An investors guide to Algorand, the multi-asset blockchain whose coin is up 500% the last 12 months

Published Sun, Sep 26 20219:28 AM EDT

One of the biggest crypto themes of the year has been the rising popularity of other types of digital assets that are usually built on Ethereum. Think tokens that facilitate decentralized finance, NFTs, blockchain-based games like Axie Infinity. As popularity and usage in these various things increases, so does the need for a host platform to provide a faster and cheaper experience. That's why algo , the native token of the Algorand blockchain, has surged more than 60% in the past 30 days and 490% for the last 12 months, according to CoinGecko. Like Solana and Cardano, Algorand is another Ethereum-alternative. And at $1.73 as of Saturday night, it's a much cheaper opportunity for anyone wanting to make a bet on the future of a blockchain ecosystem. Here's what you need to know about it. How is Algorand different from competitors? Fans of the blockchain say it's faster and more decentralized than alternatives. Not only can Algorand handle tens of thousands of transactions per second, they say those transactions achieve finality, meaning they're considered complete and irreversible, within four seconds. Algorand is also a multi-asset blockchain. That means you can list any other asset besides algo – including cryptocurrencies, stablecoins, loyalty or gaming points, store credits, real estate, and other single, unique assets – on the Algorand blockchain and take advantage of its speed and lower cost. The mechanism used to represent these assets is called the Algorand Standard Asset. This can work in some cases on the Ethereum blockchain, but it would be slower and more expensive to send. "Security [tokens] are definitely leaning that way," said Steven McClurg, chief investment officer of Valkyrie Investments, which has an Algorand Trust. "Historically they have been built on Ethereum, but Algorand is really the only other blockchain outside of Ethereum that can support securities, and the technology that Algorand uses is far superior to Ethereum. There really are no other choices at the moment." Decentralization is one of the biggest ways Algorand stands apart from other high performance blockchains, according to Arul Murugan, founder and managing partner at Borderless Capital, a big investor in startups building on Algorand. Anyone with one algo can participate in consensus, which is the way blocks of data are selected and written to the blockchain. By contrast, in order to participate on Ethereum, participants would need to lock some of their tokens into the network. Decentralization is highly technical, but it's important for the security of the network to ensure authority over any network doesn't fall to one person or become concentrated within a group of people. The future of money rails? One of the biggest ideas out there is that Algorand could help bring traditional finance to decentralized finance, Murugan said. For example, El Salvador adopted bitcoin as legal tender earlier this month, but before that it chose Algorand as the blockchain upon which it wants to build the future of its financial infrastructure. "You have wrapped bitcoin on Algorand and also have the U.S. dollar on Algorand," Murugan said. "So now people can use their bitcoin to buy a coffee the same way they can use the U.S. dollar to buy a coffee, or any transaction. It would cost them less than one cent and take about four seconds to settle." Murugan said Algorand supports more stablecoins than any other blockchain and is in talks with at least 25 central banks about creating central bank digital currencies that would move over Algorand. "Most transactions for payments are going to be happening through stablecoins," he said. "Cryptocurrencies themselves are very volatile, I don't expect that people are going to use a cryptocurrency for doing day to day transactions." Skybridge Capital's Anthony Scaramucci told CNBC Algorand will be "the winner in building the backbone for what institutions need and financial services companies need" as he introduced a $250 million fund focused on providing institutions with access to these unique decentralized finance opportunities on Algorand. Regulatory risk Price volatility is always a risk to consider when investing in digital assets by nature of them being so young, innovative and unproven. Regulatory hostility toward crypto is particularly high these days, especially with stablecoins so in focus for U.S. regulators, which could augment the volatility aspect for some time. "We will have this regulatory pressure for the next one to two years," Murugan said. "It's going to be more volatile so you need to have some hedge or need to be prepared for the near-term risk." Still, he remains bullish on the future of Algorand and of decentralized networks. "The regulatory risk is not just going to go away, but I have not seen anyone slowing down because of the relative risk, everyone is going full steam ahead," he said, talking about those building in the industry. He also warned that blockchain is "very early on," which means there's "some systemic technological risk" to be mindful of as developers work to fix and perfect the system.

Digital cryptocurrencies, Bitcoin, Ripple, Ethernum, Dash, Monero and Litecoin.

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One of the biggest crypto themes of the year has been the rising popularity of other types of digital assets that are usually built on Ethereum.