After Elon Musk, CEO of Tesla, announced that his company would no longer support bitcoin because of its dangerous effects on the environment, the cryptocurrency market dropped exponentially.
Meanwhile, the price of Cardano’s ADA, the world’s fourth most valuable token, surged by 11% in price one Sunday morning to $1.64. Two weeks prior, it reached an all-time high of $2.46, effectively catapulting its market capitalisation to roughly $61.5 billion.
Cardano is a decentralized third-generation proof-of-stake blockchain platform. Ethereum co-founder Charles Hoskinson began the development of Cardano in 2015 and launched the platform two years later.
Like Ethereum, both platforms are used for applications, such as smart contracts, and have the goals of building a connected and decentralized system.
It is still in the middle phases of its development plan as it proceeds through five planned “eras,” which progressively add features such as decentralization, smart contracts, scaling, and governance.
Its main applications are identity management and traceability. The former can be utilized to streamline and simplify processes that require collecting data from multiple sources.
At the same time, the latter can be used to track and audit a product’s manufacturing processes from creation to completion and potentially eliminate the market for counterfeit.
Cardano’s native token, ADA, is named after Ada Lovelace, the nineteenth-century countess and English mathematician recognized as the first computer programmer.
It is used for transacting and settling for smart contract operations and can be bought and sold for fiat currency or other digital currencies.
Ouroboros is the first peer-reviewed, sustainably secure blockchain protocol. It enables the network’s decentralization and allows it to scale to global requirements without compromising security sustainably.
A vision propels their protocol for a more secure and transparent global payment system and a means to redistribute power and control more fairly.
Ouroboros divides physical time into epochs made up of slots, fixed periods; an epoch remains for five days, while a slot lasts for a second.
These numbers are configurable and can be changed after an updated proposal. In summary, epochs work circularly: when one ends, another starts.
Cardano uses the proof of stake (PoS) model, unlike Bitcoin (BTC) and Ethereum (ETH), to mine new blocks in the chain and verify transactions. Only a few Cardano owners can mine ADA, which effectively reduces the energy it consumes.
In comparison, Bitcoin’s proof of work (PoW) model has no restrictions on the number of computers allowed to mine.
It requires a small number of ADA owners to be online and maintain good network connectivity. Additionally, the algorithm contains the concept of stake pools to cut down on energy consumption.
ADA holders can organize themselves into stake pools and elect a select few to represent the pool during protocol execution to make it easy to participate and ensure block creation even if some are offline.
Cardano is also developing a smart contract program that serves as a secure and stable platform for developing decentralized applications.
In the future, the team at Cardano aims to use a democratic on-chain governance system called Project Catalyst to manage the development and execution of projects.
Although cryptocurrencies are highly volatile and speculative investments, Cardano has a strong team behind it and has already accomplished a lot.
In the end, everybody is different, whether it be the financial situation, risk tolerance, or investment strategy.
As we’ve seen, Cardano is more compact than Bitcoin, so it comes with its risks and advantages. The important part is understanding what those are and consider them against your necessities.
Remember only to invest money you can afford to lose, so you balance out the risky and volatile nature of cryptocurrency investment.
In the long term, there’s been no greater method to grow your wealth than investing, but unwisely putting your capital may result in a loss on your part.
Remember that cryptocurrencies are traded between consenting parties with no broker and tracked on digital ledgers, so you only have yourself to blame.
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