Why Cardano Is a Game-Changing Cryptocurrency For the Future

Over the past few months, the crypto news cycle has been agog with the news of Bitcoin (BTC) and Ethereum (ETH) price somersaults. Whilst this attention is understandable, another star is rising and could potentially bedazzle the crypto universe. And that is none other than Cardano (ADA), currently trading at $ 1.3912. At less than $2, ADA does appear to be tiny compared to the behemoths like BTC and ETC, trading at $42,000 and $3000 as of early August 2021. In spite of this, Cardano could become the proverbial mouse that roared.

What Is Cardano (ADA)?

Cardano can be considered to be a global blockchain initiative built from the scratch by a highly eclectic albeit talented pool of individuals that includes academics and an Ethereum co-founder. ADA is peer-reviewed, which I as an academic finds reassuring. At its heart, ADA is an open-source, decentralized blockchain project to facilitate peer-to-peer transactions and for facilitating smart contracts. It has soared to record highs and in 2021 it has gained a whopping 2000% plus.

So What Can ADA Really Do (and Why We Need to Pay Attention)

Unlike Bitcoin or Ethereum's costly proof of work (PoW) system, ADA uses proof of stake (PoS) to validate transactions. ADA's POS system is known as Ouroboros Protocol and it allows trusted players to validate transactions instead of solving a pointlessly complex cryptography problem. Given its high speeds, the network might eventually handle up to a million transactions per second. This is one of the things that makes ADA a game-changer and allow ADA to upend the traditional banking systems.

ADA And Smart Contracts

Cardano is well-placed to exploit the smart contracts technology to the fullest and support self-executing agreements that do not require professional oversight at scale.

Additionally, these smart contracts could blow open the doors to the NFT world, a space dominated by Ethereum’s ERC-20 tokens and allow inexpensive digital artwork to make profits (currently ETH gas fees can exceed $100). The deployment of smart contracts on the Cardano network will also enable the support of decentralized applications (DApps), another area currently dominated by ETH. ADA DApps will implement Haskell-based languages like Plutus which would make it a lot easier for developers to write and deploy DApps on Cardano. ADA's latest upgrade, the “Mary Hardfork” users will be able to create their own unique tokens, including NFTs, and transact directly with these on the Cardano platform.

Lower Transaction Costs

In addition to rapid transactions, ADA could enable transactions with lower costs. In fact, this is one area in which ADA could potentially outdo ETH. The average cost for completing transactions on ETH (also gas fees) is around $20 and depending on the nature of the transaction, gas fees could easily run into hundreds or thousands of dollars. This is where ADA's POS comes in, it makes transactions much more efficient by rewarding miners transaction fees as opposed to "block rewards" offered by BTC and ETH networks. Apart from eliminating the high gas fees, POS could make mining greener. According to Leafscore, Cardano ranks 3rd among the 16 coins with the lowest energy consumption. Given the backlash BTC faced for its carbon footprint, ADA could appeal to environmentally-minded users in the crypto space.

In order to operationalise this POS, the forgers (people who validate ADA transactions) put their Cardano tokens in a specific wallet which freezes them. This is staking. While the tokens can't be sold whilst in the said wallet, it gives the forgers the opportunity to win the transaction fees. Higher the staking, the greater the opportunity to win the transaction fees.

Game-Changer In the Real World?

While ADA is a technological marvel, it also has significant real-world potential. In April 2021, ADA entered a partnership with the World Mobile Group to help bolster Africa’s digital, financial and social services. A significant proportion of the world's unbanked population lives in Africa and ADA could really be life-changing for this section of the population. As a part of this partnership, ADA will collaborate with Ethiopia’s Ministry of Education to help connect teachers and students via their Atla PRISM solution. Atala Prism’s blockchain identity solution supports ‘decentralized digital identity’ (DID). Atala Prism is expected to provide DIDs for 5m students across 3,500 schools which will be used to store educational records. This will support robust verification and potentially make the employment marketplace safer. These DIDs could also support safe monetary transactions. The existing remittance transaction rates range from 8%-15% and even microfinance loans can have interest rates going up to 85%. Blockchain solutions such as those offered by ADA could help reduce these problems and even allow users to guard themselves against the volatility seen in many FIAT currencies.

In Conclusion

ADA is a technologically superior undertaking with potentially major real-world applications and ramifications. I do not know if ADA can overtake ETH or if ETH could overtake BTC. However, given the advantages it offers and its applications, ADA appears to be a potential game-changer. I make it a point to buy ADAs regularly, mostly with loose change. This era of loose change level ADA may not last as ADA prices have been projected to go up. So ADA is certainly worth bearing in mind for the immediate future.