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Ethereum Vs. Algorand – What’s the Difference?

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Once you learn the crucial differences between Ethereum (ETH) and Algorand (ALGO), you are ready to develop a more comprehensive trading strategy. Both of these networks provide Dapp developers with a foundation to create upon. While Ethereum was the pioneer in this sector, networks like Algorand 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 the attention of traders for multiple reasons. For one, the network's developer was a Massachusetts Institute of Technology professor and Turing award-winning computer scientist, Silvio Micali.

Algorand (ALGO) Vs Ethereum (ETH)
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 as well as today's most advanced DeFi protocols. The developers believe this approach is exactly what's 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.
Currently, Ethereum is in the midst of a major upgrade as it seeks to transition from a Proof-of-Work (PoW) network to utilizing a Proof-of-Stake (PoS) consensus mechanism. This maneuver would not only improve scalability and help to reduce gas fees, but it would also enable Ethereum users to secure passive returns by staking their crypto.
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. Ethereum in particular suffers from congestion that has resulted in higher gas fees for everyone. Algorand 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 scalability 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.

Algorand (ALGO) Vs Ethereum (ETH)
The protocol has full DeFi support and is the largest DeFi ecosystem in the world. Notably, what Ethereum may currently lack 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 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?
Ethereum operates as a proof-of-work protocol. The network relies on nodes to execute smart contracts and validation of the ledger. Ethereum nodes act as miners, and compete to validate the network and secure rewards in the form of ETH. The protocol changed the game with the introduction of the ‘solidity' programming language which simplified Dapp development.
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 drive up performance considerably. The network will introduce Validator Nodes as part of this approach. This upgrade will also reduce the platform's carbon footprint.
Validator Nodes
Validator nodes will be responsible for staking ETH and keeping the blockchain status. 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 can't afford this amount yet, there are always staking pools that combine your deposit with others.
The Ethereum Foundation is the non-profit tasked with raising awareness for the project and supporting Dapps with the potential to increase usability. The foundation now encompasses a massive community of developers with the majority of all new blockchain developers starting on the network.
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) vs. 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.
To learn more, make sure to visit our Investing in Algorand and Investing in Ethereum guides.
David Hamilton is a full-time journalist and a long-time bitcoinist. He specializes in writing articles on the blockchain. His articles have been published in multiple bitcoin publications including Bitcoinlightning.com
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