Other than Cardano, none of the 10 largest cryptocurrencies by market capitalization are based on peer-reviewed protocol. On top of that, no cryptocurrency in the top 10 was implemented using a formal specification, except Cardano.
This is the current standard in cryptocurrency that Cardano seeks to change.
The team led by Charles Hoskinson relies on a methodical and academically-oriented approach. They adhere to a set of scientific principles that includes:
- The formal verification of code, which means to know with certainty what functionalities a program is capable or incapable of doing.
- The ”first-principles” approach or breaking down things into their fundamental truths and then making developments from there.
- Peer review, which is the academic and scientific evaluation of the protocol by other professionals in the field.
With this philosophy, long-term investors will be getting a platform created with the highest standards of safety and quality. More importantly, the peer review helps ensure that the theory is solid and that the platform will work as advertised.
The drawback, however, is that the development of Cardano will take time… a lot of time. Think of a miracle drug or vaccine in the early stages of development; that’s Cardano. If you are an investor who can afford to wait, this miracle drug might just work wonders on your net worth.
Now that you know the vision, the motivation, and the methodology that drives Cardano, it’s time to explore what sets it apart from its competitors.
Imagine a platform where you don’t have to log in to an exchange to buy and sell various cryptocurrencies. Instead, you’d convert cryptocurrencies into fiat and see the balance immediately reflect in your bank account. That’s what Cardano promises to accomplish.
The cryptocurrency aims to provide an ecosystem where a user can transfer value and information between different blockchains, as well as the financial legacy system. According to Charles Hoskinson, Cardano seeks to provide this ecosystem in the next few years where users can interchange cryptocurrencies, such as Litecoin to Bitcoin to Ethereum to Cardano. On top of that, the system also aims to enable users to communicate with their regular bank accounts or even their credit cards.
In a nutshell, Cardano aims to bridge the gap between the cryptocurrency industry and the traditional banking system. If accomplished, this might be the catalyst for the mainstream adoption of crypto. In addition to that, billions and billions of new funds might flow into crypto because there’s a system that allows the legacy financial system to communicate with the crypto industry and help ensure compliance.
As a long-term investor, the development of these features make Cardano extremely attractive. These functionalities alone, if successfully developed, can make the cryptocurrency bullish in the next five to ten years.
For Cardano to be the bridge between many cryptos, as well as crypto and the traditional banking system, it must be scalable. What this means is that Cardano should be able to handle hundreds, if not thousands, of transactions per second (TPS). To give you a better perspective, Bitcoin can handle 7 TPS while Ethereum can do 15. Currently, Cardano does between 50 – 250 TPS.
Although Cardano’s TPS is significantly higher than that of Bitcoin and Ethereum combined, it is still not sufficient to help Charles Hoskinson reach the goal of creating a financial tool that will be used by billions. This is why the team is working hard to develop the Ouroboros Hydra. This is a proof-of-stake system that highlights the sharding functionality.
In a nutshell, sharding enables a consensus protocol like Cardano to boost its processing speed as more nodes (stakeholders or miners) participate in the system. Ideally, the more participating nodes or stakeholders, the higher the processing speed. Below is a video of Charles Hoskinson explaining how he and his team plan to significantly increase the scalability of Cardano:
With the Ouroboros Hydra, Cardano’s TPS go as high as tens of thousands. This enables the cryptocurrency to surge ahead of Visa, which handles an average of 4,400 TPS. More importantly, this makes the platform and the network robust enough to serve billions of people.
Cardano is not limited to the functionalities that we mentioned above. It offers so much more but the reliance on scientific rigour to ensure quality and safety along with interoperability and scalability are the three qualities that can make Cardano the runaway cryptocurrency leader in the coming years. Even though the altcoin is still a speculative play, our research suggests that Cardano is a solid investment for a long-term fundamental pick.