Cardano Is The One Cryptocurrency That Can Kill Ethereum

Isaiah McCall

https://img.particlenews.com/image.php?url=3jOpJS_0YmXDUCF00

Cardano (ADA), the first proof-of-stake blockchain platform moved into the third position of the overall crypto market cap last week.

And now following a recent update to Cardano’s blockchain dubbed the “Mary Hard Fork” it could be the next cryptocurrency to explode and join the ranks of Bitcoin and Ethereum in the thousands of dollars.

At the time of this article, Cardano is trading at $1.22. ADA has surged 2,440% in the past year.

While the rest of the cryptocurrency market was crashing last week — and is still crashing with Bitcoin down $10,000 — Cardano broke the trend and continued to soar to record highs. This is because Cardano isn’t like other cryptocurrencies. It’s touted as a third-generation crypto, or the best technology that this space has seen so far.

Crypto Technology Made Simple 

Here’s a breakdown of the three generations of crypto technology. Because like the third generation of Pokémon, it’s better than the other two:

First Generation (Bitcoin, Litecoin, Dogecoin): The earliest cryptocurrencies that invented the blockchain and many of the central features we see in every cryptocurrency today. However, many argue this is the slowest, most expensive, and outdated technology.

Second Generation (Ethereum): Smart programmable money. Ethereum introduced the world to smart contracts. Vitalik Buterin, the creator of Ethereum, and his team realized that online decentralized agreements between two parties could benefit from blockchain technology. This innovation has enabled Etherum to become a hub where many businesses are building their online presence. 

Third Generation (Cardano, Polkadot): The next stage in the evolutionary cycle. A system based on proof-of-stake blockchain and not proof-of-work. We’ll get into the nitty-gritty of POS and POW soon, but for now, know that while Ethereum improved gen one tech in many amazing ways, its system for validating transactions is expensive and uses up a lot of energy. 

This is where Cardano comes into play. 

Cardano Vs. Ethereum 

Cardano and Ethereum are both trying to become the best platforms for designing smart contract technology. They’re both trying to be the Amazon Web Services of the cryptocurrency space; in other words, they want to be the best platforms for other technologies to be built on top of. 

The technical term for what they both want to do is “DAO” or Decentralized Autonomous Organization. A fancy way of saying a decentralized marketplace where future technology is built off of. 

Ironically enough, the founder of Cardano, Charles Hoskinson, was also a co-founder of Ethereum.

Ethereum Has Problems. Cardano Solves Them

One big problem facing Ethereum is high gas fees. Essentially, whenever you want to send ETH you have to pay a transaction fee in order for it to be completed. The average gas fee right now is more than $20, and some users have reported paying thousands in fees. 

While Cardano does have a fee, it’s much cheaper than Ethereum. 

Could you imagine paying a minimum $20 fee on PayPal? The service wouldn’t have survived for long. 

The smallest tasks on Ethereum have become very costly because of these gas fees. Ethereum aims to solve this problem with Ethereum 2.0, but for now Cardano is leading the charge through a revolutionary blockchain innovation called proof-of-stake. 

To understand that system, let’s first quickly break down proof of work and how mining cryptocurrency works.

Understanding Proof of Work

Transactions need to be validated in the cryptocurrency space. This keeps the entire blockchain accountable. A fraudulent or unverified transaction would jeopardize the system. 

Validating these transactions requires miners in a proof-of-work system to solve complex equations that are backed by cryptography. Hence the name “cryptocurrency.” And whoever solves the equation first is rewarded crypto (Bitcoin or Ethereum for example).

It’s like a Rubix cube and whoever solves it first — and thus validates the transaction and adds it to the blockchain — is rewarded for their effort. 

The creator of Bitcoin baked game theory into the blockchain. The system needs to be validated and miners want to earn more as crypto grows in value. This creates a positive feedback loop. To simplify this even further here’s a great example from Bitdegree.org:

Miner 1

Attempt 1: 5+7 = 10 *Incorrect*

Attempt 2: 5+7 = 13 *Incorrect*

Attempt 3: 5+7 = 9 *Incorrect*

Miner 2

Attempt 1: 5+7 = 17 *Incorrect*

Attempt 2: 5+7 = 8 *Incorrect*

Attempt 3: 5+7 = 12 *Correct*

Miner 2 would have validated the transaction and won the reward in this example.

Let me reiterate, a POW system is protected by cryptography. No cryptographic code required to verify a transaction is the same. This is why mining requires better technology and more energy as Bitcoin and Ethereum increase in popularity and scale. Unfortunately, that means the cost to maintain these tokens is getting higher and higher.

