Is Algorand Worth Investing?
Is It Worth Buying Algorand?
While early cryptocurrencies like Bitcoin and Ethereum experienced a lot of success, they are often victims of the blockchain trilemma. This means that they struggle to be secure, scalable and decentralized simultaneously.
These are three crucial features to any digital assets, but most struggle to achieve all three. One is usually sacrificed for the sake of the others. For instance, Bitcoin often sacrifices transaction speeds/scalability to allow for more security and decentralization.
As a result, most of the new cryptocurrencies have been trying to solve this problem in order to gain an advantage in the highly competitive market. However, achieving a perfect blend of speed, security and decentralization have proved to be a can of worms, and few assets have managed to do so.
Algorand is one of them.
Unlike Bitcoin and Ethereum, Algorand uses a Proof of Stake (POS) instead of a Proof of Work (POW) consensus, allowing its users to stake their assets in order to strengthen network security and receive rewards for doing so.
This allows the platform to focus more on scalability and decentralization, pushing it close to solving the blockchain trilemma.
But what exactly is Algorand, and is it worth investing in?
Read ahead to find out.
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- What Is Algorand?
- How Does Algorand Work?
- Algorand Price History
- Algorand Price Predictions for 2021-2022
- How to Invest in Algorand
- Is Algorand a Good Investment?
- Conclusion: So, Should I Buy Algorand?
What Is Algorand?
Algorand is a decentralized Pure Proof of Stake network that was created in 2019 by MIT professor Silvio Micali to try and solve the blockchain trilemma. The platform is also used to create decentralized applications (dApps), just like Ethereum.
Algorand provides developers with the tools and the infrastructure they need to quickly and efficiently develop financial products that are speedy, scalable and decentralized. In particular, Algorand is popular for its fast transactions speeds of more than 1000 TPS.
It also prides on low gas fees, which makes it a better choice for developers and investors, especially when compared to Ethereum and Bitcoin, which are known to sometimes have ridiculously high fees.
To make things even easier for developers, Algorand uses what is known as the Algorand Standard Asset (ASA), which allows developers to painlessly create new tokens or transfer projects from other networks.
Underpinning all the operations on the network is Algorand’s native token; ALGO.
A Little Bit About ALGO
ALGO is Algorand’s native utility token. The token is mostly used to clear gas fees such as paying for transactions or compensating for smart contracts computations.
The token is also used to support the operations of the Algorand ecosystem in general and allows its holders to earn passive income from the rewards they receive. According to financial analysts, ALGO holders can earn up to 7.5% APY (Annual Percentage Yield) in passive income.
ALGO is also used on DeFi applications that are built on Algorand to support their operations and increase the token’s use cases and value.
One attractive thing about the ALGO token is that it distributes rewards among all holders and not just those who verify transactions.
Currently, there are 10 billion ALGO tokens in supply, and they are distributed as follows:
- 3 billion tokens were released into circulation and will be used for the first five years.
- 1.75 billion tokens are used as rewards for participating in various network activities
- 2.5 billion tokens are distributed over time to relay nodes
- Another 2.5 billion tokens are reserved for the operation of the Algorand Foundation and Algorand Inc.
- 0.25 billion are used as grants for end-users.
How Does Algorand Work?
The Algorand protocol has two layers.
The first layer is where most of the network operations happen. These include:
- Running smart contracts. These are only basic smart contracts that are individually known as ASC. More advanced smart contracts run on the second layer.
- Handling atomic swaps
- Creating new ASAs (Algorand Standard Assets)
The second layer is capable of running more advanced smart contracts with more features and faster speeds.
As we already mentioned, Algorand is built around the PoS consensus mechanism. However, in this case, it is known as a Pure Proof of Stake (PPoS). This is much faster than PoS and allows all ALGO holders to produce blocks and receive incentives.
The Algorand ecosystem is also supported by a network of geographically distributed relay nodes. These are used to route blocks to participation nodes, validate signatures and sometimes participate in consensus.
Algorand uses a process known as cryptographic sortition to select users that participate in its consensus protocol. In this case, block producers are randomly and secretly selected by the Algorand Protocol by using a weighted lottery system.
According to the system, users who hold more ALGO tokens are more likely to be selected.
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Algorand Price History
According to CoinMarketCap, Algorand started trading at around $2.89. That was on June 20th 2019. After this first spike, the token started dropping dramatically, and by the end of July, it was going for around $1.43.
ALGO slumped even further in the following months and was trading at around $00.89 by the end of September. There was a slight improvement towards the end of the year, and by December 2019, it was playing at around $0.23.
ALGO’s early price crash was inspired by several factors, which included a small community. However, the biggest contributor, according to experts, is the fact that the supply was way higher than demand.
Given that it only had a small community back then, few people were interested in the coin, especially at a time when big players like Bitcoin were dominating the market. As a result of the slump, investors who bought ALGO at its starting price of almost $3 suffered a lot of loss as the token has never been able to replicate that growth.
To compensate users and maintain its public image and credibility, Algorand had to buy back user tokens at 90% of the buying price. This was a good move that helped investors recover some of the loss, but nonetheless, no one made a profit, especially those who had planned to hold.
