With its relatively low price and market capitalization, Algorand (CCC:ALGO-USD) is an altcoin that’s largely under the radar. Yet, that doesn’t mean that cryptocurrency traders should ignore Algorand.
Founded by cryptographer Silvio Micali, Algorand represents an attempt to merge the best aspects of traditional and decentralized financial. The result, hopefully, will be a unified system that’s frictionless, inclusive and secure.
As we’ll see, the ALGO token had quite a run in early 2021. There’s been a price dip, though, and that could provide an entry point for new investors.
It’s risky to hold smaller altcoins, no doubt about that. Still, Algorand is sufficiently unique to set it apart from the sea of upstart tokens out there.
A Closer Look at the Algorand Price
The ALGO coin was launched in 2019, so it’s a newcomer in the crypto-verse. The price generally stayed below 50 cents until early 2021.
Then, Algorand took off in January and the first half of February. Amazingly, the price reached a 52-week high of around $1.82 on Feb. 12.
After a pullback, the ALGO bulls staged another rally in mid-April. Interestingly, they pushed the price up to almost the exact same level as they did in February.
Unfortunately, there was another decline as Algorand slid back below $1. As of this writing, the price sits at 86.12 cents, about midway between its one-month low-high of 67.44 cents and $1.14. The market cap is $2.68 billion.
Since there’s apparent resistance in the $1.80 area, it might be a good idea to take profits if ALGO gets there again.
A Giant Ecosystem
Given Algorand’s small market cap and its low price, you might be led to assume that businesses aren’t aware of it.
That’s actually not the case, however. Apparently, plenty of organizations are interested in a decentralized network that offers enhanced scale and security.
Indeed, there’s a lengthy web page devoted to Algorand’s vast ecosystem. This ecosystem includes many of the most popular cryptocurrency exchanges. It also features partnerships with renowned universities located on multiple continents.
In all, more than 500 global organizations leverage Algorand’s technology. These include fintechs, start-ups, financial services and various institutions.
What’s drawing all of these organizations? There must be something truly unique going on here.
I believe that the main attraction is Algorand’s advanced blockchain, which creates a bridge between centralized systems and legacy processes (i.e., the technically un-savvy) and blockchain infrastructure.
Creating Connections and Saving Energy
This can be achieved through an open connector API (application programming interface).
The API enables participating users to “seamlessly tap into a blockchain that provides the ability to scale to billions of users, speeds required for today’s business needs, finality to ensure security of data and assets on chain, and low transaction costs.”
Moreover, Algorand encourages mindful but reluctant organizations to participate in its carbon-negative network.
Many cryptocurrency networks run on a proof-of-work system, in which the users solve complex cryptographic puzzles through mining activity.
This process is known to be wasteful as it depletes large amounts of energy. Furthermore, the proof-of-work system is expensive.
Not only that, but in proof-of-work, blocks take 10 minutes to be propagated to the network.
That’s not the case with Algorand’s pure proof-of-stake protocol.
In this system, the users are randomly selected to propose blocks and vote on proposals. Additionally, “No stake is ever held hostage.”
In other words, Algorand users are free to spend their stake at any time – no requirement to set aside part of one’s stake in order to participate in the consensus protocol.
The Bottom Line
It’s risky to invest in altcoins generally. Therefore, ALGO bulls should be cautious and maintain reasonable position sizes.
That being said, this is a token and a network that’s different from the others. It’s one of the most interesting altcoins out there.
And with 500 organizations leveraging Algorand’s technology, stakeholders should know that they’re in very good company.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.