Cardano, an “Ethereum killer?”
Cardano, an “Ethereum killer?”
Many see Cardano as a potential “Ethereum killer.” These are crypto projects that serve the same use-case and can form serious competition for Ethereum. What aspects of Cardano are similar to Ethereum? Both are so-called smart contract networks. Where bitcoin (BTC) allows you to securely and cheaply send money to other people, Cardano and Ethereum make it possible to program this money as well.
You can see a smart contract as a piece of computer code that executes the program once specific requirements are met. Ethereum was the first to implement these smart contracts, but Cardano further improved this technology and its possibilities. Thus, the “third-generation” blockchain is a Proof of Stake (PoS) blockchain that takes smart contracts to the next level.
With its PoS protocol, Cardano is much more scalable and efficient. Compared to Proof of Work (PoW) on which Bitcoin and Ethereum run, the blockchain of Cardano is just as secure but can handle many more transactions per second (TPS). With PoW, it is the miners that process transactions and secure the network. They consume a lot of energy to encrypt data and are therefore often criticized for the carbon footprint they leave behind. PoW networks are also considered not being very future-proof as there is a limit to how many transaction miners can process. The result of a congested network was very noticeable on Ethereum, where the transaction costs went through the roof.
The efficiency of Cardano is further improved with the Layer 2 solution called Hydra. This solution is built on top of Cardano’s main chain and makes it possible to process even more transactions. Hydra increases the throughput with every node that connects to the network. Some even say a TPS of 1 million is within the realm of possibilities. And lastly, another critical feature is the hard fork combinator (HFC). This makes it possible to implement big updates without having to interrupt the blockchain. Hard forks can be a risky way to update a network, but Cardano makes this event safer and more reliable.
The noble goal of the Cardano developer
When we move from the technology to the use-cases, we see some interesting facts. The Cardano developer, Input Output Hong Kong (IOHK), focuses on the African continent. With the technology that it has developed, the company hopes to help Africans run their economy smoother and more equal. Cardano may be able to give the African economy a considerable boost. But how exactly can Cardano help?
Cardano and its developer already set foot on the ground in Africa. They have signed deals in Ethiopia and Tanzania where they, together with companies and governments, will give citizens a digital identity. Having a digital identity may be nothing special to us in the developed world, but it means a significant change for people who don’t have one. They will be able to open a bank account, study (including storage of digital school records, safely on the blockchain), and use healthcare.
On the financial side, Cardano may also be able to help. One goal Charles Hoskinson, the founder of Cardano, has set is that he wants to be able to give out a loan via Cardano to African businesses. He believes that many companies in the developed world will be willing to loan money to African entrepreneurs if this process is easy and automated. Cardano aims to do just that. According to the founder, this may cause the most significant migration of capital from the developed world to the developing world in human history.
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