Why Algorand?

In this section, we’ll explore key factors to consider when choosing a blockchain and evaluate how Algorand excels in each area. By the end, you’ll see why Algorand is a top choice for building your application.

Algorand provides institutional-grade blockchain infrastructure, offering high performance, security, and scalability. Designed for decentralized applications, digital assets, and financial solutions, it leverages a unique Pure Proof-of-Stake (PPoS) consensus mechanism to ensure fast finality, low transaction costs, and robust security. Whether you’re developing smart contracts, integrating blockchain into existing systems, or building enterprise solutions, Algorand delivers a seamless and efficient developer experience.

Our founding principles

The core principles that guide Algorand’s development include:

Security - A blockchain that cannot be manipulated by adversaries, even if they control a significant portion of the network
Scalability - High transaction throughput with minimal latency and low costs
Decentralization - A truly distributed network with no central authorities
Sustainability - Environmental responsibility through minimal energy consumption
Finality - Instant transaction finality without the possibility of forks

The consensus protocol

The problem with many blockchains is they sacrifice at least one of the key properties of security, scalability, and decentralization, known as the blockchain trilemma. Algorand addresses the blockchain trilemma with its unique PPoS mechanism, achieving a strong balance between security, scalability, and decentralization.

Algorand’s consensus protocol works by selecting a block proposer and a set of voting committees at each block round, to propose a block and validate the proposal, respectively. The proposer and committees are randomly chosen from the pool of all algo holders, and the likelihood of being chosen is proportional to the account’s stake in the network.

The technical specifics of Algorand’s consensus include:

Verifiable Random Function (VRF) - Algorand uses cryptographic sortition based on VRFs to randomly select users to participate in the consensus protocol. The VRF acts as a random number generator that provides a proof that the selection was truly random.
Byzantine Agreement Protocol - Once users are selected, they participate in a Byzantine agreement protocol that ensures consensus even if some participants are malicious.
Two-Phase Block Production:
- Propose Phase: Selected proposers suggest new blocks
- Soft Vote: Committee members vote on proposals
- Certify Vote: A different committee certifies the block
Cryptographic Self-Selection - Users privately check if they’re selected for committees using their private keys, without revealing themselves until necessary, preventing targeted attacks.
Committee Rotation - New committees are selected for each step of the consensus process, enhancing security.

Algorand consensus provides the following technical guarantees:

Fork-resistance: With overwhelming probability (>99.9%), no forks occur
Strong consistency: All users have the same view of the confirmed transactions
Liveness: The system continues to make progress even under severe network conditions

For more details, refer to Consensus Overview. You can also read the Official Algorand whitepaper for more technical indepth.

Proof-of-stake versus proof-of-work

Most blockchains these days fall into the general categories of proof-of-stake or proof-of-work.

Simply put, a proof-of-stake blockchain gives users who have more stake (who hold more of the underlying currency in the system) more influence in proposing and validating new blocks, usually through some sort of voting mechanism.

In proof-of-work, nodes race to solve a challenging cryptographic puzzle and serve up their solution alongside a new block proposal (this is referred to as “mining” and these nodes are called “miners”). The winner is rewarded with some of the underlying currency of the system and their block becomes part of the chain.

Because proof-of-work requires solving a cryptographic puzzle before anyone else, compute power plays a significant part in the strategy to win. This has led to many debates around energy consumption and its effects on the climate.

Proof-of-stake blockchains, including Algorand, require significantly less energy than proof-of-work chains. Algorand is carbon-negative due to its minimal energy consumption and offset initiatives.

The native currency

Each blockchain has its own native currency that plays a critical role in incentivizing good network behavior. Algorand’s native currency is called the Algo.

If you hold Algos, you can register to participate in consensus, which means that you will participate in the process of proposing and voting on new blocks.

The Algo also acts as a utility token. When you’re building an application, you need algos to pay transaction fees and to serve as minimum balance deposits if you want to store data on the blockchain. The cost of these fees and minimum balances is very low, fractions of a penny in most cases.

Fees

Fees are calculated based on the size of the transaction and a user can choose to augment a fee to help prioritize acceptance into a block when network traffic is high and blocks are consistently full. There is no concept of gas fees on Algorand.

