Cardano (ADA), which debuted in 2017, is frequently referred to as a third-generation cryptocurrency. It builds on the work of Bitcoin and Ethereum while aiming to be more sustainable and scalable. That means it’s better for the environment, faster, and more secure.
Despite its high potential, Cardano has received little mainstream attention and is regarded as one of the altcoins to watch. If you’re considering purchasing it, here’s what you should know first.
Cardano Is a Low-Energy Cryptocurrency
Cardano has a significant advantage in that it is an environmentally friendly cryptocurrency. Here’s a quick comparison of how much energy Cardano, Bitcoin, and Ethereum are estimated to use each year:
- Cardano: 6 gigawatt-hours
- Bitcoin: 130 terawatt hours
- Ethereum: 50 terawatt hours
Remember that one terawatt equals 1,000 gigatonnes. In other words, Bitcoin consumes roughly the same amount of energy as Argentina, which has about 45 million people. Cardano consumes the equivalent of 600 US homes.
Cardano verifies transactions using a different system, known as proof of stake. Because fewer devices can verify transactions at once thanks to proof of stake, energy consumption is kept to a minimum. Ethereum and Bitcoin, on the other hand, employ the proof-of-work model. As a result, the number of devices involved in proof of work is unrestricted, and this can result in extremely high energy consumption. For this reason, Ethereum is in the process of converting to a proof-of-stake model.
Cardano’s Founder Co-founded Ethereum
With Vitalik Buterin, who served as Ethereum’s co-founder and creator, Charles Hoskinson was a founding team member. However, Buterin preferred a nonprofit, while Hoskinson wanted it to be a commercial project. In 2014, Buterin fired Hoskinson from the Ethereum team due to this disagreement.
Cardano was created by Hoskinson in 2015 and resembled Ethereum in many ways. For example, both Cardano and Ethereum are programmable blockchains that use smart contracts and can be used by others to create apps.
It Is Capable of Handling a Large Number of Transactions
The biggest cryptocurrencies have struggled with scalability. For example, Bitcoin handles about five transactions per second, while Ethereum handles about fifteen. This results in slower transactions and higher fees. Visa, on the other hand, handles approximately 1,700 transactions per second.
Cardano has processed 257 transactions per second in tests. It also intends to add another layer to its blockchain, Hydra. This technology has the potential to process one million transactions per second.
Cardano Has Numerous Use-Cases
Cardano is an ambitious project with numerous potential applications in various industries.
Cardano’s collaboration with the Ethiopian Ministry of Education is a recent, real-world example. For five million Ethiopian students, Cardano’s blockchain will store tamper-proof records. When those students pursue higher education and jobs, their records and accomplishments will be available on the blockchain.
Related article: 5 Things You Didn’t Know About Cardano (ADA)
Cardano Coins Has a Limited Supply
Cryptocurrencies can have a finite or infinite supply. Because there will never be more than 21 million Bitcoin, Bitcoin is the most well-known example of a cryptocurrency with a fixed supply.
Cardano is in the same boat. It has a maximum supply of 45 billion ADA, with approximately 32 billion ADA currently in circulation. That does not guarantee that the price will rise. However, if Cardano becomes popular, the limited supply may help to increase demand.
Cardano, like any other cryptocurrency, has risks. We can’t be certain it will achieve its objectives or even be worth anything in the future. These are the risks of any cryptocurrency investment. Nonetheless, it’s easy to see why investors are excited about Cardano. Now that you know more about it, you can decide whether purchasing Cardano is a good idea.