Cardano is currently one of the biggest news makers in the cryptocurrency space. In line with the leading coins Bitcoin and Ethereum, it is rebounding from lows in May of this year.
Cardano’s native coin ADA has also made rapid strides, becoming the third largest digital coin by market capitalization. In doing so, it has left many other leading currencies behind. Binance Coin and Tether are now in fourth and fifth place, respectively.
ADA is up more than 1000 percent since the beginning of this year. On August 27, 2021, it was trading at $ 2.62 with a market capitalization of $ 84.4 billion. The native coin of the open source Swiss blockchain Cardano was created so that members can participate in the network’s operations. By default, it gives ADA coin holders the power to vote on any software upgrade.
Regulators and economists recently called for mandatory cryptocurrency use cases to be taken seriously. Accordingly, the ADA creators keep the blockchain on the way to upgrading to the 4th generation by enabling the modular development of decentralized apps and smart contracts.
Cardano: history and functions
Cardano started out as a third generation blockchain network. In comparison, Bitcoin and Ethereum belong to the first and second generation of blockchain technology. It aims to compete with Ethereum by being a more secure, scalable, and efficient network. However, Cardano is trying to achieve what Ethereum has consistently done for a long time.
While investors have put their focus and attention heavily on ADA, there are still some questions as to whether it has the potential to replicate Ethereum’s success.
Cardano vs Ethereum
The network that Cardano aims to imitate and surpass is Ethereum. That’s because Ethereum supports decentralized apps, DeFi, NFT and smart contracts. It’s something that Cardano also promises, and in a better way.
The Cardano network works with “Proof of Stake” as opposed to Ethereum’s “Proof of Work”. When a miner tries to validate a Cardano transaction, he must show the coins in his possession as proof of use. In the case of Ethereum, a miner has to validate the transaction through a proof of work that involves working out a puzzle, which takes more time and consumes more energy.
However, Ethereum has already made progress in addressing some of its challenges mentioned above. One of the improvements is the recent London hard fork. A more formal move to Ethereum 2.0 is expected by the end of this year.
Cardano’s way ahead of us
Cardano’s recent collaboration with UK-based blockchain forensics company Coinfirm to ensure strict compliance with ADA regulatory requirements is also a step in the right direction. Cardano has also been speculated to become the official crypto payments partner of online retail giant Amazon.
Many investors are optimistic about Cardano because of its energy efficiency and plans to implement smart contract functions on the network. Cardano’s smart contract protocol, dubbed the “Alonzo Mainnet Hardfork”, is set to go live on September 12th. This upgrade will allow developers to build exchanges and other DApps such as Defi and NFT on their network.
(Edited by: Yashi Gupta)