21.10.2020

Algorand Foundation Sets Aside $50M in Tokens to Spur Development

The program marks Algorand’s most substantial community investment to date. A previous grant program unveiled last November pledged anywhere from 5,000 to 250,000 ALGO per six-month project, but that upper bound was “the maximum award” the Foundation said it would allow. Those figures are dwarfed by this new program’s first allocation: six million ALGO split three ways. 

The Algorand Foundation has earmarked 250 million ALGO tokens – worth about $50 million at press time – for a grant program that aims to spur development of the Algorand ecosystem.

Announced Tuesday, the grant money will be doled out to companies and developers building out Algorand’s proof-of-stake blockchain over the next two to four years, according to Head of Operations Fangfang Chen. Projects focused on research and development, dapps, education and “community initiatives” are eligible for grants.

The Foundation selected projects by Bloq, PureStake and Reach for the first round of grants. Chen declined to state the allotments breakdown, saying only that grants are “tailored to each project need.”

Bloq is developing multi-chain infrastructure while PureStake is building the “AlgoSigner” browser plug-in. Reach, a dapp development assistance platform, is retrofitting its compiler for Algorand, said founder Chis Swenor.

Swenor said Reach’s eventual integration will lower the barriers to entry on Algorand. His platform caters to first-time dapp developers who lack the experience and deep pockets of “blockchain experts.”

Reach makes dapp coding “safe for all developers, not just teams of blockchain experts with an abundance of funds they can throw at auditing,” he said. “We are helping Algorand reach all developers in the world and not just the blockchain experts.”

Derek Yoo, PureStake’s chief executive, told CoinDesk that AlgoSign “will let developers build Algorand transaction capabilities into their applications, much like the MetaMask plugin does on the Ethereum network.”

He said the funding will cover development and the first year of maintenance and upgrades.

The Algorand Foundation controls the program’s selection and evaluation processes at launch, but that may change in 2021, when Chen said it may shift decision making over to the community.

Ahead of Davos, What Can Cash Teach Us About Crypto?

“Transactions are slow and costly.”

“What is it backed by?”

“Can we conduct anti–money laundering compliance?”

“There are serious security flaws.”

“It carries tremendous operational risks.”

“We have concerns around stability.”

Are these comments about cash or cryptocurrency? It is a little hard to say.

The similarities between the two represent an uncomfortable truth, particularly when you consider that many of the parties who have leveled such criticisms at cryptocurrencies over the last three years have been the issuers and defenders of cash itself: central banks.

Ahead of the annual meeting in Davos, where many central bankers, movers and shakers will gather to discuss what the future of finance holds, it is worth remembering where we have come from. In particular, we should remember the characteristics – and the consequences – of the existence of cash, that relic of the past.

I have long held that, were cash invented today, it would be dismissed by policymakers, bankers and law enforcement as dystopian, absurd and dangerous. Regulators would wring their hands over tax evasion and terrorist financing. Central bankers would worry about the implications on their ability to institute negative interest rates. Executives at the heart of the financial system would scoff at the idea of such an archaic system: “What does one do with it?” they would laugh. “Carry it around in a suitcase?”

And yet, for the last hundred years, physical cash has been central to the global financial system. Ahead of his time, economist Ken Rogoff wrote in 2014 in “The Costs and Benefits to Phasing Out Paper Currency” that roughly 10 percent of the U.S. Federal Reserve’s M2 money supply was held in paper cash. Clearly, despite the many issues posed by this asset in this medium, cash remains in high demand.

This should be little wonder. Physical cash can perform many wonders that digital forms of money have (until recently) never been able to offer. Cash is more immune to seizure from banks and governments than a savings account. Cash offers underground economies a cloak of privacy. Perhaps most importantly, cash enables those who do not have access to bank accounts an ability to save and transact in their local currency. These guarantees have formed an important foundation of demand for paper currency.

While paper money remains relevant today, the world is trending in another direction. Digital payments systems, from AliPay to Zelle, are replacing the use of cash. These shifts have prompted policymakers, politicians, and pundits around the world to explore central bank digital currencies (CBDCs) and corporate-issued coins as the next generation of money. Sweden’s Riksbank is working toward an “e-Krona” in the face of dwindling cash use. Facebook’s Libra project has been framed by Mark Zuckerberg himself as a direct answer to China’s digital cash systems, both existent and emerging.

Amidst all of the printed words and proofs-of-concept, however, policymakers would do well to remember that perhaps the most important experiment with digital money – bitcoin – has been running for over a decade in plain sight. The last year has seen CBDCs and corporate coins grab headlines while decentralized cryptocurrencies have often been relegated to a footnote, dismissed as unusable, untenable and even unethical.

But cryptocurrencies have much in common with that other product that has long been a central part of the global financial system: cash. Cryptocurrencies’ importance and implications – for local and global policymaking, for matters of privacy and for the preservation of civil liberties – ought not to be underestimated and ought to be just as central to the conversations of those gathering at Davos.

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