1 Cryptocurrency That Could Dwarf Ethereum

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Despite the recent turmoil rattling the crypto market, over the past five years, Ethereum (ETH -3.56%) has generated an astronomical return of 2,560%. You’d be hard-pressed to find a financial asset with a better return than that during the same time. 

The world’s second-most valuable cryptocurrency has become a popular arena for the development of decentralized applications (dApps), including decentralized finance protocols and non-fungible tokens. And as of May 11, Ethereum’s market value stood at $271 billion. 

But an up-and-coming cryptocurrency known as Cardano (ADA -8.55%) is gaining major traction. Let’s take a look at how it just might top Ethereum. 

Cardano has a great deal of credibility 

Cardano was founded in 2015 by former Ethereum co-founder Charles Hoskinson, which makes it a credible project thanks to the technical expertise he gained by previously starting what is today the second most valuable crypto network. Since its public launch in 2017, Ada, Cardano’s native token, has soared 2,400% in value. And it currently has a market cap of $19 billion, good for seventh place in the crypto rankings. 

What makes Cardano unique is its research-based, peer-reviewed development approach. When new features are implemented, they go through a rigorous process of analysis and scrutiny by a team of computer scientists and cryptographers across the world.

Additionally, Cardano’s development comes in five phases, each focusing on one key attribute. They are: foundation, decentralization, smart contracts, scalability, and governance. Authoritative bodies, like the Cardano Foundation, IOHK, and EMURGO, help to lead the network’s adoption, engineering, and commercialization, respectively. 

Image source: Getty Images.

Cardano is solving for scalability 

Ethereum is currently working to transition away from a proof-of-work (PoW) system, in which miners must use huge amounts of computational power to solve complex math puzzles in order to validate transactions on the blockchain, to a proof-of-stake mechanism; Cardano is already there. 

Its Ouroboros consensus mechanism requires Ada owners to stake their holdings to be able to approve transactions on the ledger. It requires substantially less energy than PoW, and it’s much faster. Currently, Cardano can process 250 transactions per second (TPS), more than Ethereum’s 14.

But after the current development phase, Basho, is fully implemented, Cardano will be able to theoretically handle 1 million TPS. That’s because its new algorithm, called Ouroboros Hydra, will add sidechains (that run parallel to the main network) that can spread the system’s load across the Cardano blockchain. This is expected to be completed sometime in 2022.

Cardano is building real use cases 

As Cardano continues solving for crypto’s scalability problem, its potential to create real-world use cases soars. With faster processing times, the network becomes far more attractive to developers who want to build on Cardano. As of May 10, there were almost 3,000 different dApps on Ethereum’s blockchain. But with the expected integration of Basho, Cardano will become a top destination for developers. 

Even in a more tangible sense, Cardano can make an impact. The blockchain can be used to identify counterfeit medicine in the healthcare sector, to track supply chains in the agriculture industry, and for client onboarding in financial services. While these are tiny projects today, they demonstrate how Cardano is spearheading crypto’s impact in our daily lives. 

Cardano is a promising blockchain that has some wonderful characteristics supporting its continued progress. As it keeps advancing and gaining momentum, its future returns could certainly outpace Ethereum’s.