What is Algorand and how does ALGO work?
Algorand is a layer-one blockchain whose ALGO coin powers fast payments and smart contracts. It launched in June 2019 and uses pure proof-of-stake.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
On this page
- Committees of ALGO holders propose and certify each block.
- Silvio Micali started Algorand; the mainnet launched in June 2019.
- The SEC named ALGO a security in 2023 enforcement actions.
Algorand aims to settle each transaction in one round, so a confirmed block is not replaced by a competing chain. It does this without mining, on ordinary computers.
How does Algorand work?
Algorand uses pure proof-of-stake. Any ALGO holder can take part, and the protocol picks random committees with cryptographic sortition. Your odds depend on how many ALGO you hold.
- Block proposal: a chosen user proposes a block.
- Soft vote: a committee narrows the proposals.
- Certify vote: a committee commits the block as final.
Who created Algorand?
Silvio Micali, an MIT professor and computer scientist, started Algorand in 2017. The public gained access to a test network in April 2019, and the main network launched in June 2019.
The design came out of Micali's research into Byzantine agreement, the problem of getting many computers to agree when some misbehave.
What is Algorand used for?
Algorand is a smart contract platform, not only a payments coin. Developers build apps on it, and users issue their own tokens.
- Payments: send ALGO to anyone on the network.
- DeFi: lending and trading apps.
- NFTs: digital collectibles.
- Tokenized assets: property or fund shares recorded as tokens.
How is Algorand different?
Algorand and Ethereum both run smart contracts. Ethereum has used proof-of-stake since 2022 and settles blocks after checkpoints. A certified block on Algorand is final in one round.
What legal issues has Algorand faced?
In June 2023, the SEC named ALGO as a security in its enforcement actions against major exchanges. The SEC and the CFTC later called it a digital commodity in a joint interpretive release dated March 17, 2026.
Frequently asked questions
Yes to send a transaction, because network fees are paid in ALGO. You can read the chain and try some apps without holding any.
Yes. Under pure proof-of-stake, any holder can be selected to validate blocks, and your odds improve with the ALGO you hold. You join through a wallet or service that supports consensus participation.
Committees are chosen at random from ALGO holders, so no single company approves transactions. The Algorand Foundation has played a large role in funding and guiding the network.
Mobile, web and hardware wallets made for Algorand hold ALGO and sign transactions. The MyAlgo wallet lost $9.6 million to a hack in February 2023, and the Algorand Foundation told users to move their funds out.
