Cardano, a relatively new entrant in the cryptocurrency scene, was introduced on September 29, 2017, and has quickly gained significant attention. While its rapid rise to the top six cryptocurrencies within just four months is impressive, what truly sets Cardano apart is its vast potential compared to other digital currencies in the market.
Ethereum, another prominent cryptocurrency, has also garnered considerable interest due to its multifaceted nature. Unlike being just a digital currency, Ethereum functions as a software platform that goes beyond simple transactions. Its primary purpose lies in enabling smart contracts, which leverage blockchain technology to verify various agreements and interactions between parties.
While Ethereum is often referred to as “Bitcoin 2.0” for taking blockchain to the next level, Cardano aims to become “Ethereum 2.0,” striving to build on Ethereum’s accomplishments and push the boundaries even further.
Cardano is spearheaded by Charles Hopkinson, who happens to be a co-founder of Ethereum as well. Witnessing Ethereum’s growth into the world’s second most popular cryptocurrency by market capitalization, and the excitement surrounding its potential, Hopkinson and his team aspire to reach greater heights with Cardano.
To distinguish its technology from its currency, Cardano’s software platform is referred to as Cardano itself, while the currency it employs is called Ada. This differentiation may be confusing to some, but it emphasizes that Cardano is much more than a means of exchanging value among users—it is a robust software platform with numerous applications beyond currency transactions.
Cardano as a Means of Exchanging Value
The usefulness of a cryptocurrency can be measured in three main ways: its function as a currency, its utility beyond currency transactions, and its value as an investment. These factors collectively determine the overall value of a cybercurrency.
One critical aspect of a digital currency’s usefulness is its scalability. Bitcoin, for example, has faced significant challenges in this area. The Bitcoin system can only process a limited number of transactions efficiently, leading to long processing times. As a result, it can take up to two hours to complete a transaction, which is considerably slower compared to traditional payment methods that process transactions in seconds.
Ethereum has attempted to address this issue by enabling faster transaction processing, though it still requires several minutes to complete a transaction. However, if Ethereum were to become widely adopted as a payment method, the increased demand could potentially overwhelm the system, causing bottlenecks and inefficiencies.
Ripple stands out as a digital currency that has achieved scalability, allowing it to handle increased demand effectively. Ripple has managed to compete with well-established payment systems like Visa in terms of transaction processing times, showcasing its potential as a practical payment solution.
Cardano, like Ripple, is striving to enhance scalability. While it hasn’t consistently achieved the desired results, it has shown better performance than Ethereum and significantly outperformed Bitcoin. Cardano’s transaction processing times typically fall within a few minutes, making it relatively efficient for online transactions.
In the context of the growing online retail market, a cybercurrency’s efficiency for online transactions is crucial. Waiting a minute or two for an online transaction may be acceptable to customers, but longer processing times can lead to dissatisfaction and inconvenience, especially in face-to-face settings like physical stores.
Cardano’s success in the online realm is notable, given its relatively low usage compared to Bitcoin. However, if Cardano were to gain widespread adoption like Bitcoin, its ability to perform acceptably under increased demand would be a concern. Nevertheless, Cardano shows promise in being adaptable to higher transaction volumes compared to many other cryptocurrencies.
Cardano as a Tool
The primary goal of Cardano is not to replace traditional currencies like the dollar or even Bitcoin. Instead, it aims to leverage blockchain technology and public ledgers to facilitate transactions and interactions in new and innovative ways.
An exemplary use case of this concept is Ethereum’s smart contracts, where the public monitors and verifies the progress and completion of contracts between users. However, Cardano seeks to take this idea even further, aiming to achieve a more scientific approach to blockchain technology. It aims to expand the philosophy of proving things on the blockchain beyond just smart contracts.
Decentralizing money is a fundamental objective of cryptocurrencies, and Cardano has made strides in achieving this. Unlike centralized databases, which are susceptible to fraud, manipulation, and data loss, Cardano’s decentralized ledger, spread across many computers, enhances security and governance.
Cardano envisions its technology being utilized for a wide range of purposes beyond just securing transactions. It seeks to provide publicly verifiable solutions for various types of disputes and interactions.
One of Cardano’s significant advantages is that it is built on peer-reviewed scientific research. This scientific foundation extends not only to the software it produces but also to the software itself, making it the first truly scientific blockchain technology.
While Cardano does function as a currency for exchanging value between users of its software, its mission goes beyond being a digital currency. One of its ambitious goals is to bring banking services and other offerings to underdeveloped countries lacking traditional banking infrastructure. By providing an efficient and secure system, Cardano aims to increase market participation, especially among those who distrust traditional authorities with managing their money.
Cardano’s existence on a public ledger helps alleviate concerns about trust, as transactions and interactions are transparent and publicly verifiable.
The idea of centralized databases may indeed become less prominent in the future, as advancements in decentralized technologies like Cardano continue to progress. While there is still much progress to be made, the concept of using public ledgers for various applications is steadily moving forward. As online access expands, the potential for ideas like Cardano to be widely implemented becomes more feasible.
Cardano as an Investment
The use of cybercurrencies and related programs as investments has been one of the most significant factors driving their popularity and market value. Cardano, like many other cryptocurrencies, has experienced substantial growth in market capitalization and price, largely due to public interest and speculation.
Unlike traditional investments such as stocks, where valuation is linked to the present or future value of a company, the price of digital currencies like Cardano’s Ada is primarily driven by supply and demand dynamics. This means that their value can be highly volatile, and market excitement and sentiment can lead to significant price fluctuations.
Cardano, like many other cryptocurrencies, experienced a peak in late 2017 and early 2018, followed by a period of profit-taking that caused its price to decline significantly. However, it has since stabilized to some extent.
Investing in cybercurrencies carries high risks compared to traditional investments, and the potential for high rewards comes with extreme volatility. The price of Cardano has seen rapid and dramatic changes, with huge gains and losses occurring within short periods.
While Cardano achieved an extraordinary 60-fold increase in value over a little more than a year, such returns are not typical in traditional investment markets. However, with high returns comes a higher level of risk, and investors should exercise caution and be prepared for the extreme fluctuations in the cybercurrency market.
The correlation between cybercurrencies can also impact Cardano’s price movements, as these assets tend to be influenced by overall market trends.
Regarding Cardano’s future, its prospects appear promising, given its focus on taking public proof of work to new levels. The project’s emphasis on scientific research and innovative approaches could contribute to its long-term success.
