Investing Idea: Algorand (ALGO)


Many of today’s cryptocurrencies are struggling to solve all of the three main pillars of blockchain technology: decentralization, security, and scalability.

Blockchain Trilemma
The blockchain trilemma faced by most cryptocurrencies | Source: Steemit

For instance, Bitcoin (BTC/USD) is fully decentralized and secure but it is having trouble scaling. The leading cryptocurrency’s transaction rate stands at 3.8 transactions per second (TPS). This is far from Visa’s rate of 1,700 TPS.

Another example is Ripple (XRP/USD). The Standard as known to some can be considered as secure and scalable. It’s throughput is at an impressive 1,500 TPS. Nevertheless, there are concerns about the cryptocurrency’s trustless nature or decentralization.

Cardano (ADA/USD) appears to be solving the blockchain trilemma. However, the cryptocurrency is still at its nascent stages of development and it is far from reaching its fullest potential.

Enter Algorand (ALGO/USD). The relatively new cryptocurrency was built to address the three issues that plague most cryptocurrencies. The end purpose is two-fold. First, it was developed to provide a decentralized network for fast (1,000 TPS), secure, and cost-effective transactions. In addition to that, it also enables users to efficiently tokenize assets with maximum transparency.

Algorand Value Metrics

  • Current Price: $0.569657
  • All-Time High: $3.28
  • All-Time Low: $0.514144
  • YTD Performance: -82.63%
  • Market Cap: $141.219 million
  • Market Cap Ranking: 42nd
  • ROI Since Launch: -82.63%
  • Primary Markets: Hotbit, Bilaxy, MXC, Bit-Z, Binance
Algorand chart
Algorand crypto chart | Source: CoinMarketCap

Investment Case

Algorand is positioning itself to compete against Stellar (XLM/USD). Its aim is to build a decentralized infrastructure where users can make instantaneous payments. Like Stellar, Algorand also offers secure and cheap transactions. According to Binance, Algorand’s network is so efficient that it charges a minimum of 0.001 Algos per transaction.

Similar to Stellar, Algorand is also targeting users from emerging markets who are looking for affordable cross-border payment solutions that are easy to use.

What sets Algorand apart from the competition is that it enables users to create multiple transactions in advance. This is a huge development for cryptocurrencies that pose as a borderless payment solution.

Vesting Schedule Feature Puts Algorand Ahead of the Pack

Today, most cryptocurrencies require the payor to hit the send button to initiate the transaction. Sure, there are smart contracts that can collect payments from participants once a certain condition is met. However, these are mostly one and done deals.

Algorand revolutionizes payment schemes in the cryptocurrency world by enabling users to generate a vesting schedule by creating signed transactions in advance. This feature is similar to how post-dated cheques work.

The payor creates a number of signed transactions with different block periods before addressing them to the payee. The payee then broadcasts a transaction as soon as a block period becomes valid. As a result, the payee receives the payment in a timely fashion.

This feature offers a myriad of use cases. For instance, migrant workers can schedule monthly remittances to their families who are living halfway across the world. Companies can also leverage this functionality to collect recurring payments or subscription fees. Banks and financial institutions can also rely on Algorand to issue loans with scheduled repayment workflows.

This is just the tip of the iceberg. With the vesting schedule feature, users can create complex payment systems. This functionality works well with Algorand’s aim to tokenize assets.

Real Estate Asset Tokenization is Also Part of Algorand’s Repertoire

Retail investors have found it difficult to penetrate the world of real estate investing. In addition to huge capital requirements, 80% of the commercial real estate market in the US is under the control of institutions.

Algorand can change that by allowing sellers to tokenize their real estate assets through AssetBlock. The company is building a layer 2 application on the Algorand blockchain to facilitate the sale of digital assets to private investors. On top of that, the financial services firm is also offering crypto holders the opportunity to access loans and purchase real estate.

AssetBlock’s application leverages Algorand’s non-interactive trade mechanism. With this feature, sellers only need to post their properties for sale on the network. The sale takes place as soon as a buyer agrees with the price. The trade happens without the additional involvement of sellers.

The Bottom Line

All in all, Algorand offers attractive features that put the cryptocurrency way ahead of its competitors.
It solves the blockchain trilemma and offers a secure, fast, and cost-effective network for borderless transactions. Along with these next generation capabilities, the cryptocurrency allows users to create a vesting schedule and make payments in advance. Lastly, the Algorand network also enables sellers to tokenize their real estate properties and find trade partners with limited interaction.
In short, the crypto token offers numerous use cases enroute to achieving its mission of a borderless economy. This is our investment case for Algorand.


Disclaimer: The author does not own Algorand.
Featured image courtesy of Shutterstock.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.