Algorand vs. Ethereum – What’s the difference?

Algorand vs.  Ethereum – What’s the difference?

Once you have learned the crucial differences between Algorand (ALGO) and Ethereum (ETH), you are ready to develop a more comprehensive trading strategy. These two networks offer dapp developers with a foundation to build on. While Ethereum was the pioneer in this industry, networks like Algorand are trying to improve its blockchain design to create more scalability. Here is everything you need to know about Algorand versus Ethereum.

What is Algorand?

Algorand was designed to help bridge the gap between centralized and decentralized finance. The protocol went live in 2017 and immediately caught the attention of merchants for multiple reasons. For one thing, the network’s developer was Massachusetts Institute of Technology professor and Turing Award-winning computer scientist Silvio Micali.

    Algorand (ALGO) vs. Ethereum (ETH)

Algorand (ALGO) vs. Ethereum (ETH)

The protocol offers high-end scalability and flexibility to the market and saw its mainnet go live in 2019. It allows developers to create new Dapps that can take advantage of traditional financial applications as well as today’s most advanced DeFi protocols. The developers believe this approach is exactly what is needed to drive widespread adoption.

What is Ethereum?

Ethereum has proven to be an innovative force in the market. The network was the first to introduce the concept of easy-to-program smart contracts in 2013. This revolutionized the crypto industry by allowing developers to take advantage of smart contracts when building applications.

Today, Ethereum reigns supreme as the largest Dapp and DeFi ecosystem in the world. The network has helped stimulate investment in the sector through the introduction of the ERC-20 protocol. This token standard helped spur the breakthrough of ICO (Initial Coin Offering) in 2017. There are currently over 400,000 ERC-20 tokens in circulation. Notably, Ethereum itself held one of the biggest ICOs of its time.

Currently, Ethereum is in the midst of a major upgrade as it seeks to transition from a proof-of-work (PoW) network to using a proof-of-stake (PoS) consensus mechanism. This maneuver would not only improve scalability and help reduce gas fees, it would also allow Ethereum users to secure passive returns by staking their crypto.

What problems was Algorand designed to mitigate?

Algorand tackles the issue of centralization head-on. The protocol was designed to provide open access to financial services globally. The protocol takes advantage of the decentralized nature of the blockchain to improve transparency and democracy in the financial sector.

The system remains secure and scalable. Scalability issues have long been a problem for crypto users. Ethereum in particular is suffering from congestion which has resulted in higher gas costs for everyone. Algorand leverages a PoS consensus mechanism to provide improved performance to users and remain valid. This structure allows anyone to secure passive returns.

Integration of new developers

Another problem Algorand seeks to reduce is onboarding new developers. It is confusing to convert to a fully decentralized system from a traditional protocol. Algorand helps eliminate confusion by removing technical barriers. The system eliminates the need to learn any smart contract programming. Users can easily create NFTs and other digital assets.

What problems was Ethereum designed to alleviate?

Ethereum was designed to provide more functionality for blockchain users. The network improves the scalability of the blockchain compared to its Bitcoin-era competitor. To accomplish this task, Vitalik Buterin, the founder of the platform, integrated a script-based PoW system.

    Algorand (ALGO) vs. Ethereum (ETH)

Algorand (ALGO) vs. Ethereum (ETH)

The protocol fully supports DeFi and is the largest DeFi ecosystem in the world. Notably, what Ethereum currently lacks in functionality is made up for in liquidity.

How does Algorand work?

Algorand is a layer 1 blockchain that provides secure p2p commerce between network users. The protocol operates as an open financial system that takes advantage of the immutable nature of blockchain technology to improve usability. Today, Algorand has been used by enterprise and consumer sectors for various Dapps.

As part of their all-inclusive strategy, Algorand includes a variety of services. One of the main features of the network is the AlgoFi P2P lending protocol. This system allows users to secure returns in the form of interest payments on loaned crypto. To participate, users provide liquidity to large pools of interest-bearing loans.

How does Ethereum work?

Ethereum functions as a proof-of-work protocol. The network relies on nodes to execute smart contracts and ledger validation. Ethereum nodes act as miners and compete with each other to validate the network and earn rewards in the form of ETH. The protocol changed the game with the introduction of the “solidity” programming language which simplified the development of Dapp.

Ethereum in its current PoW standard can handle around 15 transactions per second. This is far less than today’s advanced fourth-generation blockchains. However, the introduction of ETH 2.0 will significantly increase performance. The network will introduce validation nodes as part of this approach. This upgrade will also reduce the carbon footprint of the platform.

Validator nodes

Validator nodes will be responsible for staking ETH and maintaining the status of the blockchain. Anyone can become a validating node if they meet the minimum staking requirements. Currently, these requirements sit at 32 ETH. For those who want to participate but cannot yet afford this amount, there are still betting pools that combine your deposit with others.

The Ethereum Foundation is the non-profit organization responsible for raising awareness of the project and supporting Dapps with the potential to increase usability. The foundation now encompasses a massive developer community with the majority of all new blockchain developers starting out on the network.

How to buy Algorand (ALGO) and Ethereum (ETH)

Currently, Algorand (ALGO) and Ethereum (ETH) are each available for purchase on the following exchanges.

Binary stamp – Founded in 2011, Bitstamp is one of the oldest and most trusted exchanges in the world. This exchange currently accepts residents of Canada, the United Kingdom and the United States excluding the states of Alabama, Hawaii, Idaho, Louisiana, Nevada and New Jersey.

Defend – This is one of the best exchanges for US and UK residents which offers a wide range of cryptocurrencies. Germany and the Netherlands are prohibited.

Respect the disclaimer: Assets available on Uphold are subject to region. All investments and transactions are risky and may result in loss of capital. Crypto-assets are largely unregulated and therefore unprotected.

BinanceIdeal for Australia, Canada, Singapore, UK and most of the world. US residents are prohibited to buy most of the tokens. Use the discount code: EE59L0QP for 10% cashback on all trading fees.

Algorand vs. Ethereum – Smart contract networks clash

When you look at Algorand (ALGO) versus Ethereum (ETH), it’s easy to see that they both have use case scenarios. Algorand may be more advanced in terms of features but it lacks the liquidity of Ethereum. As such, both projects have the potential to continue to grow in the future.

To find out more, visit Invest in Algorand and Invest in Ethereum guides.


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