Little-known cryptocurrency Cardano (ADA) has emerged from nowhere to become the third largest after Bitcoin and Ethereum following a recent price spike as blockchain enthusiasts seek more climate-friendly options.
Cardano’s price has risen more than 36% in the last week and its market cap stands at $ 90.6 billion (€ 76 billion), according to crypto website CoinMarketCap.
What is Cardano and what is its success? Here is everything you need to know.
What is Cardano?
Cardano is a blockchain platform and has its own internal cryptocurrency called ADA.
The tokens (coins) are named after Augusta “Ada” King, or Ada Lovelace, a 19th century British countess known for her work on a theoretical computing engine. She is considered the first computer programmer and is the daughter of the poet Lord Byron.
Cardano was created in 2015 by Ethereum co-founder Charles Hoskinson, and was launched in 2017. Since then, the token has returned 7,080% to investors.
Cardano is the largest cryptocurrency to use the proof-of-stake blockchain model, which is considered a greener alternative. Chia is another of the cryptocurrencies based on this system.
As cryptocurrency enthusiasts become more aware of their environmental impact, Cardano has an edge over Bitcoin and Ethereum, and this could be one of the reasons for its recent success.
Recent figures from Bitcoinenergyconsumption.com, which measures the energy impact of Bitcoin, show that the estimated annual emissions of Bitcoin are more than 57 million tons of CO2 per year, which is equivalent to the annual carbon footprint of a European country like Greece.
In addition, this summer Iran and China temporarily banned cryptocurrency mining because the computers used in the process were consuming too much electricity and causing power outages.
The proof of stake or Proof of Stake (PoS) is an algorithm to validate the cryptocurrency that works by randomly assigning coins to users, which “validates” them by putting coins as collateral. This differs from the proof-of-work mechanism – used by Bitcoin and Ethereum – which requires a global network of computers to operate at the same time when a transaction takes place.
What are the reasons for Cardano’s success?
In the last two weeks, the cryptocurrency market has been on the rise. Bitcoin and Ethereum have led the way, but “altcoins” – alternative digital currencies to Bitcoin – have also picked up the pace in the price race.
Cardano’s price hike came after it announced a major update called Alonzo, which will be released in September.
Alonzo will introduce smart contracts on the blockchain. Smart contracts are programs stored on a blockchain that are executed when predetermined conditions are met. They are often used to automate the execution of an agreement and will allow Cardano to deploy its own smart contracts and pave the way for its own decentralized applications (dApps).
Another reason for Cardano’s boom is that, as of August 25, its currency will be listed on the Japanese stock exchange following authorization from the country, which is considered to have one of the strictest criteria for entering the market.
This means that the Cardano ADA will join the elite coins of Bitcoin, Ethereum and Litecoin in Japan, where it will be put to the test.