Marketed as “the world’s greenest blockchain” and often called an “Ethereum (ETH 0.89%) killer,” the Algorand (ALGO 7.39%) blockchain network offers a fast, low-cost platform for smart contracts. You may have seen the Algorand name around your favorite sporting events in recent years, as the foundation behind it sponsors everything from chess championships and electric car racing to the FIFA World Cup.
However, Algorand’s buzz isn’t always bullish. The cryptocurrency has taken a deeper price cut than peers like Ethereum, Cardano (ADA -0.14%), and Tezos (XTZ 1.58%) in the current crypto winter.
Is Algorand a buy after that massive price drop, or should you turn your attention to other cryptocurrencies right now? Let’s find out.
What sets Algorand apart from its rivals?
Like other major smart contract platforms, Algorand offers a unique profile of computing power, transaction speed, security, and environmental impact, among other attributes. The Algorand project focuses on environment-friendly operations above all else, and the blockchain network has been carbon neutral or even negative (meaning it removes more carbon dioxide from the environment than it creates) since Earth Day 2021.
That being said, Cardano and Tezos put their backs into green marketing and operations, too. Moving on to transactions per second, Algorand is faster than Ethereum and Cardano but slower than Tezos or Solana. So far, Algorand doesn’t stand out as a slam-dunk winner.
Then again, Algorand’s blockchain design relies on a unique transaction settlement system and two separate blockchain ledgers, and some crypto industry watchers call it one of the most secure digital assets on the market today. Furthermore, Algorand’s app development platform has earned plaudits from developers and reviewers as it combines a powerful smart contracts system with easy-to-use app-writing tools.
Algorand’s middling transaction speed is a trade-off against extraordinary data security and a developer-friendly platform. Hence, the blockchain network’s long-term value will depend on its ability to attract developers and their projects, followed by successful product launches into the mainstream decentralized finance (DeFi) solutions.
On that note, Cardano boasts more than 5,000 active smart contracts these days, while Tezos’ smart-contracts count stops at roughly 600. Ethereum wins this comparison handily with nearly 1.5 million active contracts. Algorand appears to fall short again with about 700 active contracts, where the top development projects seem to be clones of solutions originally launched on Ethereum.
It’s not a good look for Algorand.
Is “Algo” something special or nothing to see?
The more I read about Algorand’s position in today’s DeFi market, the less I’m impressed by the cryptocurrency. And Google Trends showed no huge spike in online searches for the crypto name around the FIFA World Cup, even though the Algorand logo was on display in the world’s most popular televised sporting event.
In other words, Algorand hasn’t found it easy to build the media buzz it needs in order to win more development projects. The Algorand Foundation may need to retool its marketing strategy to stay competitive with the Cardanos and Ethereum of the world.
I am not planning to sell my handful of Algorand tokens in a rage, but I’m also not inspired to buy more in this deep price dip. Before reaching for Algorand’s “buy” button, there are too many objectively successful cryptocurrencies to consider. For example, I would much rather put my crypto investment funds to work in Ethereum or Polkadot today, because I expect to see their names in many more development projects in the long run.
Until further notice, I don’t think you should load up on Algorand tokens in this crypto winter.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Anders Bylund has positions in Algorand, Alphabet, Cardano, Ethereum, Polkadot, Solana, and Tezos. The Motley Fool has positions in and recommends Alphabet, Cardano, Ethereum, and Solana. The Motley Fool has a disclosure policy.