Generally, when people think about cryptocurrency, bitcoin springs to mind. Indeed, many contend that bitcoin and cryptocurrency are two sides of the same coin. Pun intended, of course.
To an extent, they are... but only in that bitcoin is a cryptocurrency. There are plenty of other cryptocurrencies and more are being developed every day.
Thus, the average person could be excused for thinking Cardano might be a new Pierre Cardin fashion line; perhaps something with an Italian flavour or one targeted to the extreme sports enthusiast.
The crypto-savvy know better. Cardano is making waves just now, and for a good reason. Of the top cryptocurrencies to invest in this year, Ada, Cardano's coin and Cardano itself are rapidly gaining steam. How and why?
Superprof now focuses on this exciting blockchain platform.
How Cardano Came to Be
In 2013, a mere four years after Bitcoin burst onto the financial landscape, Charles Hoskinson joined Vitalik Buterin (and six other developers) to build Ethereum - the second-largest cryptocurrency. That partnership lasted only about one year.
Mr Hoskinson wanted to take the venture public while Mr Buterin insisted it should remain a non-profit. The former was removed from the project. After a six-month break, another former Ethereum founder, Jeremy Wood, invited him to collaborate on a new blockchain project his company, Input Output Hong Kong (IOHK) was building.
Thus, Cardano came into existence.
By the way, our little joke about Cardano having an Italian flavour was spot on; those in the know are aware that the project was named after 16th Century Italian polymath Gerolamo Cardano. The endeavour's coin, ADA, was named after Ada Lovelace, author of the world's first algorithm.
One characteristic that distinguishes Cardano from both the Bitcoin and Ethereum blockchains is the protocol that defines how it works.
The first two working blockchains operate on a proof-of-work protocol, which means that an amount of computational time and effort must be spent to achieve results. This protocol makes PoW particularly work-intensive and it gobbles up a lot of energy.
By contrast, Cardano operates on a proof of stake protocol, meaning that validators are confirmed based on their stake - the quantity of cryptocurrency they hold, versus the amount of work required to obtain currency. That makes PoS a much more energy-efficient blockchain system.
It's important to note that the purpose of the work involved for PoW is not to make people work hard (and consume a lot of energy) for a reward; it is to deter data manipulation. In other words, it is a safety feature designed to prevent a multi-pronged assault by making it impossible for anyone with multiple profiles established to swarm the system.
Proof of stake works in much the same way. Even if someone did establish multiple profiles, only those with the highest stakes could validate the overall system. That would make it statistically impossible for any one holder to gain disproportionate power.
PoW and PoS are two of the most renowned Sybil defence mechanisms. Those defences, of course, are named after the woman who was famously treated for multiple personality disorder.
Fascinating, some of these backstories, aren't they? Do you know how the binance coin got its name?
Cardano Catapults to the Forefront
With PoS and PoW clearly understood, we can now turn our attention to Elon Musk and his disproportionate power over cryptocurrency.
It was only a few years ago that Mr Musk declared blockchain and cryptocurrency to be the wave of the future. He did everything he could to promote bitcoin, at one point even promising that he would allow Tesla buyers to pay with bitcoin. It was possible but a bit tricky to do.
And then, he changed his mind. Only about bitcoin, though, not about cryptocurrencies in general.
His stunning about-face, announced on Twitter in May of this year, proclaimed that no longer could anyone buy his cars with bitcoin because that particular blockchain consumed entirely too much energy. However, when a more environmentally conscious crypto coin emerges, Tesla will, once again, be open to cryptocurrency trading.
Almost instantly, shares of Bitcoin (and other cryptocurrencies!) plummeted.
Apparently unconcerned about the furore his tweet caused - that wiped over $300 billion off the market within hours, Musk went on to speculate about Cardano and Ripple being more environmentally conscious due to their lower-energy networks for transaction and mining.
Thus, Cardano became the only cryptocurrency to surge when all others were tumbling.
Elon Musk doesn't get all of the credit for Cardano's wild ride these last few months, though. Ada and that platform had been on an uptick for a while already.
