Created by Massachusetts Institute of Technology professor Silvio Micali in 2017, Algorand (CRYPTO: ALGO) is a relatively new player on the cryptocurrency scene. Algorand’s main network was made public in mid-2019, giving this cryptocurrency network a total time in the market of only about a year and a half.
Sure, the cryptocurrency world operates at light speed. A year and a half might be a lifetime as far as cryptocurrencies or blockchain networks are concerned. However, the fact that Algo, the native cryptocurrency of the Algorand network, has grown to become a top-25 cryptocurrency by market cap (just under $12 billion at the time of this writing) is impressive.
As with other cryptocurrency networks, Algorand’s purpose is to facilitate efficient and smooth transactions. However, investors note that this network has a number of other features that make it stand out among its cryptocurrency peers.
Let’s dive into a few key reasons cryptocurrency enthusiasts may want to consider owning some Algo right now. Image source: Getty Images. 1. Interoperability is increasingly important
Cryptocurrency networks have generally focused on developing unique blockchain networks providing unique benefits to users and investors. The advent of relatively “closed” cryptocurrency ecosystems has forced investors to consider one particular cryptocurrency or blockchain network over another.
In the case of Algorand, a paradigm shift is underway. It is well known for its ability to work across various blockchain networks. That is, developers on Algorand can create digital assets or smart contracts on the blockchain’s Layer-1 network. For reference, a Layer-1 cryptocurrency technology is an actual blockchain, while Layer-2 technologies add an abstract operating model that helps increase the efficiency and scalability of the Layer-1 assets. Algorand’s Layer-1 network provides a blockchain-based ecosystem that allows fungible and non-fungible tokens from other blockchains to communicate with each other.
In other words, Algorand has created a way to launch multichain projects. Developers can build a range of applications that work well across various blockchains. This feature — known as interoperability — allows for a level of connectivity most other blockchains do not have. External collaboration could very well be the future of where blockchain networks are headed. In this regard, Algorand appears to have a leg up on the competition.
For cryptocurrency investors bullish on connectivity within a decentralized space, Algorand’s network is certainly an intriguing option to consider. 2. Smart contracts and use cases provide utility
Among the cryptocurrency networks that are gaining attention right now for their smart contracts and use cases is Algorand. Indeed, the ability for cryptocurrency users to engage in various value-added activities is increasingly important.
Sure, as a store of value, an argument can be made to own and hold cryptocurrency. However, for those looking at cryptocurrency investments as representative of a truly innovative technological shift, Algorand is an intriguing choice.
The Algorand network uses two types of smart contracts to enable transactions without a centralized third party: stateless smart contracts and stateful smart contracts. Stateless smart contracts are among those that investors might already be familiar with. These smart contracts facilitate various transactions to be authorized when certain agreed-upon conditions are met. Stateful smart contracts, on the other hand, are where data can be stored in perpetuity and can be used for broader purposes.
On the basis of these smart contracts, various use cases are possible. These range from stablecoins being launched — USD Coin (CRYPTO: USDC) and Tether (CRYPTO: USDT) are two prominent examples — to non-fungible tokens (NFTs), decentralized finance (DeFi) applications, and a range of other uses.
Algorand is a fast-growing network in this regard, powered by the Algo token. Accordingly, investors in Algo are generally keen on the utility the Algorand network provides relative to its cryptocurrency peers. 3. Algorand’s growth potential is impressive
One of the factors cryptocurrency investors and traders will like with Algo is the positive price momentum it has seen of late. It has been a five-bagger over the past year, and a double-up over the past three months.
This sort of growth has propelled Algorand higher in the cryptocurrency rankings. As a relatively young token, it has the sort of recent momentum that investors banking on future upside potential should appreciate.
One of the key drivers of this momentum over the past year has been Algo’s listing on prominent exchanges. Coinbase Global listed Algo in June of 2020, a move that brought near-immediate credence to this cryptocurrency and its network. Algo prices also spiked higher this week as the leading cryptocurrency exchange in South Korea added support for the Algo/South Korean won trading pair.
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