Is Algorand a Good Investment? 5 Reasons We Think It Is
Algorand is a leading blockchain project that seeks to become the most environmentally-friendly platforms in the world. It is a smart contract chain that uses the Algorand Virtual Machine (AVM) that provides numerous possibilities for scaling and accelerating projects. According to its website, Algorand can handle over 1,000 transactions per second (tps).
Algorand price performance
Algorand ranks as one of the biggest smart contract platforms in the world. According to CoinGecko, it has a total market capitalization of over $4.7 billion. Like most digital coins, ALGO has not had a good year as its price has crashed by more than 60%. It has also declined by over 77% from its all-time high and is trading near its lowest level since February 2021.
There are numerous reasons why the Algorand price has plummeted in the past few months. First, there are the significant risks about the Federal Reserve will embrace a more hawkish tone. Indeed, the bank has already done that by implementing two rate hikes.
The most recent rate hike that happened in May was a whopping 0.50%. The bank also decided to continue hiking interest rates and implementing quantitative tightening policies. Historically, cryptocurrencies like Algorand tend to underperform in a period of high-interest rates.
Second, Algorand has struggled because of the rising competition and the fact that its ecosystem is a bit smaller than that of its peers. Some of the biggest competitors to Algorand are Ethereum, Cronos, Solana, and Cardano. While these networks have a total value locked (TVL) of billions, Algorand has a relatively smaller one.
With this in mind, let us look at some of the top reasons why Algorand is a good investment.
Algorand’s World Cup exposure
World Cup is one of the biggest sporting events in the world with billions of viewers globally. Recent data shows that there were over 1.1 billion viewers of the final between France and Croatia. This is a significant number considering that the world has a population of more than 8 billion. Also, the World Cup is watched by more people than those who watch Formula 1 and Super Bowl.
In May 2022, Algorand announced that it had signed a deal with FIFA to become a major sponsor of the World Cup. As a result, its logo will be seen by millions of people from around the world. At the same time, FIFA will use Algorand’s technology to create its blockchain initiatives like Non-Fungible Tokens (NFT).
Therefore, we believe that the Algorand price will make a steady recovery during and after the World Cup event. This will happen as more people decide to buy the coin during the matches.
However, while this is a good catalyst, it is worth noting that cryptocurrencies that have appeared in most events have only had a temporary boost. For example, Cronos, which was previously known as Crypto.com Coin, saw just a modes gain when the company sponsored Super Bowl.
Its growing ecosystem
Algorand is a good investment because of its growing ecosystem across the board. Like Solana and Avalanche, Algorand has been adopted by all types of developers. These creators are building applications in all industries, including Automated Market Makers (AMM), analytics, decentralized autonomous organizations (DAO), DEX, governance, oracles, and NFTs among others.
The catalogue of all apps created in Algorand has been growing rapidly in the past few months. Some of the most popular blockchain platforms created using Algorand are AlgoFund, AlgoLaunch, Choice Coin, Algofi, Flex NBA, The Drag Racing League, and Folks Finance among others. While most of these projects are in their infancy, there is a likelihood that they will continue growing in the coming years.
It is a proof-of-stake platform
The other reason why the Algorand price will keep doing well is that it was built using a pure proof-of-stake (PPoS) consensus. This is a protocol that enables new coins to be minted through the use of validators. It differs from a proof-of-work methodology, which allows coins to be created by solving complex mathematical solutions.
Proof-of-stake is said to be a better approach, which explains why Ethereum is migrating from its PoW platform to PoS.
There are several benefits of Algorand being a PoS platform. First, it allows investors to earn a return by simply holding the coin. This process, known as staking, allows people to earn as much as 12% APY. Second, it makes Algoran to be significantly faster. It can handle over 1,000 transactions per second, while Ethereum can only handle less than 20.
Further, Algorand’s PoS system helps to ensure that it is climate-friendly. Indeed, the platform uses ClimateTrade to offset its carbon footprint. ClimateTrade is used widely by companies that are seeking to reduce their footprint.
Algorand is offered widely
Further, Algorand is provided widely by most brokers and exchanges. It is available in leading centralized exchanges like Coinbase, Crypto.com, and Binance. These are some of the most popular exchanges in the world. At the same time, it is possible to buy and trade Algorand in leading decentralized exchanges like Uniswap and PancakeSwap.
Learn more about how to trade cryptocurrency.
Algorand has a strong community
Finally, Algorand has one of the biggest communities in the blockchain industry. Its main Twitter account has over 250,000 followers, which is higher than most cryptocurrencies. Also, a closer look at its network shows that it has millions of wallets. At the same time, Algorand has launched a $250 million grants program to incentivize developers.