With the institutional investors dipping their toes into cryptocurrencies today, Bitcoin and other altcoins, like Ethereum, are gaining traction even among traditional investors. One of those altcoins is Cardano. Famed to challenge the position of Ethereum as one of the world’s largest crypto assets, Cardano is a peer-reviewed blockchain innovation that is centered on ouroboros. With its native cryptocurrency token, ADA, Cardano uses a proof-of-stake protocol. Although Ethereum was launched in 2015, two years before Cardano, they both share similar characteristics.
Features of Cardano
Before you decide whether to invest in Cardano or not, a comprehensive understanding of its characteristics is important.
·     Cardano is energy-efficient
Cardano’s founder, Charles Hoskinson was once a part of the team that created Ethereum. However, Cardano’s efficient use of energy through its proof-of-stake protocol to validate transactions as opposed to proof-of-work consensus differentiates it from Ethereum and even Bitcoin. The proof-of-stake protocol does not consume complex computing power like the proof-of-work. Therefore, Cardano’s energy-efficient green initiative makes it popular among many people. For instance, the Bitcoin mining process consumes about 91 terawatts of energy per hour, the same amount of energy that can power the Netherlands. Although the amount of energy consumption by the Ethereum Blockchain is much lower than that of Bitcoin it is still significant compared to Cardano. Cardano’s proof-of-stake consensus consumes 6 gigawatts of energy per year.
The proof-of-stake protocol allows holders of ADA to stake their coins to become validators of new coins. The staking system implies that transaction validation is based on how many coins are held by a miner. This is beneficial to the community but can also lead to monopoly. New miners cannot be part of the system because the more ADA a miner has, the more they will be able to mint. Just like Cardano, Ethereum is also planning on implementing proof-of-stake consensus on its Blockchain which shows the adaptability of the system.
·     Scalable Digital Asset
Cardano currently handles 250 transactions per second (TPS) against Ethereum 15 TPS. Cardano aims to provide a more efficient scalability solution through the launch of a layer-2 scaling solution known as Hydra. Hydra is set to allow 1 million Transactions Per Second on Cardano’s blockchain. The development of Hydra is necessary for Cardano to be able to handle the storage capacity needed to sustain more transactions on the Blockchain. Cardano currently has one of the lowest costs on transactions and according to its founder; it seeks to ensure that transactions are carried out on the blockchain at little to no cost.
·     Limited Supply
The price of cryptocurrency is largely determined by the force of demand and supply. Similar to Bitcoin, ADA has a limited supply of 45 billion. Currently, there is 32 billion ADA in circulation, and experts said that the finite number of the altcoin can boost its price among its competition.
·     Smart Contract
Cardano recently integrated about 200 verifiable smart contracts on its blockchain explorer. This was launched during Alonzo’s hard fork in September. Currently, there are about 2800 smart contracts on the Ethereum Blockchain but developers have to pay a huge amount of transaction fee. The integration of the smart contract is to enable decentralized finance on the Blockchain. This is part of the Cardano roadmap to becoming a decentralized application (DApps) platform where DeFi developers can save money on transaction fees. Some notable smart contracts on the Blockchain include GREED, Cardax, Liqwid, and SingularityNET. However, the smart contracts are still in a time lock and cannot be accessed by developers until they are released.
Should I Invest in Cardano?
Since its inception in 2017, Cardano has witnessed price volatility like any other crypto asset. It has been one of the top ten cryptocurrencies in the market since its launch. The price of ADA hovered around $1 all through the year 2020. However, in the time when Bitcoin is criticized heavily for its energy consumption, Cardano gained popularity among crypto investors in February 2021 due to its green initiative and environmentally-friendly project. The project has since taken the attention of crypto enthusiasts. Followed closely by Tether and Solana, Cardano has the fifth market ranking with a market capitalization of $69 million. Click here to know the current crypto market ranking.
The enormous attention it enjoyed boosted its price by 170% in July and it reached an all-time high of $3.09. Presently though, the price of ADA stands at $2.14 on major exchanges.
Cardano has been steadily rising since its launch. Its peer-reviewed academic research makes it more secure than most centralized virtual assets. The steady growth the Blockchain is experiencing might, with the introduction of many layers of scalability and interoperability, make it a potentially long time investment asset. However, it is still a cryptocurrency and it experiences big highs and huge lows. Do not place all your bets on one asset. You can combine Cardano with other altcoins in the market.
Conclusion
Cardano has enjoyed publicity and institutional investment in recent times. In the crypto world, noise around an asset might make it difficult to choose the right crypto investment. However, Cardano is future-driven and most experts say it is going to gain more traction going forward.Â