This is fine for Bitcoin, which aims to be a store of value that isn’t traded as often. But for a lighter more efficient coin like Ethereum, proof-of-work is a challenge they now have to overcome. 

This is Why Proof of Stake is Better

Proof-of-stake makes transactions much more efficient by not rewarding miners with a block reward — such as Bitcoin or Ethereum — but with the transaction fee. There are no complex mathematical equations in POS. This is why the individuals are called forgers, and not miners in this system. 

It’s actually really cool, and I’m excited to explain it to you. Essentially, you put your Cardano tokens in a specific wallet which freezes them. Doing this means you won’t be able to sell them for a given time, but having these tokens in this wallet enables you to win any transaction fee.

The more you “stake” the higher the chances of you winning this fee. For instance, if you staked 100 coins and 1,000 were in circulation total, you’d have a 10% chance to win any given transaction fee.

You’re locking your Cardano away and letting it work for you. And in doing so, strengthening the network by validating the transactions. 

https://img.particlenews.com/image.php?url=2u3ID1_0YmXDUCF00Source: blockgeeks

The more Cardano owned by a miner, the more power he or she has in its blockchain. Owning 5% of Cardano would give you 5% mining power, for example. POS would eliminate high gas fees and make mining much greener as well. 

In 2015, it was estimated that one Bitcoin transaction required the amount of electricity needed to power up 1.57 American households per day. Today Bitcoin consumes more electricity than Argentina due to the proof of work system where miners solve extensive computational puzzles in order to verify transactions. 

Game Theory Used in Cardano

One important thing to note about proof-of-stake, it uses game theory to incentivize staking and holding the system accountable. If a miner or mining group controlled 51% of the computational power of the network — or owned 51% of the coins in this case — they could create fraudulent blocks and ruin the system entirely. 

Cardano, however, uses the concept of greed to make their blockchain safe and secure to use. Because more mining power goes to the miners who own more Cardano, they are incentivized to run the system fairly to increase value in the coin. If Cardano succeeds, the miners succeed. They have a “stake” in its success. 

Besides crypto being in a bear market at the moment, the reason many speculate Ethereum hasn’t soared past $2,000 is because of the issues that other cryptocurrencies like Cardano solve. POS opens the possibility for cryptocurrencies to become digital money instead of a store of value or gold 2.0 like Bitcoin is. 

Interoperability and The Mary Hard Fork 

Interoperability is the sexy buzzword being thrown around the cryptocurrency space. And for good reason too. 

Cryptocurrency used to be a winner-take-all industry. If it wasn’t someone begging you to buy Bitcoin it was someone begging you to buy Doge. Now, thanks to tokens like Ethereum and Cardano, the game has changed to which cryptocurrency is the best and most fluid to work with other technologies. 

Interoperability — “The ability of computer systems or software to exchange and make use of information.”

I remember in College my business school friends would say they were most scared of Amazon’s economic stranglehold due to Amazon Web Services. This is because AWS doesn’t really compete with other companies, it works with them. 

As Peter Thiel, creator of PayPal, once said, capitalism and competition are inverses of each other. The best companies work together. 

This is what interoperability means for the cryptocurrency space. It’s a race to see who can be the next AWS. They may actually give a service like AWS a serious run for its money in doing so. 

Meanwhile, the “Mary Hardfork”— named after Frankenstein author Mary Shelley — is Cardano’s newest upgrade and a first major step towards this future. Users will be able to create their own unique tokens, including NFTs, and transact directly with these on the Cardano platform. 

All of this isn’t even mentioning Cardano’s robust community, its bold strategy to introduce cryptocurrency in Africa, or the intrepidness of its founder Charles Hoskinson [He really is a character]. 

I’m extremely bullish on Cardano. I don’t even think it has to be an Ethereum killer, but a token that finds its space in the cryptocurrency market. I would keep your eye on this groundbreaking altcoin for the foreseeable future. 

“If you see me trying to boost the price of Ada, then I’ve been compromised and sell all your Ada. Cardano will be valuable based upon hard work, real world use and the utility of the platform. I’m not here to make day traders rich. I’m here to change the world” — Charles Hoskinson

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USA Today Reporter and Ultramarathoner. I write about Cryptocurrency, Fitness Hacks, and Greek Philosophy. Also a diehard Trekkie | mccallisaiah@gmail.com

Jersey City, NJ
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