Updated: Jul 17, 2022
Cardano (ADA), is creating a name for itself and giving the big coins a run for their money. It has fast become the world’s 6th largest cryptocurrency and is now said to be the best “Ethereum Killer”. Cardano’s native digital token, ADA has a market capitalization of $15.7 and is ranked at #8 in the world of crypto.
This is a sign of its sustainability and gives one a serious reason to wonder whether it’s time to move from either Bitcoin or Ethereum. What else could be in store for Cardano and its cryptocurrency? But before we go further, here’s a brief introduction to the Cardano coin.
HISTORY OF CARDANO (ADA)
Making its appearance in 2017, Cardano is the brainchild of Charles Hoskinson, co-founder of Ethereum and developer of BitShares. Hoskinson felt Ethereum had limitations in its efficiency, capability, and scalability. He sought to develop a new coin to fix all those disadvantages. And thus, the Cardano cryptocurrency was born.
Hoskinson created Cardano to provide a platform for people to build applications that would address the real-life problems of the world and improve living standards of . From eradicating fake medicines on the market to giving access to people who cannot get credit or open bank accounts, Hoskinson hopes to solve them all with the use of Cardano.
According to their website, Cardano is a “proof-of-stake blockchain platform: the first to be founded on peer-reviewed research and developed through evidence-based methods.” It provides unparalleled security and sustainability to decentralized applications, systems, and societies through the combination of initiating technologies. It seeks to create a more sustainable and balanced ecosystem for cryptocurrencies. One could say Cardano was born to redistribute power from unaccountable structures to the people and become a facilitating force for favorable change and progress.
The non-profit foundation that is in charge of managing Cardano has also partnered with a group of academic institutions to research and review all aspects of its blockchain. Researchers at Lancaster University are developing a “reference treasury model” to find a sustainable way of funding future development for Cardano's blockchain.
Not only that, Hoskinson invented the Cardano network to offer a platform for developers where they can develop smart contracts and decentralized applications (Dapps). Recently, Cardano upgraded to the Goguen mainnet, a blockchain technology that offers token lock network features.
HOW CARDANO IS DIFFERENT FROM OTHER CRYPTOCURRENCIES
Cardano’s native token, ADA, is said to be the first third-generation cryptocurrency (Bitcoin is the first generation and Ethereum is the second). Cardano’s algorithm, Ouroboros, has been put forward to tackle and solve the scalability, sustainability, interoperability, and infrastructure problems on other cryptocurrency platforms.
Ouroboros makes use of a Proof of Stake (PoS) system to save costs on energy and enable faster transaction processing. Cardano’s blockchain streamlines the number of nodes present in a network instead of having a copy of each blockchain on a node, commonly attributed with bitcoin. Cardano achieves this by putting node leaders in charge of ascertaining and assessing transactions from a collection of nodes. The top node leader then transfers all transactions to the main network.
Cardano also added RINA (Recursive Internetwork Architecture) to its arsenal to scale its network. This network topology was first developed by John Day and enables customized increments to be added to heterogeneous networks. Hoskinson wants Cardano’s protocol tools to reach the standards of TCP/IP, the dominant protocol used on the Internet for the exchange of data. This solves the problem of scalability that other cryptocurrencies face.
Another problem is interoperability. This refers to the portability of a cryptocurrency both within its natural ecosystem and in its interface with the existing global finance ecosystem. There is no way to perform cross-chain transactions between cryptocurrencies currently, and nor is there a way to conduct a transaction involving cryptocurrencies and the global finance ecosystem without any intermediaries. Exchanges are one such intermediary but they are unreliable as they either fall through or charge exorbitant fees. There has been further distancing of the cryptocurrency ecosystem from the global finance ecosystem due to regulations relating to customer and transaction identities. A way Cardano aims to enable cross-chain transfers is using side chains. Sidechains perform transactions between two parties off the chain.
Cardano is also looking out for new ways for individuals and institutions to divulge metadata relating to customer identities and transactions selectively. This enables cryptocurrencies to be used for everyday trading and transactions.
Sustainability is the last problem on the list and it has to deal with the structures of governance that provide incentives to miners including other stakeholders. It is also about evolving an economic model that is self-sustaining for cryptocurrency. In addition, sustainability aims to invent a constitution of protocols to avoid messy hard forks as is evident in Bitcoin and Ethereum. These protocols will be built into Cardano blockchains in the future so that applications using these protocols check for compliances automatically right as the application is being built. This automation saves time on discussions and implementations regarding hard forks. Hoskinson refers to this as the “mechanization of a social process.”
PROS AND CONS OF INVESTING IN CARDANO
Substance over the hype
Still in the early days
Existence of competition in the same space
No advantage for first-mover
SHOULD YOU INVEST IN CARDANO?
The founder of Cardano has been in the business of cryptocurrency since its inception and has garnered knowledge and experience to enable him to anticipate potential problems and thereby proffer solutions to those problems. Cardano greatly relies on its human and technical credentials and this makes it a very promising coin to have in your wallet.
You should know that all cryptocurrencies are highly unpredictable and volatile, and thus cannot be 100% assured as a good investment. The Cardano coin as we all know is still in its infancy and this comes with its risks and advantages as well. What you should do is think seriously about it and weigh all your options before deciding to go all-in on it. Note that you should only invest money that you cannot afford to lose, this cannot be emphasized enough.
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