An hour after Elon Musk announced that Tesla would no longer accept payments with Bitcoins, more than a quarter of a trillion dollars was wiped from the global cryptocurrency market.
The billionaire entrepreneur and crypto enthusiast cited concerns about the environmental impact of Bitcoin, which had the ripple effect of driving down the price of nearly all of its rivals, with one notable exception.
The cryptocurrency Ada, based on the Cardano platform, not only avoided a price drop, but actually jumped 20% immediately after Musk’s tweet, before climbing to a new all-time high over the weekend above the US $ 2.
One reason for this is its underlying technology, which is based on a proof of stake, not a proof of work. This means that it does not rely on power-hungry computers to process transactions and generate new Ada units.
Cardano describes itself as the “most environmentally sustainable” cryptocurrency, thanks to its innovative proof-of-stake blockchain protocol that values the percentage of coins a miner owns rather than the processing power they have.
Earlier this year, Cardano founder Charles Hoskinson estimated that his network uses less power than 0.01% of the Bitcoin network. In theory, the proof-of-stake system could achieve more than four million times the energy efficiency of a proof-of-work system, such as Bitcoin’s.
It is not the only cryptocurrency that uses proof of stake or takes its environmental impact into consideration, but it is easily the largest.
Beyond its climate credentials, Cardano also recently became a fully decentralized community network, meaning its parent company no longer has control over its blockchain. Market analysts say this development makes it an attractive proposition for investors.
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“This milestone will help Cardano better position itself to challenge major rivals in the cryptoverse,” said Nigel Green, CEO of financial advisory firm deVere Group.
“Cardano is likely to be a challenge for Ethereum, as not only can it be used as a currency, but its blockchain can also be used to create decentralized smart contracts, protocols, and applications. Also, it is significantly more scalable than Ethereum. “
A 2019 post speculated what Ada’s price might be in the future. At the time, a single Ada was worth $ 0.04 and Cardano’s overall market capitalization was about $ 1 billion, yet the developers foresaw the exponential growth in value to come, and they went even further.
Rather than simply comparing it to other cryptocurrencies, Cardano’s potential was compared to global tech giants like Amazon, Facebook, and Netflix, and the huge valuations that accompany them.
“Cardano aims to become a global financial computer,” the publication stated. “Is that more than Netflix can offer? Netflix is a streaming service … We think Cardano can have a bigger impact. Could Cardano be better than Facebook? Facebook is just a social network. Cardano is here for everyone who could use decentralized currency and create decentralized services.
“What could Ada’s price be in a few years? If you agree with our comparison of Cardano with tech companies, then it’s pretty easy … It could be huge. Cardano could have a similar capitalization to that of the tech giants. “
In the year and a half since this was written, Cardano has become the world’s fourth most valuable cryptocurrency with a market capitalization of over $ 70 billion. While this may still be a far cry from Netflix’s $ 200 billion valuation, it puts it on par with Chinese tech giant Baidu, and more than the combined value of Dropbox, McAfee antivirus, Slack, and LG Electronics.
The same year the post was written, Cardano was ranked the “busiest” cryptocurrency ahead of Ethereum, according to a report by market intelligence firm Santiment, making it the most developed crypto project of 2019. of more than 1,000 that were considered.
Bitcoin didn’t even make the top 20. It is this utility and technological potential that sets Cardano apart from its more famous rival. In addition to the online book that keeps track of transactions, Cardano has a second layer of calculation that enables everything from smart contracts and decentralized applications, to buying land and voting.
“Is Bitcoin a competitor? We don’t believe it. Bitcoin is something else, ”the 2019 publication stated.“ Bitcoin maintains the narrative of being digital gold. ”
This idea that Bitcoin is better suited to be a digital store of value has been embraced by institutional investors over the past year, who have cited its finite supply (there will only be 21 million coins) and its already established reputation of delivering a solid return. from the investment.
Even Tesla has stuck to Bitcoin in this regard, choosing not to sell its $ 1.5 billion holdings. “When fiat currency has negative real interest, only a fool would not look elsewhere,” he explained in a tweet justifying Tesla’s investment. “Having some Bitcoin, which is simply a less silly form of liquidity than cash, is adventurous enough for an S & P500 company.”
Musk has already shown his preference for other cryptocurrencies as an alternative to fiat currencies by accepting Dogecoin payments at SpaceX, another of his companies. The question now will be whether the potential promised by the lesser known Cardano can be popularized and materialized on a similar scale.