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Algorand (ALGO): Explained – How It Works and Its Significance in 2025
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Algorand (ALGO): Explained – How It Works and Its Significance in 2025

Algorand stands out as one of the most advanced blockchain ecosystems in the crypto space, solving the blockchain trilemma with its revolutionary consensus. Created by a Turing Award winner, this quantum-resistant blockchain offers maximum security, exceptional scalability, and true decentralization. Algorand emerges as a sustainable and high-performing alternative to traditional blockchains.

Written by Gaston Cuny

Translated on July 15, 2025 at 14:15 by Gaston Cuny

Algorand logo on blue background.
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What is Algorand (ALGO)?

Algorand is a Layer 1 blockchain designed to definitively solve the blockchain trilemma identified by Vitalik Buterin. This decentralized infrastructure uses a unique consensus mechanism called Pure Proof of Stake (PPoS). This allows it to simultaneously achieve maximum security, exceptional scalability, and true decentralization.

The uniqueness of Algorand lies in its ability to offer instant finality for transactions. This eliminates the risks of block reorganization that affect other blockchains. This technology can process more than 6,000 transactions per second with fees lower than $0.001. Algorand is thus positioned as one of the most efficient solutions in the market.

The Algorand ecosystem is also distinguished by its exceptional environmental commitment. The blockchain not only displays carbon neutrality but goes further by maintaining a negative carbon footprint. This is primarily due to its partnership with ClimateTrade and investments in carbon offset projects.

climate trade

The history of Algorand

It begins in 2017 with the vision of Professor Silvio Micali from the Massachusetts Institute of Technology (MIT). This world-renowned cryptographer, winner of the Turing Award in 2012, spent several years developing the theoretical foundations of a blockchain capable of overcoming the technical limitations of existing systems.

The development of Algorand accelerated in 2018 with the creation of Algorand Inc. and the recruitment of a team of top engineers. The Algorand Foundation was established in 2019 as a non-profit organization tasked with overseeing ecosystem development, governance, and research initiatives.

Algorand’s mainnet was launched in June 2019, marking the culmination of more than two years of intensive development. Since its launch, the blockchain has undergone several major updates, notably the introduction of smart contracts in 2021 and continuous performance improvements with the Dynamic Lambda update in 2025.

Who created Algorand?

Algorand was created by Silvio Micali, a legendary figure in modern cryptography and a professor at MIT since 1983. Micali is recognized as one of the pioneers of theoretical cryptography. He co-invented fundamental concepts such as zero-knowledge proofs and digital signatures.

Silvio Micali received the Turing Award in 2012, considered the “Nobel Prize of computing,” for his revolutionary contributions to cryptography. His work laid the theoretical foundations for many technologies used today in computer security and cryptocurrencies.

The Algorand team quickly expanded with experts from leading academic institutions and technology companies. This concentration of talent allowed the development of a technically superior blockchain, validated by the international scientific community.

What is the ALGO crypto used for?

ALGO is the native token of the Algorand network, fulfilling several essential functions that ensure proper operation and security. Unlike speculative tokens, ALGO has real and multiple utility that makes it a fundamental digital asset.

The first function of ALGO concerns the payment of transaction fees on the network. Each interaction with the blockchain requires the payment of minimal fees in ALGO. This ensures network security while maintaining extremely low usage costs, typically less than $0.001 per transaction.

ALGO token

Staking represents the second major use of ALGO. Holders can participate in the Pure Proof of Stake consensus by delegating their tokens to participation nodes. They receive rewards proportional to their stake. This mechanism secures the blockchain while offering passive income to investors.

Decentralized governance constitutes the third pillar of ALGO’s utility. Holders can participate in important decisions regarding protocol evolution, technical updates, and network parameters. Algorand’s governance system allows democratic participation in strategic decisions.

The Algorand ecosystem is experiencing growing adoption with the recent launch of staking on Binance and Crypto.com in July 2025. This facilitates access to staking rewards for a wider audience. The integration of Wormhole also improves multi-chain interoperability, strengthening the utility of the ALGO token.

How does the Algorand network work?

The Algorand network relies on a revolutionary technical architecture. It combines several innovations to achieve exceptional performance while maintaining maximum security and decentralization.

A unique consensus

The Pure Proof of Stake (PPoS) consensus is Algorand’s most remarkable innovation. Unlike traditional PoS systems, PPoS uses a verifiable random function (VRF) to securely select validators for each block. This approach eliminates risks of centralization and ensures fair participation by all ALGO holders.