Openness

Earlier, we compared a blockchain ledger that is distributed, to a traditional ledger that is owned by a single entity. Technically, a blockchain ledger could be owned and operated by just a few entities, but this wouldn’t be a very good blockchain since such a centralized set of nodes could easily manipulate the state of the blockchain. Algorand is completely open and permissionless. Anyone, anywhere in the world, who owns Algos can participate in consensus.

Post Quantum Readiness

Algorand is the leader in blockchain quantum resilience, already safeguarding the entire history of the chain against future threats of quantum computers through the implementation of FALCON signatures, a globally recognized post-quantum cryptography standard based on lattices. For more details, refer Leading on post-quantum technology

Node Types and Requirements

A node on Algorand is a computer running the Algorand software (algod) that participates in the Algorand network. Nodes play a crucial role in maintaining the blockchain by processing blocks, participating in the consensus protocol, or storing data. Algorand’s network consists of several types of nodes:

Relay Nodes: High-performance nodes that facilitate communication but don’t participate in consensus
- Recommended specs: 8+ CPU cores, 16+ GB RAM, 500GB+ SSD, 100Mbps+ connection
Participation Nodes: Nodes that participate in consensus by proposing and voting on blocks
- Recommended specs: 4+ CPU cores, 8+ GB RAM, 100GB+ SSD, 10Mbps+ connection
Non-participating Nodes: Nodes that just observe and validate the blockchain
- Recommended specs: 2+ CPU cores, 4+ GB RAM, 50GB+ SSD, 5Mbps+ connection

To run a node, checkout Nodekit Quickstart. For more details on node types, refer here.

Decentralization

Similarly, if all the people who are running nodes are the same company or set of companies then we find ourselves in a similar situation where we aren’t much better off than just having a central database controlled by a select few. On Algorand, since the protocol is open and permissionless, nodes can and do exist all over the world.

Metrics Portal

The Metrics Portal provides real-time data on the Algorand blockchain and its expanding ecosystem. It offers insights across various key areas, including transaction performance, decentralization, DeFi, NFTs, ecosystem activity, developer contributions, governance, research, blockchain explorers, and sustainability efforts.

Additional sources provide deeper analysis and comparisons, such as TPS rankings, node distribution, DeFi statistics, NFT sales, governance participation, and environmental impact. These insights are available through platforms like Nodely, DeFi Llama, Asalytic, Artemis, Messari, Nansen, and Carbon-Ratings.com, ensuring transparency for all stakeholders.

For latest data, visit Algorand Metrics.

Transparency

How do you know that anything that we are telling you here is true? You can check for yourself. All of the code for the core protocol is open source. Anyone can review it and contribute to it.

The Algorand source code

Forking (or lack of)

Forking is when a blockchain diverges into two separate paths. Sometimes this forking is intentional, like when a significant part of the community wants to change the fundamentals of the protocol. Other times this forking is accidental and occurs when two miners find a block at almost the same time. Eventually, one of the paths will be abandoned, which means that all transactions that occurred since that fork on the abandoned path (the orphaned chain) will be invalid. This has important implications for transaction finality, which we’ll talk about in a bit.

Algorand’s design ensures that the probability of forks is negligible under normal network conditions, making transaction finality effectively instant.

Technical Explanation of Fork Resistance

Algorand’s fork resistance comes from its consensus mechanism:

Cryptographic Sortition: Each user is selected with probability proportional to their stake
Leader Selection: Only one leader is selected to propose a block in each round
Committee Voting: A supermajority (>2/3) of committee votes is required to certify a block
Ephemeral Keys: New participation keys are generated for each round
Block Certificates: Each block contains cryptographic proof of committee approval

This design makes forking mathematically improbable (with probability < 10^-18 under reasonable assumptions).

Performance

The speed at which blocks are produced, the amount of transactions that can fit into a block, and when those transactions are considered final are important factors to consider when choosing a blockchain. For Algorand, performance is and will always be a key focus area for the core development team.

Throughput

You want to choose a blockchain that can scale and handle high throughput so that your users don’t experience long wait times when interacting with your application.

On Algorand, blocks are produced every 2.85 seconds and can hold up to 25,000 transactions, which results in a throughput of over 10,000 transactions per second (10,000 TPS).

