Could This Eco-Friendly Crypto Surpass Bitcoin and Ethereum?
With more than 7000 digital assets out there, the world of cryptocurrencies is fast expanding. Although Bitcoin (BTC) and Ether (ETH) are the most popular cryptos in the market, many other emerging coins have unique features and offerings.
These altcoins are primarily designed to overcome important issues pressing the blockchain community, such as slow transactions and carbon footprints. As per a report published by Galaxy Digital and confirmed by International Energy Agency (IEA), the annual electricity consumption of the Bitcoin network is around 113.89 terawatts per hour per year (TWh/year).
Currently, there are newer, cheaper, and faster cryptocurrencies that consume a fraction of this energy. Cardano (ADA) is one such network. Created by Charles Hoskinson, Cardano is the result of years of academic research and planning. Hoskinson also co-founded the Ethereum blockchain.
Cardano: A Third-Generation Cryptocurrency
Bitcoin was a revolutionary invention back when it launched in 2009. However, one of the main challenges associated with this coin is that it is challenging to program Bitcoin. For instance, a user can securely transfer 0.02 Bitcoin to another person. However, they cannot include any conditions, meaning they cannot transfer 0.02 BTC in exchange for a product or a service.
This is where Ethereum comes into the picture. It introduced the first programmable blockchain in 2015. When users make Ether payments, they can include conditions. Additionally, devs can build other applications and digital tokens on the Ethereum platform.
However, there is still room for improvement in terms of speed, energy consumption, and decentralization. Ethereum is upgrading to Ethereum 2.0, which will address some of these issues. But third-generation cryptocurrencies like Cardano do not need upgrades to perform better and faster because they have been engineered differently.
Proof of Work vs. Proof of Stake
Bitcoin and Ethereum networks consume a lot of energy because both platforms use a Proof of Work (PoW) mining model. Through the process of mining, these blockchains add new blocks and verify transactions. A blockchain is simply an advanced database made up of interconnected blocks.
As the value of BTC and ETH increases, mining new blocks becomes more profitable, and more firms want to do it. By design, only one BTC block can be mined every ten minutes. When more computing power is added, the mining process becomes harder, meaning more energy is required to reach the same endpoint. As a result, the entire system becomes complex and inefficient.
On the other hand, the Proof of Stake (PoS) mechanism only allows people who own some of the network's native currency to validate transactions. This process, called staking, helps to ensure mining does not get out of control. As a result, there is no financial incentive to keep adding more computing power.
The Cardano network employs a PoS model. The highly-anticipated Ethereum 2.0 upgrade would move the network from PoW to a PoS model and cut its energy by a whopping 99.95%.
Can Cardano ADA Surpass Ethereum ETH?
Both ADA and ETH are popular coins that are beaming with nothing but long-term potential. Ethereum and Cardano are competing in the same sector. They are both scalable, programmable platforms and will offer smart contracts, allowing the development of applications. Both have solid foundations and teams with a lot of crypto experience.
However, there are some notable differences between them. Cardano had dedicated years to planning, researching, and testing its network. Each step it has taken has been peer-reviewed. The platform has brought in experts from various fields to ensure the protocol is robust and scalable.
Many analysts believe that Cardano will overtake Ethereum shortly. The Cardano team plans to launch smart contracts later this year. These contracts refer to self-executing pieces of code on the blockchain network.
Notably, Ethereum already has over 2,500 applications running on its network. Its smart contracts are functional and are the backbone of the emerging non-fungible tokens (NFTs) market. The network also hosts several decentralized finance (DeFi) projects. Decentralized finance applications strive to cut out intermediaries (such as banks) on financial services like loans, interest-earning accounts, etc.
However, until ETH 2.0 launches, Ethereum remains energy-intensive. It is also known for its extremely high gas fees (like transaction fees) that get more costly as the network gets more congested.
Ethereum may have thousands of protocols running on its platform, but Cardano has built partnerships and relationships with governments in developing countries. For instance, it recently rolled out a project with the Ethiopian Ministry of Education to create a blockchain-based system to track student performance in local schools.
2022 will be a crucial year for both cryptocurrencies. If Ethereum manages the transition to ETH 2.0 without major hitches or security breaches, it is likely to lead the crypto market for the foreseeable future.
On the other hand, if Cardano's smart contract rollout is problem-free, it will soon provide low-fee, speedy transactions to NFTs and DeFi applications, which may attract a significant share of the app market. Additionally, its real-world relationships mean that there is a good chance it could outperform Ethereum in the long term.
Cardano: Other Important Features
The Cardano team has some big goals for the project. First, the platform's developers seek to restore trust in global economic systems by integrating Cardano technologies. Precisely, the platform has introduced a more transparent, secure, and sustainable way to conduct business globally.
Furthermore, Cardano devs seek to provide the world’s unbanked population access to financial services. To this extent, Cardano has projects currently underway in Africa and other parts of the developing world.
Another notable goal of Cardano is to help stabilize the decentralized application (dApp) sector. The platform focuses on security and sustainability specifically applied to decentralized systems, applications, and societies. Speaking on their goals, Cardano developers stated they intend to “provide a more balanced and sustainable ecosystem that better accounts for the needs of its users as well as other systems seeking integration.”
Given its massive following and expanding network, it is safe to say that Cardano will remain a top player in the blockchain sector for years. Its technical advancements and unique approach will be quite a hot topic within the blockchain community.
ADA has a market cap of $49,07,14,79,867 and is currently trading at an affordable price of $1.5, making now a great time to invest in the asset.
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