Algorand’s Byzantine consensus algorithm enables consensus to be reached even in the presence of malicious nodes. At least two-thirds of participants must remain honest. This Byzantine fault tolerance guarantees network security under adverse conditions.

Algorand’s instant finality architecture eliminates the risks of block reorganization that affect other blockchains. Once a transaction is confirmed, it immediately and definitively becomes recorded in the blockchain. This offers security comparable to traditional payment systems.

algorand blockchain

The two types of nodes

The network uses two types of nodes: relay nodes that maintain global network connectivity with high-bandwidth connections, and participation nodes that hold voting keys and participate in consensus. This two-layer architecture optimizes both performance and decentralization.

Advantages and disadvantages of Algorand (ALGO)

Let’s now look at the strengths and areas for improvement of the Algorand network.

The 5 main advantages of Algorand

1. Exceptional technical performance: With more than 6,000 transactions per second, instant finality, and fees lower than $0.001, Algorand offers performance comparable to traditional payment systems while maintaining blockchain decentralization.

2. Advanced cryptographic security: Created by Turing Award winner Silvio Micali, Algorand integrates the latest advances in cryptography, including quantum resistance and zero-knowledge proofs, positioning the blockchain for the post-quantum era.

3. Environmental sustainability: Algorand maintains a negative carbon footprint thanks to its ultra-efficient Pure Proof of Stake consensus and investments in carbon offset projects via ClimateTrade, addressing growing ESG concerns.

4. Resolution of the blockchain trilemma: Unlike other blockchains that sacrifice one aspect of the trilemma, Algorand simultaneously achieves maximum security, high scalability, and true decentralization thanks to its unique architecture.

5. Growing institutional ecosystem: The launch of staking on Binance and Crypto.com in 2025, Wormhole integration for interoperability, and adoption by financial institutions demonstrate the growing maturity of the ecosystem.

The 5 main disadvantages of Algorand

1. Limited adoption compared to leaders: Despite its technical advantages, Algorand struggles to compete with Ethereum’s adoption or Solana’s popularity. The DeFi ecosystem remains relatively modest compared to competing blockchains.

2. Technical complexity: Algorand’s advanced cryptographic innovations, while offering advantages, can create a barrier to entry for developers accustomed to simpler environments like Ethereum.

3. Token concentration and governance: The Algorand Foundation holds a significant share of ALGO tokens, raising questions about the real decentralization of governance and decision-making power concentrated in the hands of the founding organization.

4. Disappointing price performance: Despite its technical advantages, ALGO has experienced disappointing price performance over the past 2 years, reflecting a lack of market recognition for its innovations.

5. Intense competition: The Layer 1 blockchain market is saturated with established competitors. Algorand must constantly prove its added value against more popular but technically inferior solutions.

Algorand (ALGO) price and predictions

The recent price evolution of ALGO shows modest performance in 2025. The token is currently trading around $0.27, after nevertheless experiencing a nice increase of more than 70% in recent days.

ALGO price
Source: CoinMarketCap

Algorand predictions for 2025

Price predictions for 2025 vary considerably according to analysts. CCN anticipates a very wide range of $0.12 to $0.66 for 2025, while Cryptopolitan forecasts a maximum of $0.33 by the end of 2025. Long Forecast suggests an average price of $0.23 for July 2025.

More optimistic forecasts from Coinpedia indicate a potential of $0.90 by the end of 2025, based on growing adoption and technical developments. Digital Coin Price mentions that ALGO reached $0.49 in January 2025 before falling back.

Factors influencing ALGO’s price include the recent launch of staking on major exchanges, Wormhole integration for multi-chain interoperability, and the Dynamic Lambda update that improves network performance. However, Tether’s decision to suspend USDT on Algorand in September 2025 could create temporary downward pressure.

Algorand’s on-chain activity shows encouraging signals with growing adoption of 62% according to some metrics, and the continuous development of decentralized applications on the blockchain. Instant finality and ultra-low fees continue to attract new projects.

Important moments in Algorand’s history

2017: Theoretical conception by Silvio Micali at MIT. The Turing Award winner begins developing the cryptographic foundations of Pure Proof of Stake consensus.

2018: Creation of Algorand Inc. and beginning of practical blockchain development. The team expands with experts in cryptography and blockchain engineering.

