Can Cardano Become the Future of the Cryptocurrency World?
After its launch in September 2017, Cardano has constantly been among the top cryptocurrencies based on their market cap. Now, Cardano takes the fifth place with the market capitalization of more than $45 billion. For now, only Bitcoin ($1,180 billion), Ethereum ($263 billion), Binance Coin ($87 billion), and XRP ($80 billion) have a higher market cap than Cardano.
When it was launched, ADA was traded at just 0.02 USD per coin. Since then, the coin value has been growing constantly. Now, one ADA is traded for 1.43 USD, and the coin value is growing. It means that the coin attracts the attention of investors and users. Moreover, some specialists insist that in the future, Cardano might become the major cryptocurrency by beating even Bitcoin and Ethereum.
Are there viable reasons to believe so? Let us have a look at those special features of Cardano that make the network so popular and check whether Cardano can be a competitor to such cryptocurrencies as Bitcoin and Ethereum.
Cardano and Bitcoin
Bitcoin is a cryptocurrency of the first generation. BTC was created as an alternative to fiat money. It can be bought, sold, exchanged. You can pay with Bitcoins for goods and services. That`s it.
Bitcoin is the most expensive cryptocurrency with many users interested to invest in it. However, the network is plagued by some problems such as slow transactions (completing 1 transaction might take up to 20 minutes), high fees, and high energy consumption by mining activities. So, during one year, Bitcoin miners spend as much energy as the entire population of Argentina does.
Cardano is not even a cryptocurrency but a network. ADA, the coin powering the Cardano system, is considered to be a cryptocurrency of the third generation. The Cardano network is able to process more than 200 transactions per second, the fees are very low, and the coin cannot be mined.
As you can see, it is almost impossible to compare Bitcoin and Cardano, they are too different. When comparing Cardano with the leading cryptocurrencies, it is more correct to do so in a pair with Ethereum than with Bitcoin.
Cardano and Ethereum
Both Ethereum and Cardano systems have many features in common. That`s why their comparison will help users to learn more about Cardano, its network and blockchain, its potential, and its benefits compared to those that the Ethereum network offers.
Both Ethereum and Cardano are networks. And both networks are powered by their own coins: Ether is the crypto of Ethereum, and ADA is the coin powering the Cardano system.
Both blockchains are used to support Smart Contracts, Decentralized Apps, DeFi.
It looks like in comparison with a more established Ethereum system, Cardano has little chance to move on. However, this is far from the truth.
Cardano was created by one of the Ethereum developers Charles Hoskinson with an aim to improve the Ethereum system and avoid the issues that Ethereum started facing at that time. Scalability and security were among the most crucial issues. Charles Hoskinson believed that, at that time, Ethereum couldn`t manage these problems so easily. Thus, he created another system that was aimed to eliminate the existing issues of the Ethereum network.
The Solution Is the Cardano Proof-of-Stake Protocol
The network already uses proof-of-stake technology to confirm transactions. The application of proof-of-stake protocol means less energy consumption, a faster speed of transaction processing, and it allows more people to participate in the transaction confirmations. These are significant benefits compared to those cryptocurrencies that don`t use proof-of-stake to confirm transactions.
There is one crucial potential issue connected with the proof-of-work protocol. This issue is called a 51% attack. If crypto uses proof-of-work to confirm transactions, miners compete to solve a mathematical puzzle faster. The success is directly connected to the computing power applied. Thus, if a person or a company can obtain 51% of the hashing power, such a person or company can control the blockchain. While it doesn`t look feasible for now, the danger exists. Thus, potentially, any cryptocurrency that still works on proof-of-work, is potentially very vulnerable.
This danger doesn`t exist in networks running on proof-of-stake because there, all the users that stack a specific number of coins can confirm transactions. There is no competition between miners and thus, there is no need to purchase 51% of hashing power because it becomes useless. To confirm transactions and receive awards you need just to have some ADA coins.
While Cardano already works on proof-of-stake, Ethereum is just switching to it, and it is still unclear when the transition is going to be completed. In this regard, Cardano is much more advanced than Ethereum.
Unique, or Non-Fungible Tokens Support
Ethereum has become famous for its CryptoKitties collectibles. Since then, many non-fungible tokens have been created, and the majority of them run on the Ethereum blockchain. Some token types are very expensive, and a network`s ability to support them is valued highly.
Cardano has already implemented its â€œMaryâ€ update that allowed the users to create non-fungible tokens on the platform. It pushed the interest of investors to Cardano. Therefore, in this aspect, Ethereum has no benefits compared to Cardano.
Implementing Decentralized Apps on the Ethereum network is becoming increasingly expensive. The same applies to Smart Contracts. On the Cardano network, all these functionalities are much cheaper. Also, the expenditures for developing, implementing, and running Decentralized Apps are more predictable than doing the same on the Ethereum network.
While many users still believe that Cardano cannot compete with Ethereum, some companies are already moving to the Cardano network. Alex Mashinsky, the CEO of lending company Celsius, has already confirmed that he is going to switch to Cardano from Ethereum. His main reason to do so is because of the excessive costs of using the Ethereum network. More than 100 other companies did the same for the same reason.
Cardano founders took a completely different approach to creating and developing the network. The network stands out from all the other crypto projects through its academic approach to every single feature and solution.
All the papers issued by the specialists working in the Cardano team are in open access, they can be reviewed by the leading specialists in the world: engineers, finance experts, and similar, and all the improvements and suggestions are taken into consideration.
This means that every single solution is developed not by programmers only but by programmers in collaboration with an expert in the field for which the solution is designated. Thus, all the features provide maximum utility to specialists. This is one more unbeatable advantage of Cardano compared not only to Ethereum but to any other crypto project.
To Sum up
It is difficult to forecast the future of any cryptocurrency, and Cardano isn`t an exception. However, this is a project that is already competing with the major players in the cryptocurrency market. Moreover, it has all that needed to put an end to the era of Bitcoin and to overcome Ethereum in competition.
Please keep in mind that the above information is based exclusively on our observations and is provided for informational purposes only. It doesn`t constitute any kind of financial advice nor represents an official forecast. Cryptocurrency is a highly volatile asset, and you are investing in it at your own risk.