One of the biggest bottlenecks to cryptocurrency growth and efficiency is what is fondly known in the crypto community as a blockchain trilemma. This is where most crypto assets or protocols struggle to be decentralized, secure and scalable at the same time.
Although some cryptos like Ethereum and Bitcoin have been able to manage all three using the Proof of Work Consensus, there are always trade-offs.
For example, both Bitcoin and Ethereum have been forced to slightly sacrifice scalability due to the increased demand that is now skyrocketing gas prices. To phase out this challenge, cryptographers came up with what is known as a Proof of Stake Protocol which allows users to stake their assets in order to improve network security then earn some rewards in the process.
One of the networks that are ingeniously utilizing the PoS consensus is Algorand. This is a fairly new project that was created by one of the investors of PoS; MIT professor Silvio Micali.
In this guide, we are going to learn what exactly Algorand is, its latest price predictions and whether or not you should invest in it.
Let’s dive right in.
- What is Algorand?
- Algorand in 2021: Everything You Should Know
- Algorand Price History
- Algorand Price Predictions for 2021
- Algorand Price Predictions for 2022 - 2023
- Algorand Price Predictions for 2024 -2025 and Beyond
- The Future of Algorand: Will the Value of ALGO Rise?
- Conclusion: Is Algorand a Good Investment?
What is Algorand?
Algorand is a decentralized network that was created to try and solve the blockchain trilemma puzzle. That is, the need for cryptocurrencies to achieve security, scalability and decentralization simultaneously.
The project was launched in June 2019 and has now grown to be one of the most crucial players in shaping the future of finance. Just like Ethereum, Algorand is also an open-source network that allows the creation of a wide variety of blockchain-based applications.
The network is popular for its super-fast transaction speeds of 1000 transactions per second (TPS) and transaction finality of less than five seconds. It mostly achieves this using the PoS consensus mechanism, allowing it to provide validator rewards to users holding ALGO, its native cryptocurrency.
And since it relies on staking, Algorand allows developers to create decentralized applications (dApps) on its platform and enjoy the rare scalability. Its low gas fees (especially in comparison to Ethereum) is one of the biggest attraction for developers and DeFi (Decentralized finance) traders.
The Algorand Standard Asset (ASA) enables developers to create new tokens or even transfer their existing projects to the Algorand network.
At the epicentre of the Algorand network structure is ALGO, its native cryptocurrency. This is what is mostly used to complete transactions and also reward validators who produce blocks. Unlike most other open-source crypto networks, Algorand distributes the rewards among all ALGO holders instead of just the block producers.
That means that users can earn up to 7.5% APY (Annual Percentage Yield) for simply holding the ALGO coin. This is an attempt to lure in more users and accelerate the network’s growth and its quest to solve the blockchain trilemma.
ALGO coin supply is currently capped at 10 billion, and they are distributed as follows.
- 3 billion have been released into circulation for the first five years
- 1.75 billion allocated to participation rewards
- 2.5 billion for relay node runners
- 2.5 billion for the Algorand foundation
- 0.25 billion as end-user grants.
Most of the allocations are distributed over time.
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Algorand in 2021: Everything You Should Know
Like most other cryptocurrencies, ALGO is currently going through a downtrend as most experts warn that a crypto winter could be in the offing. However, Algorand hasn’t been doing badly since it was introduced into the market.
The token took advantage of the market-wide bull run that started in late 2020 and was able to go over $1.5 per token in early May. Now, while it may have a hard time going back to that price, analysts predict that ALGO might soon bounce back from the downward trajectory.
To be able to achieve this, the network must first widen its user base and increase use cases. Even with the great underlying technology, the Algorand community is still slim with little activity over the past few years.
The Algorand foundation understands this and is working around the clock to increase its community and make its technology even more efficient.
One way to achieve this is through partnering with high-end players in the crypto-space. For instance, about a month ago, Algorand partnered with the global healthcare technology firm MAPay, which mostly focuses on decentralized payment networks.
MAPay will now be using Algorand to issue a stablecoin meant to facilitate more than $800 million in healthcare costs in Bermuda.
Towards the end of March, SIAE launched 4 million NFTs, representing the rights of almost 100,000 creators. SIAE is an Italian-based rights management company that dates back to 1882.
To help accelerate its growth, Algorand has also been focusing on securing funds from investors. At the beginning of June, Borderless Capital put up $25 million to help fund Miami blockchain startups on Algorand. Investing in these projects not only helps to accelerate the growth of Algorand but also built its credibility as a reliable DeFi platform.
Additionally, Arrington Capital, a venture capital firm owned by TechCrunch founder Michael Arrington, injected $100 million into projects developed on the Algorand blockchain.
Michael Arrington’s crypto venture-capital firm, Arrington Capital Management, is launching a $100 million fund for bets on projects building on the Algorand blockchain.
The fund known as the Arrington Algo Growth Fund (AAGF) will help to facilitate the growth of tokens and equity and subsequently boost the growth of the Algorand network.
