Algorand’s institutional-grade blockchain infrastructure can scale to accommodate billions of users.
Businesses around the globe are beginning to understand the benefits of blockchain as a transformative technology with the power to reshape their business models. As far back as 2016,PwC reported that blockchain provided a unique opportunity for businesses across all sectors to reduce costs and enhance efficiencies. Two years later, in 2018, Deloitte revealed that 95% of businesses surveyed were investing in blockchain technology.
In 2022, this momentum continues with the largest companies across the globe allocating significant resources to blockchain technology to streamline and future-proof their businesses. Google’s parent company Alphabet invested a massive $1.5 billion between Sep 2021 and June 2022, and many other companies followed suit, including Samsung, Goldman Sachs, and Citigroup. With the ability to automate processes, remove intermediaries, and save time and cost in a business, blockchain is every CFO’s dream. However, there are a few caveats.
Not all blockchains are created equal
While blockchain can yield enormous cost savings across different industries, much of the technology is still in the nascent stages and many popular blockchains are ill-suited to the needs of corporations. For starters, the energy requirements of so-called Proof-of-Work (PoW) blockchains that rely on crypto mining (like Bitcoin) are immense.
Bitcoin’s yearly energy consumption is greater than that of an entire country like Sweden or Argentina with one single transaction consuming as much power as an average US household in a 74-day period. Amid growing global concern over the climate crisis and widespread energy shortages, energy-guzzling technologies like this are hardly sustainable for businesses in the long term.
In fact, the crypto industry’s second-largest blockchain Ethereum made mainstream headlines recently as it completed a long-awaited process to become greener by switching its consensus mechanism from Proof of Work (PoW) to Proof of Stake (PoS). The so-called Ethereum ‘Merge’ has reduced the blockchain’s energy output by a massive 99.95% by removing the energy-intensive practice of crypto mining from the equation. That’s because PoS blockchains use validators to validate transactions (rather than miners), making PoS around 2,000 times more energy-efficient than PoW.
PoS is also much more scalable than PoW allowing for higher throughput and reduced transaction costs. After the Merge, Ethereum’s average transaction fee has fallen by 93% from its all-time high of $196 in May 2022. Even so, at an average of $1.70 per transaction, the network is still unsuitable for many business models, causing projects to migrate to different blockchains to reduce the cost of user acquisition.
However, while many PoS chains offer next-to-nothing transaction fees, they often sacrifice other key elements, such as decentralization (and, therefore, security) in order to achieve these goals. Unlike mining, which relies on vast amounts of computational power to verify transactions, validators lend “stake” (the proportion of tokens they own) to the network to validate transactions. This means that the wealthiest validators with the most stake often gain disproportionate control of the network and its governance.
How algorand achieves decentralization, scalability, and sustainability
The Algorand blockchain–founded by Silvio Micali, MIT professor and co-inventor of many of the protocols used in cryptography today (such as Zero Knowledge proofs) solves these issues, allowing for a scalable platform that is both decentralized and environmentally friendly. Running on a variation of Proof of Stake called Pure Proof of Stake (PPoS), Algorand’s unique algorithm prioritizes decentralization and fairness.
Because PPoS selects block validators randomly and anonymously, all network participants have equal opportunities and no validator can gain more control than the rest. In this way, Algorand’s unique approach to security depends on the honesty of the majority of network participants (rather than a limited subset of a few).
Algorand also takes its commitment to the environment extremely seriously. Not only are the PPoS chain’s carbon emissions negligible to begin with (using 0.000008-kilowatt hours per final transaction, versus Bitcoin’s 930-kilowatt hours per transaction–and not necessarily final) but Algorand pledges to be the greenest blockchain, offsetting its remaining emissions through its partnership with ClimateTrade, a blockchain-based marketplace for carbon offsets. Businesses can safely build on Algorand without breaching their ESG compliance burdens or harming the environment — an increasingly salient issue across the MENA region, where the threat of climate change is particularly pronounced.
Algorand’s institutional-grade blockchain infrastructure can scale to accommodate billions of users. Its flourishing ecosystem is already being utilized by more than 2,000 organizations around the globe, like FIFA, Artory, Wholechain, and more. Transactions on Algorand take just four seconds to complete regardless of the volume on-chain, and cost just fractions of a penny to execute, making the platform suitable for any business model. Algorand is also specifically designed to be as accessible as possible, lowering the barrier to entry for businesses.
Algorand can save businesses time and expense
Algorand’s agile infrastructure can save businesses time and expense and is already being utilized across many different industry verticals. Healthcare technology firm, MAPay, for example, is using Algorand to move healthcare payments to the blockchain in Bermuda, Panama, and beyond, solving many pain points and reducing costs while increasing efficiency.
Algorand is also rapidly becoming the blockchain of choice for music makers to launch NFTs to increase fan engagement and create new economic models at scale. Original music distributor Napster is launching a decentralized music-first ecosystem that will benefit fans, music makers, and rights holders alike.
In the realm of art, creators are building sustainable careers and thriving communities with Algorand. ZestBloom, for example, a digital media marketplace for contemporary artists, allows them to regain control with royalties solutions, authentication searches, and more. And in decentralized finance (DeFi), businesses such as Venue One and Folks Finance are enabling decentralized predictions markets and lending and borrowing.
At a governmental level, several countries are beginning to realize the cost and time savings that Algorand’s technology affords. El Salvador is working with Koibanx to build out the country’s blockchain infrastructure on Algorand, and Nigeria is developing a country-wide intellectual property wallet on the Algorand blockchain. Algorand was also selected by FIFA as its official blockchain platform and the tech to power FIFA+ Collect, a new digital collectibles marketplace that will launch this September.
Algorand’s accessible and scalable technology is enabling global businesses and even governments to build sustainable solutions while saving time and cost. With increasing traction, a rapidly expanding ecosystem, and major corporations and governments making Algorand their blockchain platform of choice, isn’t it about time your business made the move?