- Algorand (ALGO-USD) is in the news again as the crypto sector accelerates.
- ALGO may be able to break above the muck with its underlying maturity.
- Cryptos are risky, so if you buy, don’t say I didn’t warn you.
With well over 18,000 cryptocurrencies to choose from, investors have no shortage of options regarding where to put their money to work. But Algorand (ALGO-USD) stands out with a distinguished track record, a focused initiative and significant popularity.
Algorand commands a market capitalization of $6 billion, putting it just inside the top 30 of the world’s most valuable cryptos. ALGO has also posted an impressive performance, up nearly 11% during the trailing week.
As some positive news hits the crypto sector it’s reasonable to assume Algorand can keep moving higher. If future geopolitical stability can be assumed, here are some factors to consider for ALGO.
What is Algorand?
Billed as a self-sustaining blockchain network, Algorand aims to be the backbone of multiple decentralized applications. Underlying ALGO’s innovation is security, scalability and efficiency, which are crucial attributes for any next-generation utilitarian project.
But why bother with Algorand when you have other cryptos like Bitcoin (BTC-USD) with a longer track record? Although BTC will likely always be associated with blockchain and the virtual currency space, the actual network is rather anachronistic by modern crypto standards. Essentially, as Bitcoin became incredibly profitable, people jumped on the bandwagon.
As you might imagine, the bandwagon just wasn’t designed from the ground up to accommodate such volume. To compensate, transaction costs increased to keep the nodes that run the show in the background happy — a problem not unique to Bitcoin. But that legacy made blockchains expensive and cumbersome platforms.
That’s where Algorand could spark a paradigm shift. While providing the same level of decentralization and security, its network is simultaneously a much more scalable, quicker and efficient platform than Bitcoin. It enables not just peer-to-peer transactions, but other uses such as smart contracts.
ALGO as a Breath of Fresh Air
At this point, you might be wondering: What makes ALGO fundamentally different from other cryptos out there?
Great question. I can perhaps interest you in recent news that Algorand released a major technical upgrade to support cross-chain interoperability. In short, ALGO will be able to communicate with other blockchains, enabling far greater utility.
Imagine Algorand being a person who is suddenly fluent in 10 languages, and you can appreciate why so many people are buzzing about cross-chain interoperability. Still, such utility is not exclusive to it, so why bother with ALGO?
It might just come down to reputation. My sense is people will eventually get turned off by weaker crypto projects that rely on memes and inane tweets from celebrities and influencers. With Algorand, the project is all business.
For one thing, its founder is Silvio Micali, a professor of computer science at the Massachusetts Institute of Technology (MIT). Second, Algorand is focused on catalyzing greater utility for blockchain projects. In other words, it’s not meandering into useless endeavors.
On top of that, according to the Harvard Business Review, “in an economy where 70% to 80% of market value comes from hard-to-assess intangible assets such as brand equity, intellectual capital, and goodwill, organizations are especially vulnerable to anything that damages their reputations.”
While we’re talking about the crypto space as opposed to the mainstream equities sector, the value of reputation probably doesn’t evaporate based on an investment market’s underlying distribution of control. Therefore, Algorand has an intangible edge.
All Cryptos Carry Risk
It must be noted that I own a position in ALGO. Therefore, rather than try to influence you into a binary buy-sell argument, you should conduct your own due diligence.
At a time when the crypto space is seemingly dominated by memes and caricatures, there’s likely great value to a sober-minded blockchain project. I don’t know about you, but I’d rather put my money to work in an MIT professor’s project than that of some random person hacking away at a laptop in a coffee shop.
Still, it’s the free market that will have the final say on Algorand. Given how unprecedented a 24/7/365 retail market is, you always have to tread carefully.
On the date of publication, Josh Enomoto held a LONG position in ALGO and BTC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.