What is Cardano, and what’s going on with it lately?
Is there still money to be made in ADA, or have we missed this token’s boat?
Welcome to cryptocurrency hype year 2021. Crypto prices have reached levels never seen before, thanks mainly to Bitcoin’s drastic price movement; other coins have benefitted from the price swings. Nearly none more than Cardano.
Known by its token, ADA, Cardano has quickly claimed the number three spot of the world’s largest cryptocurrencies by market value at close to C$117 billion. But what has fueled its dramatic rise in price and market cap?
In this feature, we’ll look at what Cardano is and what’s influencing its price action as of late. We’ll also examine what critical updates the Cardano team is working towards and if the price can sustain this ongoing momentum as we march towards the last quarter of 2021.
What is Cardano?
Cardano is a blockchain and cryptocurrency project with the ambitious goal of addressing issues related to scalability and sustainability. Cardano aims to create a platform where complex smart contracts can be created and executed in an open-source environment, with more advanced features than existing blockchains such as Bitcoin or Ethereum. More on smart contracts in a bit.
The name “Cardano” derives from Italian mathematician Gerolamo Cardano (1501–1576). Its token, ADA, was named after British Countess Ada Lovelace, best known for her work in theoretical mathematics.
Cardano was designed to compete against Bitcoin in terms of scalability as a system built on a layered architecture which allows it to be more flexible in its design. In theory, this enables it to be both highly secure and scalable enough for worldwide mass adoption.
Cardano aims to set itself apart from other blockchains by using a new consensus algorithm called proof-of-stake. In addition, sustainability comes into play as it requires no expensive hardware and uses less electricity than mining. This means ADA use cases include low-resource environments such as mobile devices or third-world countries with unreliable power grids.
Cardano’s Price Has Skyrocketed
For many years now, Cardano has been a top-15 cryptocurrency in terms of market value. However, recently it has gained significant ground. As of early September 2020, Cardano’s ADA token sits as the third-largest cryptocurrency with a price of roughly C$3.60. When you put this price into perspective by comparing it with where its price was just a year and a half ago (C$0.05), it’s hard not to take notice of its remarkable price increase over that period.
Source: [Link]
There may be a few reasons why Cardano’s price has steadily climbed in 2021 and has not suffered some of the volatile price swings that Bitcoin has.
One of those reasons pertains to its energy usage. Nevertheless, Cardano’s vision of putting sustainability first is a welcome change in a world trying to become more environmentally friendly.
When you couple that with some of the remarks that known crypto celebrities such as Elon Musk have made about Bitcoin’s “insane” energy consumption [Link], it’s not hard to see why a more energy-efficient, proof-of-stake platform would be a much greener alternative.
Proof-of-stake is a different model than the proof-of-work model that Bitcoin and Ethereum networks operate under. Proof-of-work requires a network of computers worldwide to consume massive amounts of energy because they are working at the same time when a transaction occurs on the blockchain.
Proof-of-stake is different in that the transaction validation is performed not by mining but by stakeholders who own the coins. These nodes are called “validators,” and they use their stake to take part in voting for transactions to be validated.
The best way of understanding this process is to think about it as you would at an annual shareholders meeting: each shareholder has one vote, and whoever gets more votes wins. In Cardano’s case, the best validator will get its choice of transactions validated first. It also means that there’s no need for expensive hardware or electricity bills — just your coins!
Another reason Cardano’s price has steadily risen is an important date: September 12, 2021.
Hello, September 12
On September 12, Cardano will be releasing the ‘Alonzo’ update, and this is an exciting time because it will bring several updates to the platform. However, the most significant feature is the release of new smart contracts.
The introduction of smart contracts is essential. It will allow developers to build more sophisticated applications with increased security and scalability. Smart contracts are automated contracts that are activated once a set of prearranged rules are met. Since these predetermined rules govern these contracts, the automation side of the equation is easy to execute.
This will have a meaningful impact on the Cardano blockchain because it opens the doors for developers and programmers to create and build their decentralized applications (dApps) on this blockchain.
On top of that, it would accommodate more decentralized finance (Defi) apps onto the blockchain. [Link] Incorporating this feature would significantly increase Cardano’s chances of competing with the smart contract king, Ethereum.
What’s Next
As the entire cryptocurrency market, it’s hard to predict where exactly prices will end up. But, with the price action displayed in 2021 and the Alonzo upgrade coming in September, it’s hard not to be bullish about Cardano.
