One of the stated goals of Ethereum co-founder Charles Hoskinson’s project is to create a better Ethereum. Hoskinson told Bloomberg that more than 100 companies were considering switching from Ethereum to Cardano. On the one hand, Cardano wants to establish itself as the basis for smart contract applications, including for decentralized finance (Defi) and non-fungible tokens (NFTs), but it also wants to work consciously with states and companies.
Unlike Bitcoin or Ethereum with “proof-of-work”, Cardano relies on the so-called “proof-of-stake” algorithm, which uses less energy. Instead of mining, Cardano generates new coins through “staking”. This procedure is considered to be significantly more efficient and energy-saving than mining with “proof of work” in which all computers in a network are looking for the solution to a complex mathematical problem. Only those who solve the task first will be rewarded with an Ether, for example. The performance of the rest of the computers was used for nothing. How long Cardano will be the only major cryptocurrency with “proof of stake is still unclear”. With the update to Ethereum 2.0, the Cardano rival is also turning to the proof-of-stake.
Functionality and performance are constantly checked and further developed by a large group of experienced developers and researchers from the crypto scene. The focus here is also on adapting the currency to the needs of large organizations and countries.
How the “proof of stake” algorithm works
The “proof of stake” algorithm gives more capabilities to create and add a new block to the blockchain to users with more tokens in their accounts. ADA stored in a wallet can also be delegated to a stake pool to earn rewards. This reduces the load on the network, decreases electricity costs for miners, and increases transaction processing speed. But users who hold a lot of tokens would get control of the system by that. The algorithm then randomly selects a candidate from the stakeholders, the probability of the choice corresponding to the value of his stake. This candidate then becomes the creator of a new block. This keeps the system decentralized and people with a lot of ADA don’t get excessive power by the production of new ones.
Possible uses of ADA
Just to name some. Awarding of certificates and degrees. Counterfeit protection, for digital art of any kind. To be able to do without private third-party providers, regulatory data can be digitized, such as vaccination records, tax data, or health insurance data. Certification and verification of supply chains.
Revolution from the African continent?
At the moment a lot happens on the African continent in terms of Cardano. The aim here is to provide an infrastructure with the Cardano blockchain in the countries that can serve various markets and use cases. Digital identities as well as loans and insurance are under discussion here, and it looks very promising at the moment.
Does Cardano have a future?
Cardano is a project that promises a lot and is moving forward with a great concept. It is currently still uncertain whether this will be sufficient to assert oneself in the dynamic crypto market in the long term. Blockchain technology is the answer to several challenges, whether financial, societal, or technological. Especially Cardano convinces with its scientific approach and I think it will play a major role in the future.
What do you think about Cardano? Let me know in the comments below.