As blockchain users and investors hunger for a well-rounded blend of speed, security and decentralization, Algorand stands to be one of the most in-demand projects. By the end of the year, we expect more developments to make the platform more user friendly while also trying to phase out the blockchain trilemma challenge.
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Algorand Price History
Although Algorand has its roots back in 2017, the ALGO token started trading actively around 2019. Unlike most cryptocurrencies that struggled in their early days, ALGO started trading at a fairly high price which also means it faced a big initial crash.
When it was introduced into the market, ALGO’s price jumped to more than $3 in June 2019. However, as is the case with most first day spikes, the price quickly plummeted to as low as $0.5 by the end of July.
Experts argue that several factors led to this crash. The most important one is a supply versus demand imbalance. Too many ALGO tokens were released into the market, yet there was so little demand. Remember that Algorand was mostly under the radar in its early days, so many people didn’t know about it. Most of those who knew were also not eager to invest.
This was worsened by the fact that early investors suffered so much loss that Algorand had to buy back their coins at 90% of the buying price.
After bottoming out at $0.5 in July, ALGO briefly recovered to $0.8 in mid-August before slumping again to as low as $0.2 towards the end of September. The token remained at the $0.2 - $0.3 range until February 2020, where it reached $0.4933 then dropped again to $0.148 in mid-March.
ALGO played between $0.1 and $0.4 between mid-March and the end of July before jumping to $0.6292 in mid-August. It dropped again and traded below $0.4 until the end of the year.
In February 2021, ALGO had its second-biggest spike after being caught up in a market-wide bull run that drove it to $1.7 around mid-February. This was followed by a series of fluctuations above the $1 mark until towards the end of May, when the token dropped to $0.9.
It briefly went back over $1 in June, then had a slight dip and is now trading at $0.88 according to price data from CoinMarketCap.
Algorand Price Predictions for 2021
Although Algorand started 2021 on a bullish note, it dropped in May when the market-wide bull run checked out. Cryptocurrencies across the board suffered, so we can’t say that this was an isolated case for ALGO.
The May 2021 crash was inspired by several factors. The first wave started when China announced that it would be cracking down on cryptocurrencies and cautioned financial institutions from carrying out any crypto transactions.
Later, Tesla’s Elon Musk announced that his company would no longer be accepting Bitcoin as payment for its electric cars. This brought down the price of Bitcoin by almost half.
Historically, Bitcoin has informed the prices of most other cryptocurrencies. So when it dropped, others followed. ALGO was not spared.
Unfortunately, the token has been struggling to recover and go back to its bullish trajectory. 2021 predictions have also changed significantly, with analysts now giving less-inspiring numbers.
For instance, Long Forecast initially predicted that ALGO would be worth close to $2 by the end of the year but has now downgraded its prediction to slightly above $1 by December 2021
The site believes that ALGO won’t see much improvement in July as the price continues dilly-dallying around the $0.8 level. According to Long Forecast, there will be a slight drop in August and September, where the price of ALGO will dip to $0.72 and $0.74 consecutively.
In October, the price will go back to $0.86, then $1.00 in November before closing the year at $1.16.
Although Wallet Investor agrees with Long Forecast about how ALGO might kick off July, it predicts a gradual drop that might go until early August. The token will then briefly resume its $0.8 price before dropping again to $0.6 from September until the end of October.
From November, the token will take on a gradual ascent that will see it close the year at around $0.931. CoinPrice Forecast is even more optimistic than both Wallet Investor and Long Forecast. The site predicts that ALGO will cross $0.90 in mid-2021, that is around July, then end the year at $1.23.
Usually, price analysts give very different predictions, but these ones for ALGO seem to be very close together. Whether that has something to do with the fact that the year is closing in or ALGO has low volatility levels, we get the idea that the token might cross $1 by the end of 2021.
Algorand Price Predictions for 2022 - 2023
Now, going forward, the predictions begin to be far apart. While we are closer to 2022, the volatile nature of cryptocurrencies still makes it hard to give reliable predictions.
But even if we can’t get an exact number, these predictions help us understand what we should expect going forward.
For instance, most price analysts agree that ALGO will cross $1 in 2022. Some like CoinPrice Forecast and Long Forecast already see that possibility in 2021.
In 2022, Long Forecast is even more bullish. That site predicts a decent rise for Algorand prices from December 2021 to January 2021, with the price jumping from $1.16 to $1.35. From there, it will again rise quickly to $1.57 in February but might drop to $1.45 and $1.49 in March and April consecutively.
There will then be a gradual uptrend from May, with ALGO crossing $2 in August. It will, however, stay there for a brief period before dropping again. From September, Algorand will go through several fluctuations and end the year at %1.80.
Long Forecast also predicts that ALGO will drop further at the start of 2023. The asset will start the year at $1.51, which is a notable drop from $1.80 in December 2022. There will be a slight recovery in February, but the Algorand coin will drop again to as low as $1.29 in May.
From June, Long Forecast predicts a dramatic rise, with ALGO going back to above $2 in August. This will be followed by another gradual upswing to $2.51 at the end of the year.
