Ethereum is one of the biggest names you can hear in the world of cryptocurrency. It is basically the second-largest blockchain and currency after Bitсoin. Be that as it may, it has its own challenges. Ethereum has been trying to solve the speed and security issue to some extent, but the one thing that is still left to be addressed is the scalability of the network, which is measured by transactions per second or TPS. And that is where Algorand comes in.
Algorand is both a digital currency and blockchain platform. The Algorand platform is designed to process many transactions quickly. It can host other cryptocurrencies and blockchain-based projects, making it a direct competitor to Ethereum. ALGO, the platform’s native currency, is used to secure the Algorand blockchain and pay processing fees for Algorand-based transactions. Algorand is an open-source blockchain, meaning that anyone can view and contribute to the platform’s code. It uses an operating protocol called pure proof-of-stake, which recruits network operators from the entire pool of ALGO coin holders.
What makes Algorand better than Ethereum?
What makes Algorand stand out is its speed and advanced capabilities. It is fast, cheap, decentralized, and carbon negative, and it has advanced smart contract capabilities. Algorand can process thousands of transactions per second with instant finality and with very low transaction fees, while other blockchains can be much more expensive.
Transactions Per Second
Major cryptocurrencies like Ethereum have been trying to solve the speed and security issue to some extent but the one thing that is still left to be addressed is the scalability of the network which is measured by transactions per second or TPS:
While the Ethereum network can do up to 13 TPS, Algorand can currently process up to 1,300 TPS and aims to process up to 3,000 TPS in the near future. Algorand will also add “instant finality” to its blockchain, which means transactions can never be contradicted, modified, or reversed. This feature will significantly improve the scalability of the network.
Power Usage
Every cryptocurrency works on a consensus mechanism that approves or disapproves each user-initiated transaction on its network. Legacy cryptos like Ethereum work on a PoW (proof of work) mechanism which requires huge computing power and, in turn, consumes more electricity.
Another consensus mechanism is the PoS (proof of stake), which is less power-intensive.
Ethereum is trying to shift toward the more energy-efficient PoS mechanism, but it is not yet fully operational. Algorand, on the other hand, is more cost-effective and energy-efficient than Ethereum, thanks to the pure PoS system.
The pure PoS system that Algorand implements randomly selects committees from the participating ALGO holders to validate and approve the next block in the chain. This randomization is a result of a unique cryptographic tool called the VRF (Verifiable Random function) invented by Algorand’s founder, which seeks to solve the blockchain trilemma.
Staking Rewards
Through various improvements, including the unique pure-proof-of-stake (PPoS) approach used to reach decentralized consensus, the Algorand blockchain outperforms preceding blockchain protocols. PPoS is designed to avoid the issue of the “rich growing richer.” In essence, whereas PoS pays miners with the highest stake, PPoS selects miners at random, regardless of their investment in the system.
NFT Marketplace
As non-fungible tokens are getting more and more popular, Algorand provides fast and affordable options with low fees, no forking, and minimal carbon footprints. Algorand’s low transaction fees, near instant transaction finality, and decentralization by design ensure a frictionless and accessible NFT experience for both buyers and sellers.
In comparison to other blockchains, the transaction cost of minting an NFT on Algorand can be as low as .001 ALGO due to the innovative PPoS algorithm. With the same capabilities as other popular chains, Algorand allows users to tokenize a high volume of NFTs without the harsh environmental impact and high network fees.