ALGO started 2020 at around $0.21, which was notably a bearish beginning. However, by the end of the second month, the price had doubled to $0.45, then again dipped to $0.12 in mid-march.
This was a result of the cryptocurrency market collapsing due to the outbreak of the COVID-19 pandemic. After several attempts at attaining a higher price, ALGO managed to reach $0.65. In mid-August, as most people hoped that it would hit $1 by the end of the year, ALGO encountered a major resistance level.
It started dropping again, and by December 2020, it was trading at $0.33.
A market-wide bull run kicked off at the start of 2021. ALGO, like most of the other digital tokens, took this opportunity to bounce back and attain their previous high prices. The token, therefore, started 2021 at $0.4 then started rising dramatically to reach $1.7 on 13th February 2021.
In Mid-February, the price again dropped to around $1.4, then further to $1.01 towards the end of the month. In March, ALGO bounced between $1.0 and $1.2, then went as high as $1.5 in mid-April.
However, by the end of April, it has slumped to as low as $1.1. May started on a bullish note, and the token quickly rose to $1.5 on May 9th, then again dropped to as low as $0.89 by the end of the month.
At the beginning of June, ALGO went back to above $1, then around mid-June, it dropped again to as low as $0.8. The coin started July on an uptrend and is now trading at $0.9, according to price data from CoinMarketCap.
Algorand Price Predictions for 2021-2022
To help you better understand whether Algorand is worth investing in or not, let’s look at some of the expert predictions for 2021 and 2022. Since 2021 is nearly coming to an end, most of the predictions tend to be similar, which makes it easier to figure out price direction.
As we have seen from the price history, ALGO started 2021 on a bullish note but began dropping towards the end of May. There was also some uncertainty in June, but July is already starting on an uptrend momentum.
So, we can say that the token is finally bouncing back and might close the year on a positive note. Going forward, price analysts agree that ALGO might not encounter any major resistance this year, although there might be a few fluctuations.
Although Wallet Investor predicts a slight drop to $0.84 at the start of August, it believes that the price will gradually rise to $0.9. The site, however, foresees another drop in September where the token might trade between $0.7 and $0.9. The same trend will continue until mid-November, where ALGO might go back to $0.9 then close the month at $0.949.
According to Wallet Investor, December will be more promising, with ALGO crossing $1 on the 24th, then close the year at $1.062.
Long Forecast predicts an even bigger drop this year. The price analyst believes that ALGO will end July at $0.74 then drop further to $0.63 in August and $0.59 by the end of September.
The lowest price for the remaining months will be $0.50 in October, after which the price will start rising and close the year at a low price of $0.59.
Fortunately, Long Forecast is very hopeful about 2022. It predicts that ALGO will start the year at $0.68 then gradually grow to cross $1 in April 2022. There will be a slight drop in May before the token continues its rally above $1. It might grow to as high as $1.45 in October then start dropping again to finish the year at $1.11.
Wallet Investor is much more bullish about 2022. The site continues with its 2021 upswing, with the ALGO starting at around $1.071. It will then hit $1.1, the same price that Long Forecast predicts for the end of 2022, on 7th January.
The uptrend momentum will continue, and ALGO might cross $1.5 in early February then $1.6 in mid-February. The growth will be a bit drudgy in March, with the token bouncing between $1.5 and $1.7.
Between April and July 2022, the price of ALGO might play between $1.5 and $1.8, with notable fluctuations in between. In early August, the token will cross $1.8 briefly then go back to $1.7 and $1.6. That means it will mostly trade between $1.6 and $1.8 until late December where it crosses to $1.9 and finish the year at $1.928.
Coin Price Forecast, on the other hand, predicts that ALGO will end 2021 at $1.10 and 2022 at $1.55
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How to Invest in Algorand
Later in this guide, we will be discussing whether or not Algorand is a good investment and if you should buy now or wait. However, before that, we want to briefly go through some of the different ways you can invest.
If you already know your option, feel free to skip this section and see some of the reasons why we think you should invest (or not) in the next section.
Having said that, there are basically three of the most common ways you can invest in Algorand. These are:
- Investing in Algorand applications.
For the first two options, you will need to own some ALGO tokens before you can start investing. So if you are going to trade or HODL, as most investors do, let’s quickly show you how to buy the tokens.
Now, there are several exchanges and brokerages you can use to buy ALGO, but we find eToro to be the most efficient, so we are going to use it as an example.
So, here is how to buy ALGO on eToro.
How to Buy Algorand (ALGO) on eToro
- Create an online account on eToro. You will need to provide some personal information like your username and email address.
- Afterwards, you will be required to verify your identity. This is to prove that the info you provided is indeed yours. After that, you can complete your providing more information.
- Next, you will need to deposit some funds into your account. This is what you use to buy ALGO. eToro allows a minimum deposit of $200 through credit card, bank transfer, PayPal, Neteller and a few other options.
