On paper Cardano might not seem like a worthy heir to the Bitcoin throne with its seemingly paltry price of just over $1.20 ADA, however, it is worth taking into consideration the coin’s intended purposes and its recent market growth.
Cardano is also the brainchild of Charles Hoskinson, one of the original founders of Ethereum, and he has installed a USP that is destined to see ADA become a serious rival for Eth in the multi-token space.
Proper Positioning is Key
While Cardano is a cryptocurrency it never set out to be Bitcoin. Bitcoin is the leader in the space and is clearly an investment vehicle based on its erratic valuations and limited mining potential. Cardano is setting itself up to be a competitor in the “daily driver” segment of the crypto-market alongside Ethereum.
Not only that but their market proposition is so appealing to market pundits that the digital coin has blossomed from around $0.02 ADA in mid-2020 to an all-time high of $1.48 earlier this month.
Dubai-based crypto-investment fund, FD7 Ventures, went so far as to divest themselves of more than $750 million BTC which they shifted entirely into Cardano.
Prakash Chand, Managing Director at FD7 Ventures said:
“I’ve been lucky enough to spend lots of time with the brightest minds in crypto and I’m willing to bet that each of Ethereum, Cardano and Polkadot will be more valuable than Bitcoin within the next few years.”
Unlike the high prices of Bitcoin and the Reddit frenzy that drove up Dogecoin, there has been no internet hype artificially inflating Cardano’s pricing. Rather its valuations are based on the coins potential post the Mary hard fork.
The Importance of the Mary Hard Fork
The rollout of the Cardano Mary hard fork on 1 March 2021 was an important landmark in the cryptocurrency’s evolution as it put in place the final pieces needed to encourage rapid and widespread adoption.
The hard fork unlocked the following key features on the network:
- Multi-asset tokens – Cardano will support multi-asset tokens, where the ledger will allow for the creation and use of multiple custom token types.
- Contractual agreement – The ledger will now be able to facilitate agreements whereby an asset, in this case, an ADA powered token, cannot be sold to another buyer once it has been promised (contracted) to someone else.
- Vote registry – The Voltaire framework allows ADA holders to influence the future development of the network by voting. This update allows these votes to be locked in to avoid double counting votes or other errors which could skew results.
To date one of the limitations of Cardano has been its inability to allow the creation of fungible and non-fungible tokens on the network. This ability to offer tokens “powered by” has been a major driving force behind the success of the Ethereum network, allowing it to become the second-largest network behind Bitcoin.
The Mary hard fork builds off its predecessors, Byron and Shelley, finally allowing the Cardano network to begin offering the option to create tokens on its network with two powerful advantages over the Ethereum network – speed and cost.
Avoiding the Gas Wars
At the core of the Cardano multi-token initiative has been the drive to “be better”, and in this instance, Ethereum has always had a weakness, its reliance on “gas” to process transactions.
When speaking about the Ethereum token ecosystem gas is defined as follows:
“Gas is the term used for the fee charged on the Ethereum network for a successful transaction or the execution of a smart contract. It is a fraction of the transaction charged in Ether. Fees vary as they are driven by the current supply and demand of processing capacity.”
Ethereum is incredibly popular due to being a leader in the multi-token environment, however, its popularity when linked to its gas fee system has led to what is known as “gas wars”. Given that supply and demand determine the “gas prices” processing transactions during peak times can see a sharp spike in pricing, leading to either delay in processing or unmanageable costs.
By sidestepping gassing fees Cardano ensures its customer base provably cheaper transactions, a wider spread of high-speed transactions and simple integration protocols.