Please ensure Javascript is enabled for purposes of website accessibility

Algorand: The Winner in the Proof-of-Stake Race?

By Chris MacDonald – Nov 14, 2021 at 10:28AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's grown to be a top 20 cryptocurrency, based on market cap.

Motley Fool contributor Chris MacDonald talks about why Algorand (ALGO 0.75%) made his list of top cryptocurrencies to watch. This episode of "The Crypto Show" was recorded on Oct. 20. Motley Fool analyst Eric Bleeker is also in this clip.

10 stocks we like better than Algorand
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and Algorand wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

 

*Stock Advisor returns as of October 20, 2021

 

Eric Bleeker: Let's go to your third favorite, which is Algorand, I think one thing that you like about this, which I had earlier, was an early leader in proof-of-stake.

Chris MacDonald: Yeah, I think the proof-of-stake space -- we touched on that a little bit earlier -- it's really intriguing for investors thinking about how cryptocurrencies in general and crypto networks are going to where they're moving, where they're headed in terms of the future. Algorand's position as being one of the first proof-of-stake networks is certainly intriguing and that's one of the reasons why it's grown to be a top 20 Crypto by-market cap.

Today, I was saying it was number 19, which is incredible. It was I think around 50 about a month ago. So it's moving up the rankings quickly for a reason.

It's built on what's called a pure proof-of-stake consensus protocol. Similar to other Alt Coins -- Ethereum (ETH -2.41%) is moving in this direction with various updates that are coming up -- but Algorand is further ahead in this regard. It was one of the first.

I think the other thing with this is it's cheaper and quicker to use relative to other altcoins. There is an advantage to Algorand relative to other proof-of-stake cryptocurrencies. It's such a new space that it's hard to compare and contrast right now. But Algorand is widely considered to be a proof-of-stake model that is more secure, more decentralized than other mechanisms.

One of the reasons for that is basically anyone can choose to be a part of the consensus mechanism. There's two parts to it as I understand it. There's the staking piece which is just putting your cryptocurrency up for the networks to validate the blocks. Then there's the actual consensus mechanism. But on Algorand is a little bit different from the other ones in that everyone that stakes has the option of being a part of that consensus mechanism. By doing so, even someone who has one Algorand token can be a part of that. It makes it a lot safer because a hacker coming in trying to target the validation process will have a very difficult time figuring out who could be randomly selected to be part of that protocol.

To me, that's intriguing, it's a rather secure network and it's a burgeoning place for stablecoins, NFV, other projects like that and it's grown to be one of the largest, again, for a reason.

Eric Bleeker owns shares of Ethereum. The Motley Fool owns shares of and recommends Ethereum. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.