Stakero Blog

What is Cardano (ADA) and is it worth investing in it? Does Green Cryptocurrency Have a Future?

What is Cardano?

Cardano is currently the top-10 most popular cryptocurrency on the Coinbase exchange and is gaining investor interest. Since 2019, Cardano has achieved a staggering growth of over 1700% and has become a major competitor to the main blockchain smart contract platform.

Cardano is one of the most ambitious and idealistic cryptocurrencies out there, looking to find effective solutions to the scalability and sustainability issues facing the dominant Bitcoin and Ethereum. Technically, Cardano is a third-generation blockchain platform based on the Ouroboros protocol with a unique decentralized network built on scientific, academic research created by cybersecurity and engineering experts.

It is an open-source network where decentralized applications and systems are built. The native cryptocurrency of Cardano is called ADA, named after the famous mathematician of the century before last, Ada Lovelace. ADA has reached a market cap of around $55 billion in 2021.
Ethereum co-founder Charles Hoskinson, who also develops Cardano, is confident that access to transparent banking will help billions of people improve their standard of living. 

Cardano is powered by DeFi and is aimed at some of the world's poorest regions. Hoskinson believes that if the technology works in these places, it will be an indicator of its success. In the future, this should lead to its widespread implementation.

However, the currency cannot be used without access to electricity and smartphones. But for such countries as sub-Saharan African Ethiopia and others, Cardano can still bring significant benefits. Therefore, company employees from these African countries are already promoting this idea among local residents.

Reasons for the growing popularity

The main reason for the growth in popularity and value of Cardano (ADA) was that in mid-March 2021, the Coinbase cryptocurrency exchange began to support and around the same time it appeared in Bloomberg Terminal. The market capitalization, which has grown to $55 billion, provides high liquidity, and the interest of institutional investors is growing. But besides these, there are other factors that influence the growth of Cardano.

After the general public became concerned about the environmental friendliness of bitcoin mining, which generates a lot of pollution, in the spring of 2021, and Elon Musk's tweets about canceling the acceptance of BTC for Tesla, many people realized that the main cryptocurrency leaves a large carbon footprint. As a result, investors have become more willing to invest in more energy-efficient digital coins, because it now has a huge impact on the cryptocurrency market.

Cardano is a green coin that does not harm the environment. Cardano's mining process is more efficient than other cryptocurrencies due to the underlying two-layer architecture. The Cardano Settlement Level (CSL) is a clearing arm that allows users to trade ADA instantly at low fees. The control layer consists of protocols with various functions such as improving identity recognition, providing security, working with smart contracts, etc.

Sustainability could be a feature that will give Cardano an edge over other cryptocurrencies in the coming years as the market increasingly seeks to make digital currencies sustainable. In February 2021, the Cardano development team said it would release an update that would allow users to prove ownership with non-fungible tokens and support fiat-based stablecoins.

In addition, the Cardano Foundation has donated over half a billion dollars worth of ADA to charitable causes. A certain percentage of block rewards will be transferred to organizations that deal with environmental and animal welfare issues.

Cardano vs Ethereum

Like Ethereum and Polkadot, the Cardano platform supports smart contracts. Many Cardano fans believe that it will eventually replace Ethereum with its high-speed technology and commission-free transactions.

However, Ethereum is still popular. In 2021, the value of Ethereum increased markedly when large investors paid attention to the cryptocurrency. Most NFT marketplaces are also built on the Ethereum blockchain. The growth of their popularity caused an even greater increase in the value of this asset. In addition, Ethereum profits from well-known decentralized finance (DeFi) projects built on its blockchain. 

But Ethereum has some disadvantages, and the main one is that it is expensive to use, and there are often delays in transactions. Cardano aims to surpass it in these areas due to its lightweight design.

Cardano recently had a major update called Mary transforming its ledger. Now it can not only store ADA on the blockchain but also allows you to create multiple tokens and exchange them.

Experts suggest that Cardano will be able to compete with Ethereum in the future thanks to its innovative proof-of-stake method. Instead of wasting massive computing power and environmental resources to maintain the blockchain, proof-of-stake protocols can use tokens as security to keep the system running.

Ouroboros Cardano was one of the first successful proof-of-stake protocols that created a viable alternative to proof-of-work tokens. It has become so intriguing that even Ethereum plans to switch to it soon. Many companies are also migrating to Cardano from Ethereum.

How to invest in Cardano?

ADA coin is the cryptocurrency used on the Cardano platform. ADA tokens allow voting and staking in the Cardano ecosystem. The coin can be used to earn staking for rewards in different crypto wallets. After that, it becomes an ADA token, which is then used to mine ADA. 

For staking ADA, the user receives a reward. Staking is a popular practice among altcoin holders. Cardano aims to embrace the Proof-of-stake portion of the blockchain. This has led to the emergence of a decentralized application (DApp) development platform with a multi-active ledger and verifiable smart contracts.

Benefits of Cardano

The unique features and benefits that Cardano offers will definitely encourage you to invest. However, it is important to remember that this is still a relatively new coin. 

The ADA token is listed on many major exchanges and has huge liquidity and trading volume. The price of Cardano has been volatile both this year and in the past. Currently, the market is actively supporting sustainability and promoting related cryptocurrencies. But it is difficult to predict how long this trend will continue.

In addition, the market is extremely volatile, and tweets by influential figures can cause a stir and affect the value of both Cardano and other cryptocurrencies. Potential investors should be aware of this and consider Cardano as part of a broad, diversified portfolio.

On the other hand, investing in Cardano might be a good idea as it is a promising cryptocurrency that has a real chance of taking some of the influence away from Ethereum. Cardano may not be as successful, because according to different experts, in the near future it will not be able to take the place of Bitcoin and Ethereum. But this green cryptocurency has enough prospects to remain the main competitor of the cryptocurrency market leaders. 

Today ADA coin is one of the top 10 cryptocurrencies by market capitalization, after Bitcoin, Ethereum, Binance Coin, XRP and Tether.

The big advantage is that Cardano has a strong community around it, and its technology is superior to many analogs. Cardano uses a secure blockchain system with low fees and aims to provide a sustainable ecosystem.

Thanks to these principles, the ADA cryptocurrency is likely to maintain its popularity and be able to easily compete with Ethereum and Polkadot.

Disadvantages of Cardano

Like any cryptocurrency, Cardano faces huge challenges. Competition is one of almost all cryptocurrencies. Especially giants like ETH and EOS.
In addition, Cardano focuses on the field of smart contracts and directly competes with several of the world's leading cryptocurrencies. These include Ethereum, EOS, and of course Tron, which is currently the main competitor.

At the same time, Cardano will face all the problems caused by the careful decentralization process he is trying to implement. Well, creating a healthy and autonomous ecosystem is not an easy task, especially in an environment like cryptocurrency.

Despite its growing popularity, Cardano is not yet the most popular coin in the world of crypto. So while it's one of the top 20 cryptocurrencies, there aren't many wallets yet that support it, which IOHK is trying to solve by developing its own ecosystem.