Purported Ethereum-killer Cardano (ADA) is banking on energy efficiency to win over users. Cardano has been dubbed the “Ethereum-killer” for quite some time. That’s a bold claim.
After all, Ethereum, the name of the blockchain platform and its native cryptocurrency token, Ether (ETH), is the second most valuable cryptocurrency project globally, after only Bitcoin (BTC). However, even as Ethereum tries to eclipse Bitcoin, a newer competitor attempts to take its place.
Bitcoin remains the most popular crypto asset because it is the oldest and most well-known of the lot. However, due to its appealing integrated applications, Ethereum has gained market dominance in cryptocurrencies. Again, this is an area where Bitcoin falls short.
Cardano aims to outperform them both by combining the best of both worlds. It addresses Bitcoin’s excessive energy consumption while simultaneously challenging Ethereum’s alluring, intelligent contracts. Here’s what you should know as an investor:
- What is Cardano?
- Cardano’s mission for greater efficiency.
- The advantages of Ethereum.
- How to invest in Cardano.
What Is Cardano?
Cardano is a blockchain platform based on the Ouroboros symbol. Ouroboros is a groundbreaking proof-of-stake technology that set Cardano apart from previously created cryptocurrencies that depended on proof-of-work technologies. Cardano’s value proposition hinges on this distinction.
It’s also worth noting that Cardano is the name of the blockchain platform, not the native cryptocurrency coin. Ada Lovelace, a mathematician, is the inspiration for Cardano’s ADA token. Nevertheless, Cardano is deserving of all Ethereum analogies. Cardano’s creator, Charles Hoskinson, was also a co-founder of Ethereum. However, he had an altercation with Vitalik Buterin, Ethereum’s prominent figure. Hoskinson sought to take Ethereum in a more commercial direction by allowing it to accept venture financing. Other Ethereum creators preferred a less business-oriented approach.
After quitting Ethereum, Hoskinson chose to build his cryptocurrency project to improve on it. Hoskinson’s idea would maintain many of Ethereum’s appealing aspects while addressing some of its flaws.
Cardano has had a lot of success. By market capitalization, it is now the fifth-largest cryptocurrency. In addition, Cardano has a vibrant programming community, and the project has piqued attention in 2021 as the topic of cryptocurrency’s environmental impact has taken center stage.
Cardano’s Mission: Greater Efficiency
Cardano has a significant advantage in terms of energy efficiency. Cardano’s Ouroboros proof-of-stake algorithm, according to Marie Tatibouet, chief marketing officer of renowned cryptocurrency exchange Gate.io, is 20,000 times more efficient than Bitcoin’s mining mechanism. As a result, Cardano’s primary opponent in terms of energy usage is Ethereum. As things are, Ethereum isn’t particularly energy-efficient. Ethereum, on the other hand, intends to switch to a proof-of-stake method, similar to Cardano, which would substantially boost its position.
This goes against the cryptocurrency community’s distributed authority ethos. The so-called “nothing at stake” dilemma is another one. Because there is less of a penalty for polluting the blockchain with multiple votes and other false information than there would be in a typical proof-of-work environment like Bitcoin’s, users are more likely to do so. Some purists argue that cryptocurrency doesn’t solve many of the decentralization issues it was designed to tackle without proof-of-work.
With personalities like Tesla CEO Elon Musk (ticker: TSLA) pushing energy usage concerns to the forefront, proof-of-stake has just gotten a lot of free press. As a result, Cardano’s Ouroboros appears to be one of the most intriguing proof-of-stake choices on the market.
Ethereum’s Remaining Advantages
Even while Cardano has numerous technical advantages, it may still lose out in the long run. Against Cardano, Ethereum has a significant first-mover advantage. While Cardano’s concentration on academia and non-profits has become its trademark, one could argue that a lack of private sector participation has limited the variety of market-driven use-cases. On ADA, there isn’t a single significant decentralized app under development.
Cardano is expected to have a robust and intelligent contract environment to compete with Ethereum’s DeFi platform. Cardano, on the other hand, is not yet in the same category as Ethereum.
How to Invest in Cardano
It’s not difficult to invest in Cardano if you believe in its technological advantages. The ADA coin is traded on several major crypto exchanges and has a significant level of liquidity. In March of this year, Coinbase Global (COIN) added support for Cardano, giving the project a high-profile endorsement. Cardano is heavily traded on Binance, Kraken, and Gate.io, among other notable exchanges, and Coinbase.
Cardano’s price has been fluctuating this year, as well as in the past. As a result, potential investors should be aware of this and think about Cardano as part of a broader cryptocurrency portfolio. On the other hand, Cardano could be a good investment because it has a real potential of displacing Ethereum’s market share. So Cardano may not be a hit right away, but it has enough potential to stay a top-tier crypto contender.
Cardano may not be a hit right away, but it has enough potential to stay a top-tier crypto contender.