How Far Will Cardano Go?

Crypto

Tech

How Far Will Cardano Go?

author

Getblock.io

28th January 2021

Cardano is a cryptocurrency platform with a very ambitious goal. In 2017 they released their coin called ADA. The platform was founded by software engineers formerly associated with the Ethereum team.

Key features

Not unlike Ethereum, the ADA algorithm favors Proof-of-Stake (PoS) rather than more traditional Proof-of-Work (PoW). This approach resolves the energy consumption issue. Proof-of-Work-oriented mining consumes large amounts of energy and has been known to disrupt the GPU market and pricing.

Another concern that cryptocurrencies have been receiving for a long time now is skepticism from the regulators. Banks — private and central — are very distrustful of anonymous financial activity. A number of countries, spearheaded by China, have cracked down on cryptocurrencies prosecuting their use and exchange. Cardano has proposed a solution. Wallet holders can voluntarily provide metadata that can be tracked and accounted for in traditional financial systems. According to their team, this feature can conciliate the worlds of traditional and cryptocurrencies.

The Proof-of-Stake approach allows for more sustainable mining of tokens. ADA tokens can be staked into pools. The performance of a pool affects its shareholders. This feature can be quite appealing for passive income options as you delegate the decision-making to someone who might be more involved. That is not to say this is risk-free, as some pools do perform better than others. Relocating your stake to a different pool can be reasonably fast for Cardano.

One platform to unite them all

Like many third-generation cryptocurrencies, Cardano claims to provide interoperability between different blockchains. Thus, creating an environment where eventually the disjointed patchwork on blockchain and cryptocurrency technologies can be united.

The key to this ambitious goal is splitting the blockchain into subnetworks that can communicate, but each subnetwork does not overload its nodes with the entire blockchain ledger volume. This reduces bandwidth and storage requirements for nodes in these subnetworks. Cardano implements some anti-fraud protocols to prevent double-spending when a wallet tries to spend its tokens in different subnetworks before they could communicate. The flexibility and scalability of this approach are quite impressive.

On the verge of a new era

As of now, ADA boasts a $10 billion market cap. There is anticipation that it is going to increase as Cardano enters the so-called Goguen era. According to its roadmap, Cardano will enter the Goguen era in the early spring of 2021. It heavily emphasizes smart contracts. It also promises to introduce multi-currency ledgers.

The gradual process of introducing features has been somewhat controversial. The proponents of this tiered approach advocate for measured and thoughtful development that will help to test features and correct possible errors. On the other hand, some say the project may lose its steam if its development is dragged out for too long. But very flexible smart contracts, a well-thought-out programming language, and lower transaction fees than Ethereum’s are all pointing to Cardano’s increasing appeal for investors. In any case, the release of a major update of the blockchain capabilities will attract media coverage and publicity. It means that at least in a short time after the Goguen era launch, it’s possible that ADA will reach its ATH. It may be very short-lived and entirely speculative, but it will also be contingent on how much promotion Cardano will put behind their new era.

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