Cardano (ADA) (CRYPTO: ADA) recently became the biggest proof-of-stake network on the market, which has been great news for its native token ADA. Released in 2017 by Charles Hoskinson, a co-founder of Ethereum (ETH) (CRYPTO: ETH), Cardano came out strong, reaching a market cap of $26 billion within its 1st year. The project quickly gained funding because of Hoskinson’s fame and the bold claims that Cardano will revolutionize blockchain technology.
Currently, Cardano is the 5th-largest cryptocurrency with a market cap of around billion; it peaked at a market cap of billion in May 2021. This project has experienced both bull and bear markets after heightened concerns regarding problems with scalability and sustainability of Bitcoin and other proof-of-work networks. Cardano’s functioning proof-of-stake network caught a wave of new buyers as other networks struggled to make the switch or became less competitive from high network fees. Buyer excitement shot the price up more than 500% in 2 months, which was a big step for the relatively new and still improving Cardano network.
What is Cardano (ADA)?
Cardano aims to overcome existing problems plaguing the crypto market and distinguish itself as the leader of the 3rd generation of cryptocurrency.
The 1st-generation blockchains are projects like Bitcoin, Litecoin and Dogecoin that host simple transactions and currency storage. These blockchains are hard to upgrade, slow to transact and riddled with high transaction fees because of the computing power required to verify transactions.
2nd-generation blockchains like Ethereum 1.0 act as platforms to host smart contracts that facilitate procedural transitions. This practice allows blockchain technology to be used for a variety of transitions like non-fungible tokens (NFTs) and stablecoins. However, because it is still a proof-of-work blockchain, it runs into issues with scalability and high fees like 1st-generation blockchains.
Cardano is considered the 3rd generation of cryptocurrency. It is a platform that hosts smart contracts as in the 2nd generation but is verified on a proof-of-stake network that offers interoperability with other blockchains.
Cardano's proof-of-stake network solves the scalability and sustainability problems that the current crypto market will face as it grows. It can process thousands of transactions per second and is working on a compression process to scale to millions of transactions per second. This kind of efficiency allows for fast transactions with extremely low fees.
On top of it’s powerful network, Cardano is due to release a network upgrade to enable interoperability with the Nervos Network (CKB), which is an entirely different blockchain. This bridge between two separate blockchains marks a monumental step for Cardano and the blockchain community.
The crypto market is becoming a diverse ecosystem with many different types of coins that do different things, each with its pros and cons. Odds are in the future an array of blockchains willserve different niches in the market. Without a bridge system, the use for these blockchains will be trapped forever within their chains.
How to Stake Cardano for Interest
Staking Cardano on your own is extremely time-consuming and requires a lot of technical knowledge, which is why the most common way to stake your ADA is through a 3rd-party staking pool.
To get started, you’ll need to open an account with a platform that hosts staking pools. Staking with eToro is an easy and secure way to ensure that your staked ADA is properly managed. Its certified nodes are maintained every second, so you never have to worry about fraudulent node fines.
To create an account, you’ll enter your email and find the “Verify My Account” email in your inbox. Then you need to complete your profile by submitting personal information like your name, date of birth, nationality and phone number to verify your identity.
When your account is set up, you'll be ready to onboard funds. To do this, click on “Deposit Funds,” enter the amount you want to turn into ADA and select your preferred deposit method. Keep in mind that you need to have more than $25 in ADA to earn staking rewards.
After your account is funded with your U.S. currency, you can go to the ADA price page and press “Open Trade.” eToro will stake your cryptocurrency automatically so no other action is required. After the position is held for 9 days, you start to earn interest on your Cardano.
Cardano vs Ethereum
Cardano has been compared to Ethereum since its release. Charles Hoskinson co-founded Ethereum but split up with the team after saying he wanted to turn the Ethereum nonprofit into a company to accept venture capital. He started the company IOHK after he left to build Cardano to solve the issues he saw with Ethereum's network.
The biggest issue Cardano tackles is avoiding poorly coded smart contracts. Cardano hosts a selective community of projects that are verified through an academic peer-review process and developed through evidence-based methods. The Cardano network prioritizes hosting only academically trusted projects in hopes of ensuring security and sustainability within its community.
Critics consider the Cardano ecosystem as its weakest link. In comparison with Ethereum, Cardano offers little infrastructure and far fewer network users. Ethereum plans to scale to proof-of-stake soon and already has more than 10 times the validators than Cardano on its testnet. Developers might not find the specialties of Cardano useful once the ethereum 2.0 network is released.
