ALGORAND, THE NEXT GENERATION FINANCE
Money has really evolved over time. The concept of money has grown from the system of exchanging goods for other goods, which is known as trade by barter, to the use of precious and valuable metal like silver and gold.
Presently cryptocurrency is making waves and taking over. It is seen as the future of money, and the rapid growth of cryptocurrency is giving some good reasons why it is the future of money.
THE FUTURE OF FINANCE: CRYPTOCURRENCY
Reasons why the cryptocurrency is the future of money
1. Everybody can gain access to their Finance
2. Decentralization
3. It is transparent on public blockchain, all transactions can be seen by everyone.
4. Privacy
5. Security
With that in mind, let’s take a look at the economy. Gold has a market capitalization of eight trillion dollars, which is ten percent of the total GDP of all countries.
On the other hand, the total market capitalization of the cryptocurrency market is $ 313 million, which is only four percent of the market capitalization of gold.
Bitcoin only has a market cap of $ 200 million and is dominating the cryptocurrency market with 64%, while Ethereum and Tethered dollars follow closely with 11% and 3%, respectively.
The total number of people not using cryptocurrency in the world is less than one percent of the world’s total population. Hence, there is immense development potential in cryptocurrency.
Since there has to be a massive adoption of cryptocurrency for it to grow. The use of cryptocurrency should be done by more people. The scalability issue for most cryptocurrencies is a vital problem, using Bitcoin and Ethereum as examples,
In 2009, Bitcoin was created by Satoshi Nakamoto, and it brought about the first development of the blockchain technology and pioneering cryptocurrency. But then the coin has two sides. Some people believe that it should replace the fiat currency as a medium of exchange so that it can flow, and more people should use it, while more people now have it as a store of value for long-term investments. This is also a result of the time it takes to process transactions.
However, it is faster for transactions across borders than fiat banking systems. Yet, it cannot be used for daily transactions because transactions can take up to ten minutes before it is confirmed.
Nobody will like to for up to ten minutes to confirm a transaction for a cup of coffee in our present society where everyone wants fast responses. As a result, more people own Bitcoin, making it more scarce and not allowing everyone to be financially included.
Transaction fees for Bitcoin will likely go higher in the coming time when all the Bitcoin is mined, and then the miners will have to merge together to continue to make a profit, and this might make it more centralized.
The finding for scalability solution of Bitcoin by many people has resulted in the recent increase of many Layer 2 solutions and other cryptocurrencies.
The first cryptocurrency to use smart contract was Ethereum. These are programs that run automatically as soon as some decided conditions are met. The use of smart contracts has extended the use of blockchain technology beyond cryptocurrency, as many decentralized tokens and applications are based on the Ethereum blockchain.
Although, the Ethereum has scalability issues as it uses a proof-of-work consensus algorithm like Bitcoin. Transactions can take up most of the time, and miners prioritize transactions with higher fees. The founder of Ethereum, Vitalik Buterin, proposed the blockchain trilemma that a blockchain can only have two aspects such as decentralization, security, and scalability, but not all three.
On second thought, to solve the scalability problem, it was decided that Ethereum would switch to a delegated proof-of-stake algorithm.
This provides better scalability for tokens and the applications based on the Ethereum blockchain but becomes more centralized as stake pools are delegated based on a certain number of stakes. It challenging to remove decentralization for scalability because it will seem to be like a fiat banking system. With the need to solve the issue of the blockchain trilemma, Algorand came to solve all of it.
ALGORAND FIRST PURE-PROOF OF STAKE BLOCKCHAIN
Silvio Micoli, CEO of Algorand, made aware that a blockchain only needs a subset of the participating nodes to reach consensus, and the Algorand is based on this principle. Anyone can run a node in the Algorand by just having the native tokens, which is called ALGO. Subsets are then selected at random to check transactions and blocks. This makes the greater decentralization, where nodes work together rather than compete, and more can be done more efficiently in less time.
ALGO is a cryptocurrency that enables greater financial inclusion as transactions are faster and take no more than five seconds per transaction. An average of thousands of transactions can be processed per second. This makes it useful for everyday transactions and can become an extensively used currency as a store of exchange and assets with a nominal transaction fee. It is easy to build other cryptocurrency and digital assets on Algorand blockchain with the assurance of having a decentralized, secure, and scalable project.
Some examples are the Marshal Sovereign (SOV), a local currency of the Marshal Islands that is built on the Algorand blockchain, and can be used at the same time with the Fiat.
Another example is the stable coin Tether Dollar (USDT), which is the third-largest cryptocurrency in terms of market capitalization and is already based on another blockchain. Tether Dollar on Algorand Blockchain offers better scalability with lower transaction fees, which is an advantage over others.
Circle recently launched another stable coin based on Algorand blockchain. This shows that more and more projects will be on Algorand blockchain. With the ongoing pattern of decentralized financing, the fiat banking system will gradually become a past system as there are lots of cryptocurrencies that are available to solve the blockchain trilemma on Algorand blockchain.
The decentralized ecosystem on Algorand blockchain is the next step in the evolution of money.
For more information visit
https://www.algorand.com/
https://twitter.com/algorand
https://medium.com/algorand
Written By Naphtali Dabuk