2019: Launch of the Algorand Foundation and June 2019: Mainnet launch. The Algorand blockchain becomes operational with its basic functionalities.

2021: Introduction of smart contracts and expansion of the DeFi ecosystem. Algorand becomes a complete platform for decentralized applications.

2022: ClimateTrade partnership for carbon neutrality. Algorand becomes the first blockchain with a negative carbon footprint.

Late 2022 – early 2024: Algorand and its AGLO token undergo the bear market. The price drops from almost $3 to $0.1.

July 2025: Launch of staking on Binance and Crypto.com, facilitating access to staking rewards for a wider audience.

July 2025: Wormhole integration for native multi-chain transfers, improving Algorand’s interoperability with other blockchains.

September 2025: Upcoming suspension of USDT on Algorand, marking a challenge for the blockchain’s stablecoin ecosystem.

How and where to buy Algorand (ALGO)?

Acquiring ALGO tokens is an essential step for those who wish to invest in the project, participate in its governance, or use applications in its ecosystem. Due to its growing market capitalization and popularity, the ALGO token is available on the majority of centralized exchange platforms (CEX).

These platforms allow you to buy ALGO directly with euros or dollars via different payment methods (bank card, wire transfer). Here is our ranking of the best platforms in 2025:

How to buy ALGO on Bitget? Mini tutorial

Here’s how to buy ALGO in 5 steps on the best platform in our ranking.

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  1. Create an account on Bitget:
  • Go to the official website
  • Click on “Sign Up”
  • Fill out the form with your email and password
  1. Complete KYC verification:
  • Prepare a valid ID
  • Follow the verification instructions
  1. Deposit funds:
  • Fund your account on the platform. Via bank transfer, credit card, or other cryptocurrencies for example.
  1. Buy ALGO:
  • Navigate to “Spot Trading”
  • Search for the ALGO/USDT or ALGO/EUR pair
  • Place a buy order specifying the amount of ALGO you wish to acquire or the amount you want to spend.
  • You can generally choose between a market order (purchase at current price) or a limit order (purchase at a specific price you define).
  1. Secure your ALGO:
  • After purchase, it is strongly recommended to transfer your ALGO tokens from the exchange platform to a secure personal wallet (see next section) to have full control.

Choose a platform that meets your needs in terms of fees, security, ease of use, and regulatory compliance in your jurisdiction.

How to store your Algorand (ALGO)?

Once you have acquired ALGO tokens, the question of their secure storage becomes paramount. Leaving your cryptocurrencies on an exchange platform (CEX) involves significant risks: you don’t directly control your private keys, and your funds could be lost in case of platform hacking, regulatory issues, or company bankruptcy.

Ledger

That’s why it is strongly recommended to transfer your ALGO to a personal wallet where you alone hold the private keys. “Not your keys, not your coins” is a fundamental adage in the ecosystem. There are mainly two types of wallets for storing your ALGO.

Cold Wallets

These are hardware devices that store your private keys offline, thus offering the highest level of security against online hacking. They often resemble secure USB keys. Recognized brands like Ledger (for example, Ledger Nano S Plus or Ledger Nano X) are the safest solutions for storing significant amounts or for long-term storage.

Hot Wallets

These are software (mobile or desktop applications, browser extensions) that store your private keys on a device connected to the Internet. They are more convenient for frequent use and for interacting with decentralized applications (dApps), but are inherently more vulnerable to malware and phishing than cold wallets. Popular wallets like MetaMask or Trust Wallet can be configured to manage ALGO tokens.

The choice between a cold wallet and a hot wallet depends on your specific needs: prioritize a cold wallet (like Ledger) for maximum security of your main investments, and possibly use a hot wallet (like MetaMask or Trust Wallet) for smaller amounts intended for regular interactions with Algorand’s DeFi ecosystem. The essential thing is to always carefully secure your recovery phrase (seed phrase) and never share it or store it digitally.

How to get Algorand for free?

Several methods allow you to obtain ALGO without direct investment, although these opportunities generally require time, skills, or active participation in the Algorand ecosystem.

Staking rewards represent the most accessible method to obtain free ALGO. By participating in the Pure Proof of Stake consensus, holders receive rewards proportional to their participation, typically between 4% and 8% annually.

Development programs from Algorand offer grants and rewards to creators of decentralized applications. The Algorand Foundation regularly funds innovative projects with ALGO allocations.

