Crypto Research

Cardano (ADA)

May 11, 2021

In this article we would like to introduce you to ADA, the ticker symbol for Cardano. What many don't know about Cardano and Ethereum is that they both share a common history. Although Vitalik Buterin is known as the founder of Ethereum, Ethereum was founded by five people in 2013. One of them was Gavid Wood, who later founded the cryptocurrency Polkadot. Another was the mathematician Charles Hoskinson, the founder of Cardano. Cardano is part of the Zug-based Cardano Foundation.

To understand why Cardano is so popular, we need to look at the problems that cryptocurrencies have - specifically the problems of Ethereum and how Cardano is trying to solve them. Ethereum has three main problems:

Proof of stake

One important thing to keep in mind is the difference between Proof of Work (PoW) and Proof of Stake (PoS). Proof of work is used with Bitcoin and is a consensus mechanism that is used for the validation and generation of new blocks of a blockchain. This is where the miners come into play, who guarantee the computing power. Proof of Stake is a special mechanism used to decide who is allowed to add and validate new blocks in the blockchain. Instead of miners, validators come into play here, which are selected to create the next block based on their stake. This means that those who have the most stakes in the network have a greater advantage and thus receive more profits. Cardano is trying to solve the big problem of completely abolishing gas charges by changing the consensus model from PoW to PoS. With this change, Ethereum's second problem, called scaling, will also be solved.

Scaling

To better understand Ethereum and Cardano, let's take a look at the smart contracts. Ethereum has been using smart contracts for years and Cardano will soon have them too. This should be generally available on the mainnet from mid-2021. Cardano's big difference is the speed, which currently allows 100 transactions per second, compared to ETH 1.0, which can only execute 15 transactions per second. Until ETH 2.0 arrives, which then enables 100,000 transactions per second, Cardano has a big advantage over ETH 1.0. Some believe that Cardano will be able to execute 1 million transactions per second in the future.

Interoperability

Finally, there is the last problem: interoperability. Interoperability is the pursuit of a universal language that enables and facilitates mutual communication between blockchains. A technology that can exist inside and outside of its own blockchain by working well with others. This is important in order to survive and develop in this day and age.

Another big difference between Ethereum and Cardano is in tokenomics. Cardano has a limited supply totaling 45 billion tokens, which means it is more of a deflationary currency like Bitcoin than Ethereum. Ethereum is inflationary because it doesn't have a limited supply.

One thing that both Cardano and Ethereum have in common is that they both try to be the best platforms for designing smart contracts. Additionally, if you've been looking at the charts lately, both cryptocurrencies - ETH and ADA - have seen very good growth from a price point of view. The reason for this is of course the general flow of the crypto market. Usually, BTC is the first cryptocurrency to experience a price explosion. This dynamic is then passed on to ETH and ultimately transferred to some other altcoins.