hard to target.

Fast finality

A block is final as soon as it is added: the network is designed not to fork. Transactions settle in a few seconds with small fees.

Features

• Smart contracts and a standard for issued assets.
• Atomic transfers — several transfers that either all succeed or all fail.
• A focus on payments and on applications that need predictable settlement.

The ALGO token

ALGO pays fees, is used for participation in consensus and in the network's governance programme.

Why "no forks" matters

On networks with probabilistic finality, a transaction becomes safer with every new block, and services wait for several confirmations. With immediate finality, a transaction in a block is settled at once. This simplifies payments and applications that need to know for certain that a transfer happened — for example, exchanges crediting deposits.

Risks

Adoption compared with larger smart contract platforms, changes in the economic model, and competition among fast layer 1 networks.

The market is on the ALGO coin page.

This review describes the project's design and is not investment advice. Cryptocurrency prices can be highly volatile.