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Table Of Contents
You will be ready to develop a more comprehensive trading strategy once you learn the differences between Ethereum (ETH) and Algorand (ALGO). Both of these networks provide Dapp developers with a foundation upon which to create. While Ethereum pioneered in this sector, networks like Algorand have attempted to improve its blockchain design to create more scalability. Here's everything you need to know regarding Ethereum vs. Algorand.
What is Algorand?
Algorand was built to help bridge the gap between centralized and decentralized finance. The protocol entered service in 2017 and immediately caught traders' attention for multiple reasons. For one, the network's developer was a Massachusetts Institute of Technology (MIT) professor and Turing award-winning computer scientist, Silvio Micali.
The protocol provides high-end scalability and flexibility to the market and saw its mainnet go live in 2019. It enables developers to create new Dapps that can leverage traditional financial applications and today's most advanced DeFi protocols. The developers believe this approach is needed to help drive large-scale 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 sector by allowing developers to leverage smart contracts when building apps.
Today, Ethereum reigns supreme as the largest Dapp and DeFi ecosystem in the world. The network has helped drive investment in the sector via the introduction of the ERC-20 protocol. This token standard helped to drive the 2017 ICO (Initial Coin Offering) breakout. There are currently over 400,000 ERC-20 tokens in circulation. Notably, Ethereum itself held one of the largest ICOs of its time.
What Problems Was Algorand Built to Alleviate?
Algorand tackles the issue of centralization head-on. The protocol was designed to provide open access to financial services on a global scale. The protocol leverages the decentralized nature of blockchain to improve transparency and democracy in the financial sector.
The system remains secure and scalable. Scalability concerns have long been an issue for crypto users. Before its migration to a PoS network, Ethereum in particular suffered from congestion that often resulted in higher gas fees for everyone. Algorand also leverages a PoS consensus mechanism to provide enhanced performance to users and remain valid. This structure enables anyone to secure passive returns.
New Developer Onboarding
Another problem that Algorand seeks to reduce is new developer onboarding. It's confusing to convert to an entirely decentralized system from a traditional protocol. Algorand helps to eliminate confusion by removing technical barriers. The system eliminates the need to learn any smart contract programming. Users can create NFTs and other digital assets with ease.
What Problems Was Ethereum Built to Alleviate?
Ethereum was designed to provide more functionality to blockchain users. The network improves blockchain versatility compared to its competitor at the time Bitcoin. To accomplish this task, Vitalik Buterin, the founder of the platform, integrated a script-based PoW system.
The protocol has full DeFi support and is the largest DeFi ecosystem in the world. Notably, what Ethereum may currently lack in scalability 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 leverages the immutable nature of blockchain tech to improve usability. Today, Algorand has found use by both the enterprise and consumer sectors for various Dapps.
As part of its 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 enables users to secure returns in the form of interest payments on lent-out crypto. To participate, users provide liquidity to large interest-bearing lending pools.
How Does Ethereum Work?
While Ethereum originally utilized a Proof-of-Work (PoW) mechanism known as the Ethash algorithm, it has since transitioned to become a Proof-of-Stake (PoS) network. This event, which occurred in 2022, was viewed as a major upgrade, often referred to as the launch of Ethereum 2.0. It marked Ethereum's shift towards greater energy efficiency, scalability, and security.
Validators are now responsible for processing transactions and creating new blocks, requiring a stake of 32 ETH for participation or the option to join a staking pool. This transition signifies Ethereum's commitment to sustainability and long-term scalability improvements. As such, users can stake their Ethereum to become Validators. To become a validator on Ethereum, you need to stake 32 ETH. If you don’t have this much ETH, you can leverage mining pools to combine your tokens with others and split the rewards.
How to Buy Ethereum (ETH) and Algorand (ALGO)
Currently, Ethereum (ETH) and Algorand (ALGO) are each available for purchase on the following exchanges.
Uphold – This is one of the top exchanges for United States & UK residents that offers a wide range of cryptocurrencies. Germany & Netherlands are prohibited.
Uphold Disclaimer: Terms Apply. Cryptoassets are highly volatile. Your capital is at risk. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you should not expect to be protected if something goes wrong..
Kraken – Founded in 2011, Kraken is one of the most trusted names in the industry with over 9,000,000 users, and over $207 billion in quarterly trading volume.
The Kraken exchange offers trading access to over 190 countries including Australia, Canada, Europe, and is a top exchange for USA residents. (Excluding New York & Washington state).
Ethereum vs. Algorand – Smart Contract Networks Battle it Out
When you look at Algorand (ALGO) and 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 expand moving forward.
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