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Cardano is a generation three coin that was started in 2017. For example, a generation one coin is Bitcoin or Doge, a generation 2 coin would be Ethereum and now Cardano is #3 because of the technology associated with it.
Plus, Bitcoin and Ethereum use a lot of energy and was inefficient in that regard as well. Cardano is considered much more eco friendly because of their small carbon footprint. With the shift of everything becoming more eco-friendly, this is just another reason I think it will become more widely accepted in the long run.
Well, Cardano is supposed to help take care of these inefficiencies. And you will also notice a lot of similarities between Ethereum and Cardano because the founder of Cardano is also the co-founder of Ethereum, Charles Hoskinson.
Now although they are similar, let’s talk about their main difference. Proof of Work v. Proof of Stake. Some of you out there may already know about this so feel free to skip ahead.
In a PoW system, transactions are verified by “miners”, who use their computer hardware to solve complex mathematical equations for the right to add new groups of transactions (blocks) to the blockchain (record of all blocks and the transactions in them). This is what uses up a lot of energy.
It’s only by solving these problems that a new block can be added to the last block of the blockchain. By being the first to solve one of these mathematical puzzles and add new transactions to the blockchain, a miner is rewarded with a block reward and transaction fees in the form of cryptocurrency, such as BTC.
Proof of Stake works a bit differently. Instead of miners, there are “validators” (also called other names, such as “bakers” on Tezos). These validators don’t use hardware to solve complex mathematical puzzles. Instead, they lock up or “stake” their crypto as collateral for the right to verify transactions.
Factors like the size of the stake and how long the crypto has been staked help determine who gets the right to verify transactions, whereas mining or hashing power of hardware would generally determine verification rights in PoW systems. If you’re lucky enough to validate a new block of transactions, you are rewarded with new cryptocurrency and/or transaction fees, similar to PoW.
Since it takes an enormous amount of energy to mine using proof of work, it is assumed that this will ned to be moved to a more efficient system, and that’s where the proof of stake model comes in.
Not only that, but the fees associated with proof of work is much higher, such as the gas fees for Ethereum, as Ethereum gains in value, so does the gas fees for transactions. Meaning, it costs more and more to make a transaction as the value goes up.
Bitcoin and Ethereum are slow at verifying these transactions. For instance, Bitcoin can handle around 4 transactions per second, Ethereum is a little better at 20 but is nowhere near Cardano. Cardano has the potential to verify millions of transactions per second. Which gives it so much potential for a lot of utility in the future. It’s not currently at those levels but has the technology already embedded that it can turn it up as the demand from people called for it.
Cardano is also deflationary. Meaning, there is a cap on the amount that will be created. That supply is capped at 45 billion, which sounds like a lot until you start looking at other popular cryptos that has a supply in the quadrillion range. Now currently, Cardano has appx. 31.9 billion in circulation. Bitcoin also has a max supply of 21.5 billion with appx. 18.9 billion in circulation.
#Cardano #cardanonews #cardanoupdates