What Is Algorand ?
Algorand is an entirely permissionless and decentralised public blockchain. Anyone can join the network, participate in the protocol, and use the blockchain to transact and generate blocks without needing a central authority’s permission. All of the data is public, so any participant can view the details of every block and write a transaction in a future block.
Many users will be familiar with Bitcoin, the first permissionless blockchain, whose revolutionary protocol has inspired many to build new, decentralised consensus solutions. Like Bitcoin, Algorand offers a protocol that opens up its network to everyone by design, in contrast to permissioned blockchain systems, where the power of block generation is with a small set of authorities, and most users do not have access to it.
How is different to Bitcoin?
Algorand also offers solutions to some of the limitations of Bitcoin. Some argue that Bitcoin’s proof-of-work protocol and its incentives have led to the power of block generation concentrating into just a few mining pools, with little overlap between those who mine and those who transact. The entry cost for participating in block generation has become too high for most users.
By contrast, the Algorand blockchain has only one class of users, employing a pure proof-of-stake protocol to ensure that every user can play any role in the network in proportion to their stake. In other words, all users who hold ALGOs (the native token) are automatically eligible to participate in all functionalities of the protocol, including proposing and voting on blocks. Although users can choose to use the blockchain solely to transact with ALGOs, the protocol is designed to minimise the cost of participation and thereby increase true decentralization and trustless consensus. That way, there is no need for users conducting high-value transactions or posting high-value assets on Algorand’s blockchain to rely on a small set of consensus participants remaining honest and not censoring their transactions.
Learn more about Algorand and how it works here.