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What is Algorand and what are the risks of the cryptocurrency?
ALGORAND is a cryptocurrency that runs on the Algorand blockchain.
The digital coin is currently the thirteenth biggest digital coin by market cap according to coinmarketcap.
Don't forget cryptocurrencies come with many risks and you should never invest money you can't afford to lose - or in financial products that you don't understand.
Prices can go down as well as up in the blink of an eye and anyone buying crypto has been warned they risk losing all their cash.
There's also no guarantee you'll be able to convert crypto back into cash, and you're likely to pay higher fees than with regulated financial products.
And as cryptocurrencies are unregulated, you won't have any consumer protections or be able to complain to an ombudsman if something goes wrong.
Newer cryptocurrencies can also be riskier than more established coins like bitcoin.
Here we explain what Algorand is and the risks involved.
What is Algorand?
Algorand is a cryptocurrency of the Algorand blockchain, a public decentralized network on which smart contracts can be built.
It was created in 2019 by Silvio Micali, a professor a the prestigious Massachusetts Institute of Technology (MIT).
The computer scientist has also won the Turing Award for his work in the area of cryptography.
The Algorand Foundation based in Singapore is behind the project.
Algorand claims that it speeds up transactions and improves efficiency compared to bitcoin and other blockchains.
There will be 10billion Algorand coins minted (ALGO) by 2030, according to coinmarketcap.
Algorand will be used by the government of El Salvador to develop blockchain infrastructure including Chivo, the nation's bitcoin wallet according to Forbes.
The country hit headlines as the first in the world to make bitcoin legal tender.
Algorand has also come into the mainstream, signing a deal to sponsor the Drone Racing League, CNBC reports.
Hedge fund SkyBridge Capital run by Anthony Scaramucci, the former White House Director of Communications sacked by Donald Trump, recently said it will use Algorand to get institutions to use blockchain.
The price of Algorand is currently trading at $2.06 at the time of writing.
It's up more than 4% over the past 24 hours and down from a seven day high of $2.54.
Algorand hit an all time high of $3.28 in June 2019.
Susannah Streeter, senior investment an market analyst at Hargreaves Lansdown said: "There is speculation that Algorand could be the next fast growing tree in the crypto forest, with new applications and smart contracts being built on its blockchain branches.
"It’s still dwarfed in comparison with Ethereum and upcoming rival Solana but it’s gained the spotlight with a deal with Drone Racing Land, to provide blockchain enabled tickets, collectables and other NFT-related products to promote the organisation’s events around the world.
"However, this is a highly competitive space and there is no guarantee who the eventual winners will be in the smart contract space.
What are the risks of Algorand?
Cryptocurrencies are risky and returns are never guaranteed.
Ms Streeter said: "Algorand is still wracked with volatility and this makes it unreliable as a store of value.
"Its price is being driven primarily by future price speculation rather than an underlying use-case.
"It’s also highly sensitive to any pressure which could erode the earnings of crypto speculators, having fallen in value as members of congress considered changing tax rules which could cream more profits from short term gains.
"Traders would still be wise to heed the warnings of the Financial Conduct Authority, that if consumers invest in crypto assets they should be prepared to lose their money, so they should only dabble in crypto at the fringes of their investments."
Here we explain the main risks of buying the Algorand coins and other digital currency.Consumer protection
: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements. Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market. Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products. Marketing materials: Firms may overstate the returns of products or understate the risks involved.We pay for your stories!Do you have a story for The Sun Online Money team?
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