Cardano, the sixth-largest crypto project, explained!
Cardano is an open-source and decentralized blockchain project created to facilitate peer-to-peer transactions. It has a layered architecture that facilitates smart contracts, enabling an adaptive and scalable platform without compromising security. While in the crypto world, Cardano competes with Ethereum or EOS, a traditional alternative is a platform such as Apple’s IOS.
The best way to understand Cardano is to compare it to a well-known system; I’ll go with Apple and highlight the main differences:
Because of centralization, Apple charges around 30% commission from App Store sales. On the other hand, Cardano and similar blockchain systems reduce this cost significantly because of decentralization and allow developers to create apps for a fraction of the cost Apple charges. Furthermore, Apple controls its network and has the power to allow and deny access to whomever it chooses. Cardano is an open system, and the foundation doesn’t own the network and can’t prevent anyone from accessing it.
Additionally, since Cardano is a decentralized network that uses proof of stake protocol to validate transactions, there is no need for an intermediary such as Apple to update and secure the network, and no need for banks and other financial institutions to facilitate money movements.
While all this sounds great, the truth is Cordano operates in a very competitive landscape, with very high switching costs and strong global leaders. Apple, Microsoft, and Google have strong brand recognition and control a significant portion of the traditional software market. They also offer an array of products that are easy to use and loved by users. On the blockchain side, Cardano faces fierce competition from Ethereum, the market leader, and other newly developed platforms such as EOS. Also, Cordano and other blockchain projects are at risk of new regulations that may slow their progress and force them to make drastic changes to survive.
Lastly, Cardano’s native token is called ADA, which is not a cryptocurrency like Bitcoin per se, but it’s a token that powers the Cordano network. You can buy, hold, and trade ADA, but it wasn't built to be a medium of exchange like dollars or Bitcoin. There is a maximum supply of 45 billion ADA; about 16% of ADA’s total supply went to the project’s founders, with the remaining 84% divided among investors. The primary purpose of the token is to ensure that owners can participate in the operation and governance of the network.
ADA price increased from $0.18 on 1/1/2021 to an all-time high at $1.47 on 4/15/2021 and now trades at $1.27, making Cardano the sixth largest crypto asset by market cap.
All-time chart of ADA. Source: coinmarketcap
In summary, Cardano and other blockchain projects reduce costs significantly by eliminating traditional centralized costs. They also encourage global participation and provide a greater level of privacy which has become a significant concern lately. However, they still have many challenges to overcome before they can reach mainstream adoption.