Cryptocurrencies have been all the hype in the world of finance during the last 12 months. Whilst Bitcoin may instantly spring to mind when one thinks about digital currencies, over 1,000 currently exist in the cryptosphere.
One cryptocurrency that has considerably surged in price since the tail end of last year has been Cardano, dubbed the ‘third generation’ cryptocurrency. Its meteoric increase in price has indeed been impressive – since late November last year, the price surged from $0.03 to a high of $1.28 – an increase of 4000%. Since its price peak in early January, it has fallen to $0.61 at the time of writing.
Launched only in 2017 when it had been a cryptocurrency ‘outsider’, it has now propelled itself to having the fifth-highest market capitalisation of all cryptocurrencies – currently at around $16m. Cardano is strikingly different from other cryptocurrencies in one sense – it is the first blockchain “developed from a scientific philosophy and the only one to be designed and built by a global team of leading academics and engineers”.
Indeed, its progress has been so pronounced that analysts have commented that it may well become the third-largest cryptocurrency by the end of this year.
Operating on a Recursive InterNetwork Architecture, or RINA, Cardano has several advantages that may entice speculators to invest in Ada, the company’s currency. Foremost, and unlike Bitcoin, it utilises a proof-of-stake system (using a technology called Ouroboros) for its payments, allowing transactions to be faster, more efficient and giving Cardano the ability to handle large transactions at once. Its status as the being one of the first blockchains to be built using Haskell – among the most secure programming languages – is also demonstrative of its high security.
Cardano’s attractive proof-of-stake system holds further advantages – that the Ouroboros technology allows miners to attain more tokens in proportion to time spent mining is an aspect that will likely tempt more people to use the cryptocurrency.
Through attempting to amend three central issues with the current state of cryptocurrency trading – scalability, sustainability and interoperability – the company signals its clear intent to have a significant impact on the cryptocurrency markets.
The architecture of its network is also a considerable advantage; it differs from Bitcoin in that it is built with two layers rather than one – the Cardano Settlement Layer and the Cardano Computation Layer.
The presence of two layers within the open source digital currency is beneficial in its ability to allow decentralised apps and smart contracts to be built on a separate layer. Further, the multilayer design of the decentralised public blockchain means amendments to the platform can be made without introducing a fork – a benefit that will undoubtedly attract those familiar with the cryptocurrency markets.
Naturally, one flaw of the cryptocurrency is that, unlike more established cryptocurrencies (such as Bitcoin and Ethereum), it has not yet seen widespread implementation and use. While it has been trialled on a small-scale – a pilot project is currently underway in some Greek universities, whereby evidence of students’ diplomas is placed on the blockchain – the absence of extensive utilisation may make speculators cautious.
The rapid surge in Cardano’s value since its public release and elevation to having the fifth highest market cap paints a positive outlook for the cryptocurrency’s future. Whilst its usage – given the recentness of Cardano’s release – has been limited thus far, its efficient proof-of-stake system and multilayer architecture likely means that it will continue to attract attention from within the cryptosphere throughout this year.