Cryptocurrency has become an extremely popular investment in recent years, but it can be difficult to determine which type of cryptocurrency to invest in if you aren’t clued up about the industry.
This piece will compare BTC, the most popular cryptocurrency, with an interesting up-and-coming digital asset, ALGO.
History
Investors should always be familiar with the history of any cryptocurrency, as it can give you a good indication of the performance of your potential investment.
Bitcoin (BTC)
Bitcoin is easily the most well-known cryptocurrency on the block and also the most valuable.
It was created in 2009 by an entity known as Satoshi Nakamoto – either an individual or a group of people, as no one that has come forward claiming to be the creator has been able to provide sufficient evidence to prove it.
Bitcoin was created in response to the global financial crisis, known as “The Great Recession,” experienced between 2007 and 2009, as many people had begun to distrust banks and their governments. This is why Bitcoin is a decentralized digital currency that does not rely on any central authority.
Algorand (ALGO)
Algorand was conceived in 2015 by an MIT professor named Silvio Micali and was intended to solve various problems in the blockchain industry.
Its white paper was published in 2017, and by the beginning of 2018, it had begun to receive funding.
Algorand was made accessible to the general public in 2019 and is powered by the ALGO cryptocurrency, which has a cap of 10 billion tokens.
What It Does, And Why It Was Created
When investing in crypto, you should know more about why it was created and what issues it seeks to solve.
Bitcoin (BTC)
As previously mentioned, Bitcoin was created in 2009 after the global financial crisis to act as an alternative digital payment system that would operate independently.
To put it plainly, Bitcoin allows people to send money to one another over the internet but can also be used like any other fiat currency.
Since then, Bitcoin has become extremely valuable, and people generally hold on to it as an investment instead of using it to pay for things.
Algorand (ALGO)
Algorand was created as a means to solve some of the biggest issues that the cryptocurrency industry faces, which are network security, network scalability, and transaction speed.
Algorand has solved the scalability issue, as it can process up to 1,300 transactions per second, while Bitcoin can only process five transactions per second.
Algorand also uses a pure proof-of-stake mechanism, which requires far less computing power to create new blocks, making it a much more eco-friendly option.
Price History
If you are looking to buy ALGO or Bitcoin, then it is essential to consider the price history of both cryptocurrencies, as this can give you a good indication of when it will be the right time to invest.
Bitcoin (BTC)
In 2010, one year after Bitcoin initially launched, one Bitcoin was worth a quarter of a single cent ($0.0025). The value of the cryptocurrency then began to snowball, as by April 2011, one Bitcoin was worth around $1.
Two-and-a-half years later, the currency’s value would exceed $1,000, which would only be a small sign of what was still to come, as, by November 2017, one coin would be worth $10,000.
Bitcoin’s value would continue to spike and dip until October 2021, reaching its all-time maximum price of $66,974.77.
Since this impressive record high, many external factors, such as the Russia-Ukraine conflict, have affected the value of Bitcoin and the cryptocurrency industry as a whole, which is why at the time of writing, one Bitcoin was worth $19,317.10 in October 2022.
Algorand (ALGO)
When Algorand was made accessible to the public in 2019, one ALGO token was worth $2.19; a few months after it launched, the price sank to $0.19.
The crypto industry experienced a boom in early 2020; Algorand also benefitted from this, as the token was valued at $1.71 in February 2020.
The cryptocurrency reached its all-time high one year later, in June 2021, when it was valued at $2.37; however, it once again experienced a dip along with the rest of the industry, which is why one ALGO token is currently worth around $0.31 in October 2022.
Market Cap
Market capitalization is a formula that entails multiplying the total number of shares a company has by the price of its shares. In crypto, the formula is applied to the price of a single token multiplied by the number of circulating tokens.
This is important to consider, as it can help you determine any digital asset’s popularity, value, and growth potential.
Bitcoin (BTC)
Bitcoin is the most valuable and well-known cryptocurrency available and has the highest market cap in the cryptocurrency industry.
Bitcoin currently has a market cap of $369.95B at the time of this writing in October 2022.
Algorand (ALGO)
Algorand, on the other hand, is a much newer cryptocurrency, which is why it has a market cap of $2.23B. Algorand has the 29th highest market cap of all cryptocurrencies.
Similarities
There aren’t many similarities between Bitcoin and Algorand, as Bitcoin was created many years before Algorand was.
Some of their similarities include that both currencies need to be stored in digital wallets, and both are unregulated and decentralized, which means that there aren’t any banks or governments in control of them.
Both currencies can also be purchased and traded by the general public, but this can be said for many other top-rated cryptocurrencies.
Differences
One of the main differences between the two cryptocurrencies is that Bitcoin works on a proof-of-work mechanism, while ALGO uses a pure proof-of-stake mechanism.
This means that only certain Algorand miners will receive a reward block of ALGO after allowing their computer’s processing power to be used by the network. This means that regardless of how much you mine, you will still only be as eligible to receive a reward block as any other miner.
Bitcoin’s proof-of-work mechanism, on the other hand, requires a significant amount of computing power to mine, which causes the process to use much more electricity.
Another significant difference between the two is their scalability; as we have already mentioned, Bitcoin can only process five transactions per second, while Algorand can process up to 1,300 transactions per second, with plans to increase this to up to 3,000 transactions per second.
Risks
There are risks attached to every type of investment, so in this section, we will discuss the risk associated with investing in both of these tokens.
Bitcoin (BTC)
The cryptocurrency market is highly volatile and can spike and plummet at any moment. While Bitcoin is the most valuable and popular cryptocurrency, it is not exempt from this.
The fact that Bitcoin and many other cryptocurrencies are decentralized and unregulated is often viewed as a benefit, but it can also be a risk as if you lose your Bitcoin investment, there is no place for you to file a complaint or claim.
Algorand (ALGO)
ALGO is a much newer cryptocurrency, which makes it slightly more volatile than Bitcoin, as it also faces the risk of being toppled by its competitors.
ALGO is also unregulated, and its price can also plummet and spike at any moment – you should always keep this in mind when investing in any crypto.
Where You Can Buy It
Bitcoin (BTC)
Bitcoin is incredibly easy to purchase these days, and you can buy it from any reliable platform, such as PayPal, eToro, Kraken, Robinhood, Binance, and Uphold.
Algorand (ALGO)
If you want to buy Algorand tokens, you should be able to purchase them from Coinbase, Coinmama, Robinhood, Binance, Kucoin, and Huobi Global.
How You Can Exchange ALGO To BTC
Many exchanges on the internet will allow you to exchange ALGO tokens for Bitcoin and vice versa. Some exchanges include those mentioned above, like Binance, Kraken, and Coinbase. As with all investment decisions, make sure that you only convert ALGO to BTC on a secure and reliable platform.
Future Plans
Bitcoin (BTC)
While Bitcoin tokens might not be as valuable as in October last year, many financial analysts have predicted that Bitcoin should return to its former glory by the beginning of 2023.
As with any cryptocurrency, investors should expect some dips and spikes along the way.
Algorand (ALGO)
The future isn’t as certain for the value of ALGO tokens, as many analysts predict that the value of the tokens will increase but only incrementally year by year, although there is no exact way to predict this.
References
https://itrustcapital.com/cms/what-is-algorand
https://cointelegraph.com/news/what-is-the-algorand-blockchain-and-how-does-it-work
https://www.coindesk.com/price/algorand/
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