Since its introduction, Cardano has been regarded as the ‘Ethereum-killer’. This is certainly a big claim. After all, Ethereum is the second most valuable cryptocurrency in the market, after Bitcoin. Yet, even as it is trying to take over Bitcoin, it has a rival coming up that’s vying to take its place. Bitcoin remains the largest and leading cryptocurrency asset, primarily because it is the most well-known and oldest of the lot. However, the integrated applications of Ethereum has helped it in gaining share in the crypto market. This is an area where Bitcoin lacks.
Cardano aims to surpass both because it can offer the best of both of these cryptocurrencies. It answers the excessive energy usage problem that’s associated with Bitcoin and also offers the challenging and captivating smart contracts that Ethereum is famous for. Let’s do a Cardano analysis to understand it properly:
What is Cardano?
A blockchain platform, Cardano is centered on the proof-of-stake protocol known as Ouroboros. This helped Cardano distinguish itself from the rest of cryptocurrencies in the market because the others rely on the proof-of-work protocol. Moreover, it should be noted that Cardanois the blockchain platform, while ADA is the name given to its crypto token.
Cardano shares a lot of similarities with Ethereum and for good reason. Charles Hoskinson, the founder of Cardano, was part of the team that developed Ethereum. However, he had a disagreement with VitalikButerin, the co-founder of Ethereum, due to which he had to leave. He decided to develop his own cryptocurrency project that would offer the attractive features of Ethereum and eliminate its weaknesses. Thus, a number of the robust capabilities that Ethereum is known for can be found in Cardano, like smart contracts.
Hoskinson developed Cardano to be energy-efficient from the beginning and to offer fast transactions for a minimal fee. Furthermore, another major perk that Cardano offers is that it comes with a market capitalization of 45 billion coins, as opposed to Ethereum that doesn’t have a supply cap. Cardano has enjoyed significant success in the market and has become the fifth-largest cryptocurrency in terms of market capitalization. Its programming community is also very active and has attracted a lot of attention in 2021 because the environmental impact of crypto has become a prominent topic this year.
Cardano’s Energy Efficiency
The energy efficiency that Cardano offers is its most notable aspect. The Ouroboros proof-of-stake algorithm allows Cardano to be 20,000 more efficient that the mining system of Bitcoin. Ethereum is also not very energy efficient right now, due to which it plans to move to a proof-of-stake algorithm, similar to Cardano, which would help make a big difference.
The proof-of-work protocol used by Bitcoin and other cryptocurrencies involves the use of specialized computing rigs and high-powered graphics cards for solving complicated mathematical puzzles. The rewards are given in the form of Bitcoin. Proof-of-stake does not use this computing-intensive mining process. It requires the tokens of the miners that are used as collateral for making the system function.
However, not all cryptocurrencies use the PoS model because of its proof-of-stake time bomb. The user that has the most staked crypto will be able to build more blocks and receive a greater reward. If they continue to reinvest these, their stake will continue to grow and they could end up controlling all of it. This would go against the ethos of the crypto community regarding distributed authority. But, this protocol is gaining popularity because of the energy usage concerns that are gaining prominence.
Investing in Cardano
Once you understand the technological advantages that Cardano offers, it is not hard to understand the lure of investing in it. You can look for a cryptocurrency broker that offers you the opportunity to trade the ADA token, or you can find it listed on several major exchanges that offer high liquidity as well as trading volume. It is heavily traded on some of the top exchanges in the market.