Algorand & Account Basics
Algorand is a blockchain - a type of "distributed database" which supports new ways of handling things like money and value.
If you're brand new to blockchain, crypto or Algorand, keep reading for a simple explainer of how it all works. If you're a little more familiar, skip to the "How Algorand Accounts Work" section which is an essential read for anyone setting up their first Algorand wallet.
What is a blockchain?
- Items representing value (like cryptocurrency units or NFTs) live on the blockchain
- When you want to buy, sell or transfer these items, you will submit a transaction to the blockchain
- The transaction will be processed by the blockchain and then the result will be logged (eg. 1 NFT was transferred from AccountA to AccountB) onto the "end" of the blockchain
- Therefore, the blockchain is a "chain" of every transaction that has ever happened on it, allowing us to then work out exactly where all the items are at the current time and see a full history of how they moved around
If that makes sense, keep reading!
So, the blockchain itself (this list of everything that has ever happened to the items of value listed on it) is like a big spreadsheet. What's stopping the owner of the spreadsheet changing a few rows here and there? Maybe give themselves and their friends a few extra valuable items? Or, what if the spreadsheet gets deleted by accident and the entire history is lost, or a technical error causes all the data to be invalid?
This is where the concepts of decentralization and security come into play.
- To make sure the blockchain is accurate and cannot be tampered with, the "spreadsheet" gets stored on many different computers at the same time
- Every time someone wants to submit a new transaction to the blockchain so it can be added to the end of the chain, first, a few computers are selected to verify that the transaction makes sense with their copy of the spreadsheet. They run some complicated calculations to make sure all their copies of the spreadsheet match up, and that the transaction is therefore valid and can be added to the end of the chain.
- This means, no one person, company or computer controls the blockchain's data. It is owned by the people who use the blockchain, and it is always validated with every new transaction.
Most blockchains provide tools which allow users to "explore" the data that they hold, because that data is publicly available and not owned by anyone. On Algorand, you can use AlgoExplorer to look up any transaction that ever happened on the Algorand Blockchain. This is a good way to understand the concept of the blockchain by exploring it first-hand.
What is Algorand?
Algorand is a blockchain, like Bitcoin, Ethereum, Solana, Polygon and many more. Algorand is also what's known as a "Layer-1" blockchain, meaning it provides all the core, raw functionality of a blockchain. Whether you're interested in investing in a cryptocurrency, creating an asset that exists on a blockchain, or building a "decentralized application" (a "dApp" - an application that uses the blockchain rather than a traditional "centralized" database) it's important to understand the qualities of the chain you are choosing to operate on.
All blockchains aim to be decentralized, secure and scalable - however it is technically challenging to achieve all three of these goals at once. Algorand is the only blockchain which manages to be decentralized, secure and scalable without trade-offs, on top of which, it is one of the few green blockchains. This makes it an excellent choice to start your journey into blockchain or cryptocurrency.
How Algorand Accounts Work
So, you're ready to start working with the Algorand blockchain. What's next? First, you're going to need an Algorand account.
You're probably familiar with the term "account" from your day-to-day internet browsing. You have social media accounts, email accounts, accounts for online shopping. You also have accounts that exist off the web, like bank accounts. However, the way your "account" works in these contexts is different to how a blockchain account works. It's important to understand the way the word "account" is used when talking about the blockchain and your interactions with it.
An Algorand account is represented by an "account address", which is a long string of letters and numbers, eg. RWW2NIMCWQBUPXST7HVIJIE7J3BTQ76TRGCNDM6S5MSEDXBFBBPJHIWSH4. This is the "public" part of the account: the address is known to anyone who looks at the blockchain and can be used to send assets to the account.
The account address also comes with a "private key". The private key of the account is what governs full control of the account, ie. the right to send assets from the account, along with all the other capabilities Algorand provides. On Algorand, an account's private key is represented by a 25-word passphrase. Anyone who has the 25-word passphrase has full control of its associated account.
The blockchain itself is not an interface, it is just data. To create an Algorand account on the blockchain, you need to submit a transaction to the blockchain telling it that you want to create an account. For most people, this is going to be quite difficult - it involves setting up complicated developer tools and typing things into a terminal. This is why solutions like Pera Wallet exist. They allow users to manage their Algorand accounts from their phone or computer, using a sleek interface instead of writing scary code. However, it is important to remember that you are still interacting with a blockchain. Pera can submit your transactions to the blockchain and it can show you things that have happened on the blockchain: but Pera is not the blockchain.
Therefore:
- You can create a Pera Wallet
- You can create Algorand Accounts inside your Pera Wallet
- But you cannot create a "Pera Account" - there is no such thing.
For this same reason, accounts you create using Pera Wallet can be accessed using any other wallet that supports the Algorand blockchain. As long as you have the 25-word passphrase (the private key) of the account, you can use it from any supporting software product. Equally, since your Algorand accounts exist on the Algorand blockchain rather than only in Pera, even if you delete your Pera Wallet your Algorand accounts and everything inside them still exist and can be restored into any Algorand-supporting wallet.
Pera cannot access your Algorand accounts
Related to this is the concept of "non-custodial" or "self-custody" wallets. These are wallets that do not store or keep your 25-word passphrases anywhere, in any way. Pera is a non-custodial wallet which means we do not store a record of your accounts' keys in our databases. The only person who ever has access to those 25 words is you.
✅ This is good because it means only you have control of your account and its assets. There is no dependency on Pera as a third party.
⛔️ However, it is important to remember that this also means Pera cannot help you if you lose your recovery passphrase and get locked out of your account.
Next Steps - Getting Started with Pera Wallet
Pera is the best Algorand Wallet to start your blockchain journey. Download the mobile app or get started on web. Check out the following guides to get started creating your first Algorand Accounts with Pera:
Updated on: 05/06/2025
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