The Environmental Question
To help us predict Cardano's future success, we have to drill down on the issue of energy consumption in relation to cryptocurrency and environmental sustainability.
It all comes down to how we determine value.
For some people, the amount of energy that goes into filming and broadcasting a single episode of Love Island should be considered criminally wasteful. After all, how much social benefit do shows like that produce? Sure, they're entertaining but don't they also do a lot of harm?
By contrast, cryptocurrency has the potential to revolutionise how we spend, save and think about money. It levels the playing field; cryptominers have just as much of a chance at having and building wealth as do old-money inheritors.
Other advantages include:
- crypto is non-discriminatory: anyone of any gender identity, ethnicity/race, geographic location and level of physical/mental ability can build wealth with cryptocurrency
- cryptocurrency systems are incorruptible: they are not vulnerable to hacking or theft; they are virtually corruption-proof. Once you own your coins or tokens, they are yours
- no third parties: banks, credit cards and money transfer apps all make money off of your money; crypto systems eliminate those middle entities
- cryptocurrency builds new industries: for instance fintech, a whole new dimension of financial technology, is an industry working at breakneck speed to keep up with its ongoing, rapid changes
The bottom line is that, if innovation, industry building and democratic systems are considered valuable, then the expenditures needed to build and maintain them are both vital and necessary - even if, right now, their cost is rather steep.
So, on the surface, Elon Musk's environmental concern argument has merit but, looking deeper into the issue, we're compelled to a philosophical debate about the meaning of value and who should enjoy it. And, considering he's planning on blasting off to Mars - a decidedly environmentally unfriendly move, we may even have to question his logic.
Do you wonder if, in his search for environmentally safe cryptocurrencies, he tried to buy Ethereum in the UK?
How Much is Cardano Worth?
As we mentioned earlier, Cardano was enjoying an uptick in value even before Mr Musk's tweet. However, two entities that track cryptocurrency value have commented on Cardano's bullish run.
You might know that a bull market is characterised by currently rising prices that are expected to continue to rise.
Right now, Ada trades at a bit over £1; down from May, after the initial flurry of activity caused by that fateful tweet. However, it is projected to track upward of £7 by the end of the year, according to Coinopedia.
By contrast, Coin Price Forecast is a bit more conservative in their prediction of Cardano's short-term prospects, estimating growth of only about half of Coinopedia's estimate by December. Projecting into next year, however, they believe Cardano's worth could quadruple and still go strong after that.
Indeed, after consideration of the way Bitcoin works - the very reason Mr Musk dismissed the world's first viable cryptocurrency, Cardano is finding many partners - universities and whole countries. These ventures are sure to boost its value, too.
Cardano Price Prediction
Another point to consider when predicting Cardano's prospects is the differences between bitcoin and this surging altcoin.
Bitcoin's supply is capped at 21 million but Cardano's limit is 45 billion. Despite that huge difference in availability - and aside from Elon Musk and his Twitter proclamation, bitcoins have a far wider reach and much more visibility than Cardano does.
And, while that 256-character announcement did much to elevate Cardano's profile, the bump it enjoyed in the immediate aftermath has somewhat levelled off.
Still, while some may consider bitcoin a legacy coin - it was the first-ever cryptocurrency, after all, it faces much more negative scrutiny and benefits from far fewer partnerships than Cardano does. That is to say, it has no partnerships, at least, not on the scale or calibre of its rival altcoin.
All of this means that Cardano may become the standard to which all cryptocurrencies are held.
The site Trading Beasts estimates that Cardano will see a mild slump through the end of this year and the first few months of the next. However, things will start picking up around April of 2022 and, in May, it's likely to triple in value. That surge is predicted to continue throughout the year until December, when it is projected to reflect a five-fold growth.
And beyond then? Anything can happen, including Elon Musk rocketing off in his spaceship. However, as things stand right now, Cardano's growth is predicted to be phenomenal.
How does Cardano compare to Tether's worth, though?
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