Cardano’s great sprint began in 2017 with the release of its cutting-edge architecture and mechanisms. It is no surprise that the network is now put side to side with Ethereum due to its advanced technology and similarities in efficiency. But what is it about Cardano that makes it so great? This piece will reveal all the burning questions you have about Cardano. Let’s get into it!
What is Cardano?
Cardano is a decentralized blockchain network that stands as a means of developing decentralized applications and providing banking services. Cardano was created in 2015 but had its release in 2017. The network was founded by Charles Hoskins- a co-founder of Ethereum. He aimed to create a stable ecosystem for all cryptocurrencies. Cardano prides itself on being an avenue to develop smart contracts and decentralized applications. The network is also regarded as the upgraded version of Ethereum because of its similarities. It is also a good note that Cardano is a third-generation platform while Ethereum is of the second-generation. Hence, it gives people room to wonder how much power Cardano could have over Ethereum in the future.
What is ADA?
ADA is the official native token for Cardano. The advanced blockchain of Cardano enables transactions through the ADA token without the need for intermediaries. Hence, users are given autonomy and authority over their safe and secure transactions. These transactions are also stored and recorded on the Cardano platform.
At its inception, ADA sold at $0.0024. But at the time of writing, it holds a value of $0.66 with a market cap of $22B. Currently, ADA boasts of one of the highest cryptocurrencies by market capitalization. It has also garnered credibility among users around the world, leading to its popularity. Cardano has generally shown a bullish pattern. Although, there has been a record of fluctuations and dips in recent times. But this is just part of volatility in the crypto market. Also, recent dips have been a result of recent crashes in crypto.
ADA has proven to be a versatile token. You can do just about anything relating to transactions like sending and receiving the token. ADA is also used to pay fees on the Cardano platform.
How does Cardano work?
Cardano is often referred to as an alternative to Ethereum and Bitcoin. However, both networks use the Proof of Work (PoW) consensus mechanism. Cardano uses a consensus mechanism known as Proof of Stake (PoS). Cardano ensures optimum security through this mechanism. PoS involves users of the network staking their coins to ensure the network’s security. In PoS, users lock their coins up. Users are then chosen at random by the blockchain. Then, the users’ staked coins would be used to regulate the blockchain, validate transactions, and ensure the blockchain’s security. This consensus mechanism is followed with better scalability and more transaction throughput for the network.
Cardano works with an algorithm known as Ouroboros. This algorithm is used to mine blocks with the Proof of Stake system. It also uses mathematical theories and cryptography to oversee the activities of the Blockchain. This algorithm, alongside other features of Cardano, was peer review research being the first of its kind. Ouroboros also gets extra points for making the network more environmentally friendly than its counterparts. Hence, it is safe to say that it saves more energy and is a better fit for the ecosystem.
The wonders of Cardano were not just developed overnight. In fact, there are different phases that describe the network’s development. The Cardano phases include Foundation, decentralization, smart contracts, scaling, and governance. All these phases were necessary for creating a powerful and efficient ecosystem for Cardano.
Cardano has launched some projects that cater to banking services. Products like Atala PRISM are used in credential verification for financial aids and banking. The other products are used in the areas of sales to track products.
Pros and Cons of Cardano
Before investing in the Cardano blockchain, you need to weigh the pros and cons of the project. Doing this is vital as it helps you determine whether a project is viable or not. It also helps to reduce the rate of scams/rug pulls experienced in the cryptocurrency world.
- Environmentally friendly: Cardano has an advanced mining process that uses lesser power but remains highly functional. With the environmental problems associated with crypto mining, the Cardano system reduces it and makes mining operations even safer for the environment.
- Reputable team: Cardano is one of those projects whose founders are credible, transparent, and have a wealth of experience. The founder, Charles Hoskinson, is renowned for being the co-founder of the Ethereum blockchain. With experience gained while working on Ethereum, he was able to modify some of the problems faced when creating Cardano.
- Scalability: Cardano has the opportunity to scale in the coming years, especially with the current advancements made already and the road map they’ve set for themselves.
- Early days: As much as the Cardano blockchain project has been around for years and broadly researched, it is still regarded as an early network and cryptocurrency. This means that its success depends on its future potential, and as such, it is still threading on slightly shaky ground.
- Competitors: Cardano is faced with competitors like Ethereum and Solana with better progress. Cardano could scale up if they introduced features like fully operable smart contracts, which they currently lack.
- Too ambitious: The Cardano blockchain project is said to be “too ambitious” because of the difficulty in understanding its whitepaper. Some people even term it unrealistic and fear that its ambitions might ultimately hinder the project’s growth.
- Slow in operations: The layering of features and enhancements for the Cardano project makes it slow in terms of timing. With the unattended tasks, they may lose time and might be unable to meet up with the demands of the future.
How is Cardano different from Bitcoin?
Cardano and Bitcoin are often compared because of their similar functions in making financial payments. However, they vary in many ways. Let’s take a look at some of the differences between Cardano and Bitcoin.
Cardano uses the Proof of Stake consensus mechanism, while Bitcoin uses the Proof of Work consensus mechanism. PoW is popular between Bitcoin and Ethereum. Meanwhile, PoS is used by altcoins, including Cardano. PoW is generally more expensive and tasking for miners. The former uses computers to solve complex puzzles called hash puzzles. They usually take lots of energy from the computers. Meanwhile, PoS is less demanding and often preferable for miners.
If there is any notable difference between Cardano and Bitcoin, it will definitely be the price. At the time of writing, Bitcoin’s price is $30,106 while Cardano’s price is $0.66. Bitcoin has a higher price advantage because of the time it was released. Bitcoin was released 8 years before Cardano.
Cardano is a lot more scalable than Bitcoin. Scalability entails the ability of a network to process transactions. Cardano’s scalability lies in the fact that it has less traffic than Bitcoin. Also, their consensus mechanism (PoS) allows for better scalability. Cardano can process 250 transactions per second, while Bitcoin can process 4.6 transactions per second.
Bringing back our previous point of scalability, we can also associate Bitcoin’s poor scalability with its high demand. Over the years, Bitcoin has garnered lots of popularity among users. This, among other reasons, has caused a growing demand for the network and token alike. However, Cardano has not attained that level, so its demand is significantly lower.
Is Cardano a good investment?
Cardano being one of the highest market caps proves its potency in the market. However, people might still be confused about their stand on the market trend. Cardano has generally shown uptrend patterns. Although, market volatility has shown its face on Cardano in recent times. Experts say that this might just be one of the lows of Cardano following the recent market crashes in crypto. Cardano still has lots of potential and might just be the next big thing in the future.
Generally, Cardano is a great and innovative project. Its primary aim is to improve on the mistakes made by its predecessors— Bitcoin and Ethereum. It has done some of that successfully, one of which is making mining more environmentally friendly.
However, as advantageous as it is, there are also concerns about it. The general major concern is that Cardano seems to have grandiose plans but slow execution. This could be potentially disastrous as the blockchain/web3 world keeps evolving. If they cannot execute their plans properly, then those plans might be hindered by future demands.
Overall, the Cardano project is exciting, but further research and modifications will determine how far this project will go.
Ebiere Watchman is a prolific writer specialized in web 3.0 and finance. Ebiere’s experience includes research projects, sales copywriting, and storytelling. She prides herself in crafting impeccable content to drive mass adoption in cryptocurrency.