- After the funds reflect in your account, go to eToro’s search bar and search for ‘Algorand’
- Alternatively, you can go to Top Markets, Cryptocurrencies, then choose Algorand by clicking on BUY
- Next, enter the amount you want to use to buy ALGO, then click on Open Trade
There you have it! You now have some ALGO tokens in your eToro account. So, let’s look at how to invest your new Algorand tokens and make some profit
3 Ways to Invest in Algorand:
Method 1: Hodling Algorand
Hodling is derived from the word holding, which means buying crypto at a low price and then holding until the price is high enough to be profitable. Holding can take a few to several years, depending on how fast the token grows in terms of price.
This is the best method for investing in crypto assets that have a limited supply, such as Algorand, which is capped at 10 billion coins. This is because the crypto will become scarce with time then its price will start rising due to the supply and demand imbalance.
For instance, if you buy ALGO now for $0.9 per token then sell ten years later when the price is, say, $20 per token, you could make some good profit. For instance, let’s say you buy $2,000 worth of crypto at $0.9 per token. That would be around 2,222 tokens.
Now, if you sell them in 10 years for $20 per token, you will make around $44,444. That is a profit of more than $40,000 that you don’t even have to work for. Remember that Algorand will also reward you when you stake your assets. So, apart from the value, your investment will accrue over time, you also make some passive income along the way.
However, if you don’t want to stake your tokens, you can transfer them to an off-exchange wallet then just sit and watch it increase in value. In this case, you can choose either a software or hardware wallet. Software wallets are more convenient since you can access your tokens from anywhere you want.
On the other hand, hardware wallets are more secure since they are not connected to the internet thus not vulnerable to hacking.
Method 2: Trading Algorand
Trading methods such as CFD trading allows you to profit from either price direction. That is, you can earn by predicting how the price will move or simply do spot trading where you can make a profit every time the price rises.
We find eToro to be the most convenient trading platform for ALGO. It is easy to use, fast with low transaction fees.
Method 3: Invest in Algorand dApps
This is an uncommon way to invest in Algorand, and we only recommend it for veteran investors. In this case, instead of directly investing through the ALGO token, you invest in DeFi products developed on the Algorand platform.
This is because when these products grow faster, Algorand and its token also grows and vice versa. So, you can actually profit from Algorand’s success without investing in ALGO
Is Algorand a Good Investment?
Although it is still struggling to find its place in the crypto market, Algorand has already proved to be a powerful force in defining future finance. The 2019 crash may have thwarted the hopes of most investors, but the platform has done a lot to revive its credibility.
For starters, Algorand has strong technology and one that will soon be in high demand among internet users.
The platform is also backed by some deep pockets with an enviable pool of investors and a visionary team. All these make Algorand a really good investment.
In June 2019, Algorand launched its Algorand Mainnet during a Dutch auction ICO, where it raised up to $60 million in funding. It also managed to sell 25 million tokens at $2.40 each.
Following the success of this ICO, the Algorand team reported that they would be auctioning off 600 million tokens each year using the same auction system.
Although the post-ICO performance has not been that good, Algorand still presents positive future prospects and experts predict that it might reach its current highest price by the end of next year.
According to CoinMarketCap, Algorand currently has a market cap of $2.8 billion with a fully diluted market cap of $8.9 billion. This makes it the 34th biggest cryptocurrency based on market capitalization with a 0.19% market dominance.
Of course, there are other cryptos with bigger figures, but this doesn’t mean Algorand is not worth a shot.
Upgrades such as the Algorand 2.0 present some crucial features that are useful to both the users and investors. The team is working around the clock to ensure that investors are handsomely compensated for their loyalty, and within the next few years, this might just be one of the hottest investments.
However, before you invest, remember the key rules of any cryptocurrency investment. These include doing your research, being patient and never investing more than you can afford to lose.
Check Out: Will Algorand Make Me Rich in 10 Years?
Conclusion: So, Should I Buy Algorand?
Algorand has already shown potential for high levels of volatility. While this is not an isolated case, given that all cryptocurrencies are volatile, it still pays to be careful. The asset showed unstable price movement in May 2021, although it seems to be looking up.
So, to buy Algorand or not to buy?
It depends on why you are buying Algorand. If you plan on HODLing, keep in mind that you might have to wait for a while before the investment becomes profitable. As a HODLer, you will earn some rewards by staking your coins which could be a way to make passive income.
However, making a profit from price inflation might take time. If you want quick profits, you might want to consider day trading instead. This allows you to benefit from both price fall and rises, so the price doesn’t have to be necessarily doing good for you to profit.
If you are not sure of what to do, some patience might be worth it for now. Study the market and work with an expert if necessary.
eToro – Best Platform to Buy Algorand
eToro have proven themselves trustworthy within the crypto industry over many years – we recommend you try them out.
Virtual currencies are highly volatile. Your capital is at risk.
Here are some common questions we get asked about investing in Algorand’,
How Much will Algorand be worth in 2025
According to most price analysts, Algorand will be worth between $2 to $5 by 2025.
Will Algorand go Up?
Most of the Algorand price predictions we have looked at suggest that the price of Algorand token might be up by the end of this year.