Advantages of Cardano’s Blockchain
Charles Hoskinson's bold vision for Cardano's protocol has distinguished itself as one of the most robust and forward-thinking blockchains on the market. Its critical adjustments to vulnerabilities seen within the current market, like those that allowed hacks on Ethereum, hope to create a viable platform for widespread financial adoption. The following advantages of Cardano's blockchain are what will cement its place in the crypto market.
- Peer-reviewed and evidence-based projects ensure sustainable platform growth. Hopefully, verification will produce a trustworthy community of projects so its users never have to worry about technical problems like hackers or malicious smart contracts.
- Interoperability and chain bridging allow Cardano to become a mediator between other blockchains, intertwining the price of ADA with the larger crypto market.
- Cardano's proof of stake blockchain is already a proven success, and its caucus approach to changes provide holders a reliable network.
- Cardano's strong relationship with academic and commercial institutions might secure a role within those institutions in the future.
Disadvantages of Cardano’s Blockchain
Cardano's blockchain is still in the early stages of building and iterating many of its core functions. The next steps for Cardano will make or break its success.
- If a peer-reviewed project does get hacked, Cardano will lose its main source of credibility.
- Required peer-review validation is similar to censorship and could unknowingly turn down a revolutionary project because of its abnormalities.
- Cardano does not host nearly as many projects as Ethereum.
- Cardano's proof-of-stake network doesn't incorporate pruning and compression yet.
- Cardano’s blockchain bridging functionality is still in its production stages.
Best Cryptocurrency Exchanges for Cardano
Exchanges are a great way to trade crypto hassle free. Because ADA is a popular coin, it’s a very accessible coin on most exchanges. The most common exchanges are Coinbase and eToro. As previously mentioned, eToro will automatically stake your coins. This way, you'll earn interest with a minimum of $25 in ADA.
Cryptocurrency is offered by eToro USA LLC (“the MSB”) (NMLS: 1769299) and is not FDIC or SIPC insured. Investing involves risk.
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.
Sum of median estimated savings and rewards earned, per user in 2021 across multiple Coinbase programs (excluding sweepstakes). This amount includes fee waivers from Coinbase One (excluding the subscription cost), rewards from Coinbase Card, and staking rewards. ³Crypto rewards is an optional Coinbase offer. Upon purchase of USDC, you will be automatically opted in to rewards. If you’d like to opt out or learn more about rewards, you can click here. The rewards rate is subject to change and can vary by region. Customers will be able to see the latest applicable rates directly within their accounts.
- Active Crypto Traders
Where to Store Cardano Securely
Exchanges are a 3rd-party service that store your crypto on your behalf. Using 3rd-party storage simplifies the process of handling transactions. However, many experienced crypto holders hold their coins in a cryptocurrency wallet, as it’s a more secure option. The 2 main types of wallets are software and hardware wallets, and each offers different features and security levels.
Best Software Wallet: Coinbase Wallet
One of the best software wallets on the market is Coinbase Wallet. Coinbase offers a user-friendly interface along with a Google Chrome extension that easily connects to crypto apps. Coinbase Wallet is different from Coinbase, as it stores your private keys to your coins directly on your device. In contrast, Coinbase holds its users' funds together, not allowing you to own your private keys.
- ERC-20 tokens
Best Hardware Wallet: Ledger Nano X
The best hardware wallet is Ledger Nano X, a Bluetooth-enabled device that stores your private keys independently of any 3rd-party interaction. The wallet cannot be hacked, as it stores your crypto offline. You can think of hardware wallets as vaults for your crypto. Make sure you keep your seed phrase safe, so you can retrieve your funds with this key, even if the wallet breaks.
Is ADA a Good Investment in 2021?
Cardano's devotion to doing things right the 1st time is what could lead it to become one of the most widely adopted blockchain platforms. Untrustworthy smart contracts are what tanked Ethereum's price and reputation only 1 year after the network went live. A hacker exploited a flaw in one of the earlier projects on Ethereum and stole $50 million of Ether. The company decided that because the malicious act could give that wallet a lot of staking power. This presents a risk of running malicious nodes in the future, so it had to hard fork the blockchain to essentially turn back that transaction.
Cardano wants to ensure it gets things right the first time. That commitment looks promising for big-money adoption because of the security that Cardano's network fosters Instead of Ethereum's market, which looks for innovation and freedom, Cardano looks for quality and reliability.
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