Wallet Investor continues with its 2021 trajectory and predicts that ALGO will start 2022 at $0.939 then cross $1 around mid-January. In mid-February 2022, the token will be trading at $1.5. From there, the price will mostly fluctuate between $1.4 and $1.8 between March and November.
In the last two days of 2022, Wallet Investor predicts that ALGO will trade at $1.81 and $1.82 although the price might go as high as $2.409 if the market conditions are favourable.
Wallet Investor doesn’t slow down its predictions in 2023. ALGO will start the year at $1.817 then cross $2 towards the end of January. From January until mid-April 2022, the coin will bounce between $2 and $2.5 the cross $2.5 thereafter.
This will continue until mid-May, where the price will start falling again until mid-June where it will be trading at $2.3 per token. The uptrend will then resume briefly before Algorand ALGO goes into a short consolidation mode. From July to September, Algorand price will be stuck at the $2.4 to $2.6 range with small fluctuations in between.
There will then be a slight uptrend driving the price of Algorand to $2.696 by the end of 2023.
Algorand Price Predictions for 2024 -2025 and Beyond
For some reason, Long Forecast foresees another price slump for Algorand in 2024. In fact, the new year will start at a lower price compared to where it ends in 2023. According to Long Forecast, Algorand will start 2024 at $2.11 then systematically drop to $1.74 in April. It will then briefly go to $2.02 in May before dropping again to $1.73 in June.
From June, Long Forecast predicts that ALGO will keep dropping until November where it will trade at as low as $1.18 then quickly rise to $1.37 in December 2024.
At the beginning of 2025, the price will keep rising, starting from $1.59 until it crosses $2 again in May. Long Forecast’s prediction end in July 2025, where it predicts Algorand will be trading at $2.93. From this, we can safely assume that the price analyst expects ALGO to surpass the $3 mark by the end of 2025.
Wallet Investor is slightly more bullish than Long Forecast. It predicts that ALGO will start 2024 at around $2.67 then reach $3 in early February. There will be minor fluctuations in the course of the year as the token rises to $3.3 by the end of February.
From March until the end of the year, Wallet Investor predicts that ALGO will mostly bounce between $3.2 to $3.6, with $3.3 being the most common price from month to month.
Now, in 2025, Wallet Investor continues with the uptrend momentum. ALGO will start the year at $3.6 in January and $3.9 in February. The Algorand coin will then cross $4 per token in early February and end the month at $4.2.
From March until the end of the year, Wallet Investor predicts that Algorand with trade between $4.0 and $4.5, with the highest price for 2025 being $4.467 in December.
The same enthusiasm is projected in 2026, with Algorand reaching the $5 mark in mid-march. It will then keep rising and end the year at $5.296. There might, however, be a slight drop to the $4 mark in late May and early June before the token resumes its bull run above $5.
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The Future of Algorand: Will the Value of ALGO Rise?
Although Algorand had a bright start in 2021, the price has since slumped, and while most experts are hopeful that it will start rising again, it might take some time.
From the predictions we have seen above, it is clear that the value of ALGO might rise again going forward.
For this to happen, however, the market will have to be conducive to overall cryptocurrency growth. Algorand also needs to work on widening its user base and increase protocol use cases.
Apart from that, some in-house changes should take place. These include the introduction of new features, upgrades and making the platform more user friendly. So far, Algorand has been doing great fundamentally, especially in terms of improving network performance and focusing on striking a good balance between the big three; that is security, scalability and decentralization.
For instance, in 2019, Algorand 2.0 was introduced with new features in spades. These include Atomic transfers, which allow users to submit a group of transactions as a unit in about 5 seconds. Algorand Standard Assets and layer 1 smart contracts were also introduced in this upgrade.
The team behind Algorand are working around the clock to implement additional functionality and also expand Algorand’s capabilities.
The most focus will, of course, go into improving scalability and network performance. Recently, Algorand updated its ASC1 programming language to make it easier for developers to work with.
The founder recently reported that the platform is on track to boost its block size by about 400%. That will push it from 5,000 TPS to a whooping 25,000 TPS. Block finalization time will also be cut down to 2.5 seconds from the current 4.5 to 5 seconds.
If Algorand can achieve all these, it will be closer than ever to striking an acceptable balance between speed, security and decentralization and, in the process, boost the value of ALGO.
Conclusion: Is Algorand a Good Investment?
After the initial crash in 2019, investors have become more conscious of Algorand. The token has exhibited high levels of volatility with frequent spikes that are almost immediately followed by crashes.
However, Algorand is not an entirely bad investment. The fact that it has been able to solve the biggest bottleneck in cryptocurrency means that it has huge potential for growth and a bright future.
So, while current and past investors have had to hold their breaths through a series of wild price swings, Algorand can still be profitable, especially for day-traders.
If you are a long-term holder, you might want to hold your horses first and wait until the asset attains an acceptable level of stability. Remember that people who bought and hodled when the price went above $3 are still waiting for ALGO to reach that price again.
Most importantly, keep in mind that cryptocurrency investment is risky, and you might lose all your money. So, do your own research, invest cautiously and never invest more than you can afford to lose.
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