The year 2021 was the year of Solana. This dynamic cryptocurrency soared more than 11,000% as more and more investors decided to invest. And developers flocked to the blockchain. They increased by almost five to nearly 900, according to Electric Capital's recent developer report.
Now, some investors are looking for the next Solana. By that, I mean a cryptocurrency that is set to make gains in value, developers, and general use. And the crypto that may follow in Solana's footsteps is Algorand (ALGO -7.08%). This player climbed 416% last year. And the number of developers on the platform increased to about 200 from a little more than 50 a year earlier, the Electric Capital data show. So, Algorand clearly is starting to pick up speed. Why do I think it may become as popular as Solana? Let's find out.
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New validation methods
Algorand and Solana have one particular point in common. They both offer a new way of validating transactions. Solana uses proof of history. This marks blocks of data with timestamps, and as a result, streamlines the validation process. Many blockchains use proof of stake. This offers validation power to those according to their holdings. But Algorand uses pure proof of stake. That means validation power is assigned randomly to any stakeholder.
Algorand's system also streamlines the validation process. And importantly, it favors security and decentralization. Pure proof of stake means validation responsibilities won't always go to the same group of high stakeholders.
A two-layer structure is another plus for Algorand -- that's because it reduces congestion and increases transaction speed. The first layer is the place for simple smart contracts and the creation of tokens. The second layer is meant for complex smart contracts and the development of decentralized applications (dApps).
Right now, Algorand handles about 1,200 transactions per second. The next goal is to reach about 3,000 per second. Algorand is working to eventually increase that to 45,000 transactions per second. And transactions reach completion instantly.
A secure environment for NFTs
Another advantage of Algorand is the fact that it's "unforkable." This means the network can't split into an updated version. And this is a big advantage for those creating or collecting non-fungible tokens (NFT). That's because a fork can result in duplicated NFTs or a loss in their value. An unforkable blockchain may offer a more secure environment for these assets.
Finally, many interesting projects are popping up on Algorand. So, it's clear there are plenty of real-world uses for this blockchain. For example, the Republic of the Marshall Islands chose Algorand to host its digital national currency. And Algorand is powering LiquidVineyards' platform to manage digital rights in the industry of wine and vineyards.
Now, does all of this mean Algorand will follow Solana to a 11,000% gain? Not necessarily. There is a lot of volatility in the cryptocurrency market. And risk is high. But if we look uniquely at Algorand and what it has to offer, there's reason to be optimistic about this cryptocurrency's future. And that means it could follow in Solana's path when it comes to popularity and momentum this year.
