7 things you should know before buying Cardano

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WRITTEN BY Abel Stokes 106 views date-icon 2024-05-15 10:44:23

Cardano (ADA) was launched in 2017, and it is often referred to as a third-generation cryptocurrency. It builds on the foundations of Bitcoin and Ether, but aims to be more sustainable and scalable. This means it is greener, faster, and more secure. Despite its potential, Cardano has yet to attract much mainstream attention and is therefore considered one of the alternative coins worth keeping an eye on. If you're looking to buy it, here's what you need to know first.

1. Cardano is energy efficient

One of the biggest advantages of Cardano is that it is an eco-friendly cryptocurrency. For comparison, here's how much energy Cardano, Bitcoin, and Ether consume in a year:

  • Cardano: 6 gigawatt hours;
  • Bitcoin: 130 terawatt hours;
  • Ether: 50 TWh.

It's important to know that 1 terawatt is equal to 1,000 gigawatts. In other words, Bitcoin consumes as much energy as Argentina, which has a population of about 45 million people. Cardano, on the other hand, consumes as much energy as 600 American households.

This is because Cardano uses a different system, called Proof of Stake, to validate transactions. The Proof of Stake system limits the number of devices that can confirm transactions at the same time, which keeps energy consumption under control. Bitcoin and Ether, on the other hand, use a proof-of-work model. In the proof-of-work model, the number of devices involved in verification is not limited, which can lead to extremely high energy consumption. For this reason, Ether is moving to a proof-of-capital model.

2. Cardano founders became co-developers of Ether

Charles Hoskinson and Vitalik Buterin, co-founders and inventors of Ether, were part of the team that developed Ether. However, Hoskinson wanted it to be a commercial project, while Buterin saw it as a non-profit. As a result of these disagreements, Buterin removed Hoskinson from the Ether development team in 2014.

In 2015, Hoskinson began developing Cardano, which shares many similarities with Ether. Both Cardano and Ether are programmable blockchains that others can use to develop applications, and both use smart contracts.

3. It can handle a large number of transactions

Scalability has always been an issue for the largest cryptocurrencies. Bitcoin processes about 5 transactions per second, while Ether processes about 15, resulting in slower transactions and higher fees. Visa, on the other hand, processes about 1,700 transactions per second.

During the trials, Cardano processed 257 transactions per second. Cardano also plans to add another layer to its blockchain called Hydra, which is capable of processing 1 million transactions per second. Cardano has a wide range of potential applications.

Is Cardano worth buying?

4. Cardano has a wide range of potential applications

Cardano is an ambitious project with many potential applications for its technology in a wide variety of industries. A recent real-world example is Cardano's partnership with the Ethiopian Ministry of Education, where Cardano's blockchain will store tamper-proof data of five million Ethiopian students. As these students pursue higher education and seek employment, their records and grades will be available on the blockchain.

Here are some other examples of Cardano being used in various fields:

  • Healthcare: Cardano's blockchain can authenticate pharmaceutical products and avoid the risk of buying counterfeit drugs.
  • Finance: In developing countries, Cardano can be used as identity verification and personal credit.
  • Agriculture: Blockchain technology can provide farmers, shippers and retailers with reliable supply chain traceability.

5. Research-oriented approach

One of the distinguishing features of Cardano is that its development process is peer-reviewed. Engineers and academic experts specializing in blockchain technology and cryptography have been instrumental in the development of Cardano. The peer review process means that Cardano is a slowly and steadily evolving rather than a rapidly changing cryptocurrency.

6. There is currently a limited amount of Cardano available

Cryptocurrencies can have a fixed or unlimited supply. Bitcoin is the most famous example of a cryptocurrency with a fixed supply, as there will never be more than 21 million Bitcoins. The same is true for Cardano. The maximum supply is 45 billion ADA, and there are about 32 billion ADA in circulation right now. By itself, this is not a guarantee of a price increase. But if Cardano becomes popular, the limited supply could increase demand.

7. You need a cryptocurrency exchange that offers Cardano

Since Cardano is one of the largest cryptocurrencies, you can find it on several top cryptocurrency exchanges. Here are a few popular platforms that offer Cardano:

  • Coinbase;
  • Binance;
  • Kraken;
  • eToro;
  • SoFi.

However, this feature is not available everywhere. Gemini Exchange is one notable marketplace that does not offer this feature yet. It is also not available if you buy cryptocurrencies via PayPal or Venmo.

Like other cryptocurrencies, Cardano comes with risks. It's impossible to know for sure if it will reach its goals or if it will have any value in the future. These are risks that come along with any cryptocurrency investment as too many factors influence price formation. Nevertheless, it's easy to see why Cardano is piquing the interest of investors. Now that you know more about it, you can decide if buying Cardano is right for you.

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