State Proofs

Algorand State Proofs provide cryptographic proof of state changes on the Algorand blockchain, enabling trustless verification of recent transactions without relying on intermediaries. Generated by participating nodes, these proofs summarize transactions over 256-round intervals, using Vector Commitment trees for efficiency. The compact proofs are validated through Algorand’s consensus and facilitate secure interoperability with other blockchain networks.For more details, refer State Proofs Overview

Finality

In proof-of-work blockchains, since forking is a possibility, transactions can’t be considered final until a certain amount of time passes and the likelihood of the transaction being on an orphaned chain is practically zero. This means that the actual throughput of this type of blockchain is caveated by a delay in finality. Downstream processes in an application must take this into account to avoid compounding issues if a transaction ends up being invalid.

As we mentioned earlier, Algorand does not have forking so transactions are final as soon as they are confirmed in a block.

Core features

Algorand makes it easy to tokenize, transfer, and program conditions on any instrument of value. Create fungible and nonfungible tokens with a single transaction (no smart contract code required). Or program sophisticated decentralized applications (dApps) with Algorand smart contracts.

Algorand Standard Assets (ASA)

Algorand’s native token standard provides built-in functionality for creating and managing assets:

Fungible tokens: Create tokens with divisibility up to 19 decimal places
Non-fungible tokens (NFTs): Create unique digital assets with built-in functionality
Asset parameters: Configure freeze, clawback, and manager capabilities
Metadata: Associate metadata directly with assets
Simple creation: Create with a single transaction, no smart contract required
Efficient transfers: Optimized for high-throughput transfers
Role-based control: Define manager, reserve, freeze, and clawback addresses

Smart Contracts

Algorand offers two types of smart contracts:

Smart Signatures (LogicSigs): Simple, stateless contracts that control an account with predefined logic
- High throughput, low complexity
- Gas-free execution
- Ideal for escrow and multisig scenarios
Smart Contracts: Stateful contracts written in Algorand Python or Typescript
- Global and local state storage
- Application calls and inner transactions
- Complex business logic implementation

Developer tools

Developers can write smart contracts in Algorand Python and Algorand Typescript to connect to on-chain assets or applications.

AlgoKit

You can build your first dApp in 10 Minutes with AlgoKit Algokit is a one stop shop solution to build, test, and deploy applications on the Algorand blockchain with tools that integrate into your workflow

Benefits of AlgoKit

Instant setup: Start coding in minutes with automated dependency installation and pre-configured project templates, giving you a fully-configured project with AlgoKit.
Complete development tools: Build with ready-made smart contracts, APIs, debugging tools, and testing frameworks. AlgoKit allows you to concentrate on innovation and functionality.
Developer support: Access documentation, AI tools, and an active developer community.

For more details, refer Algokit Quickstart guide.

Lora

AlgoKit lora is a powerful visual tool designed to streamline the Algorand local development experience. It acts as both a network explorer and a tool for building and testing your Algorand applications.

You can access lora by visiting here in your browser or by running algokit explore when you have the AlgoKit CLI installed.

Pera

Pera is a non-custodial and user-friendly wallet for the Algorand blockchain. It offers several key features:

Built-in browser for dApps: This allows users to easily interact with decentralized applications on the Algorand network.
Secure storage: As a non-custodial wallet, users have full control over their private keys and assets.
Easy connectivity: Pera supports PeraConnect, enabling seamless integration with various Algorand dApps.

Refer Pera Docs for more details.

Nodekit

NodeKit is a TUI for managing Algorand nodes. Its a one stop shop for managing Algorand nodes, including node creation, configuration, and management. Refer Nodekit Overview for more details.

The team & ecosystem

The Algorand protocol is completely open source, so why can’t anyone just go create a copy and create another Algorand-like blockchain? Well they absolutely can, but then they’ll have to convince everyone why the new one is better. As we’ve seen, the technology is a critical component to a blockchain, but so is the ecosystem built around it.

Algorand has some of the best researchers and developers in the world actively developing and improving Algorand’s core protocol. The Algorand Foundation invests heavily in strategy around governance and growth of the ecosystem to promote long-term value for all algo holders. This part is not easy to replicate.

Governance

The Algorand Foundation, a non-profit organization that launched the Algorand MainNet, governs the Algorand network and is committed to continuing to decentralize it and put more decision-making into the hands of the Algorand community at large.