Airdrops from the Algorand ecosystem reward active users and early adopters. Projects built on Algorand often distribute their tokens to ALGO holders.

Finally, hackathons and contests organized by the Algorand ecosystem offer ALGO prizes for the best innovations and solutions developed on the blockchain.

The legality of Algorand varies by jurisdiction, but the token is considered legal in the majority of countries that authorize cryptocurrencies. This favorable legal situation results from the decentralized nature of the project and its status as a utility token.

In the European Union, ALGO benefits from the MiCA (Markets in Crypto-Assets) regulatory framework which clarifies the status of cryptocurrencies. France, Germany, Portugal, and most European countries explicitly authorize the holding and purchase of ALGO.

In the United States, ALGO has not been classified as a security by the SEC, which facilitates its trading on regulated American platforms. The Algorand Foundation actively works with regulators to maintain compliance.

Restrictive countries like China, certain regions of India, and some Middle Eastern countries maintain prohibitions or restrictions on cryptocurrencies that also apply to ALGO.

Who holds the most ALGO?

The Algorand Foundation holds a significant portion of ALGO tokens intended for ecosystem development, participation rewards, and growth initiatives. This allocation is distributed progressively according to a transparent vesting schedule.

Institutional investors and early backers own a portion of ALGO tokens, acquired during private funding rounds before the public launch. These allocations are also subject to vesting periods.

Algorand logo

The community and network participants hold a growing share of tokens thanks to staking rewards and continuous distribution. The Pure Proof of Stake mechanism encourages a more equitable distribution over time.

Finally, exchanges and staking services like Binance hold significant amounts of ALGO for their staking and purchase services, acting as custodians for their users.

Our opinion on Algorand (ALGO) in 2025

Algorand positions itself as one of the most technically advanced blockchains in 2025, offering a complete solution to the technical challenges that still limit many competing blockchains.

Algorand’s technical strengths are undeniable with its instant finality, ultra-low fees, and quantum resistance. The blockchain created by Silvio Micali is a feat in blockchain consensus, truly resolving the trilemma without compromise.

Finally, Algorand’s environmental commitment with its negative carbon footprint addresses the growing ESG concerns of institutional investors. This sustainable approach favorably positions ALGO in a context of increased environmental awareness. All these reasons make our opinion generally positive on Algorand and its ALGO token!

Gaston Cuny

Gaston Cuny

Gaston has been a writer for over 7 years and a passionate cryptocurrency enthusiast since 2020. He loves exploring the crypto ecosystem and is now dedicated to sharing his insights and discoveries through InvestX.

FAQ – Frequently Asked Questions About Algorand (ALGO)

What makes Algorand different from other blockchains?

Algorand stands out with its Pure Proof of Stake consensus, offering instant finality and fees lower than $0.001. Created by Turing Award winner Silvio Micali, it’s the only blockchain that truly solves the trilemma while maintaining a negative carbon footprint.

Is Algorand a good investment in 2025?

Predictions range from $0.12 to $0.90 for 2025, with the current price around $0.26. The launch of staking on Binance and Crypto.com and the Wormhole integration support a positive outlook, despite the planned USDT suspension in September.

How can I earn passive income with ALGO?

Staking ALGO through its Pure Proof of Stake consensus allows users to earn passive income between 4% and 8% annually. Staking services on Binance and Crypto.com make it easy to participate without complex technical setup.

Where can I safely buy Algorand?

ALGO is available on all major platforms such as Binance, Coinbase, Crypto.com, and Kraken. Native DEXs like Tinyman offer a decentralized alternative for direct trading on the Algorand blockchain.

Can Algorand compete with Ethereum?

Algorand has superior technical features, including instant finality, ultra-low fees, and quantum resistance. However, Ethereum still holds the advantage of a well-established ecosystem, making competition dependent on the future adoption of Algorand’s innovations.

DISCLAIMER

This article is for informational purposes only and should not be considered as investment advice. Trading cryptocurrencies involves risks, and it is important not to invest more than you can afford to lose.

InvestX is not responsible for the quality of the products or services presented on this page and cannot be held liable, directly or indirectly, for any damage or loss caused by the use of any product or service featured in this article. Investments in crypto assets are inherently risky; readers should conduct their own research before taking any action and invest only within their financial means. This article does not constitute investment advice.

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