While the broader cryptocurrency market crashes after billionaire Elon Musk said Tesla would no longer accept bitcoin due to its high environmental cost, the price of Cardano’s ada, the world’s fourth most valuable token, rose as cryptocurrency traders and analysts delve into the token that promises to be an alternative much less intensive in the use of carbon-based energies.
The only cryptocurrency in the top ten to rise on Thursday was Cardano’s ada token which reached its latest high of $ 1.96 around noon EDT, catapulting its market capitalization to roughly $ 61.5 billion.
Meanwhile, the broader cryptocurrency market tumbled 9% in the past 24 hours after Musk’s Wednesday tweet announcing Tesla’s bitcoin pivot and pointing to its environmental cost, a message that wiped out more than $ 300 billion dollars. in cryptocurrency market value in just hours.
In an email Thursday morning, Investing.com senior analyst Jesse Cohen noted that Musk said he would seek out bitcoin alternatives that consume less than 1% of its energy per transaction and pointed to Cardano’s Ada and Ripple’s XRP as two cryptocurrencies with more sustainable environmental costs than bitcoin due to its less intensive transaction and mining networks.
Cardano founder Charles Hoskinson, also a co-founder of Ethereum, responded to Musk on Thursday, tweeting: “Are we finally going to have the conversation with Cardano? Come to my farm. . . I have sweet tea and mini-donuts ”.
Thanks to a more energy efficient mechanism to verify transactions, Hoskinson has claimed that Cardano uses only 6 gigawatt hours of energy per year, not even 0.01% of the 115.85 terawatt hours that bitcoin is estimated to use.
Although it’s up almost 1,000% this year alone, Cardano is also highly susceptible to massive volatility from the broader crypto market; Its token plummeted nearly 90% in less than two months in early 2018 as regulatory crackdowns on cryptocurrencies ushered in a years-long bear market for the nascent industry.
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Almost all cryptocurrencies document each transaction in what is called a public ledger, which helps ensure that transactions are transparent and safe from tampering, but that they continually require additional storage space, known as blocks. Those blocks are validated by miners, who are often awarded tokens for their work, running code 24 hours a day on special hardware called platforms. That process consumes the same amount of energy annually (around 78.5 terawatt hours) as nations like Chile, Austria, and Finland. “Adding cryptocurrencies to a wallet will make it less environmentally friendly,” says Gerald Moser, chief market strategist at Barclays Private Bank, noting that mining generates the same amount of e-waste as countries like Luxembourg because mining equipment generally becomes obsolete. every 18 months or so.
To validate blocks, many cryptocurrencies, including bitcoin, use a mechanism known as proof of work, which requires large amounts of code and power, managed by many competing miners, to solve complicated cryptographic problems. Cardano argues that its alternative proof-of-stake consensus mechanism is “superior in terms of energy conservation” because it selects a specific user to validate blocks based on who has the largest stake in a protocol, forgoing much of the avid competition. of energy. There is still a debate as to which method is safer.
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More regulation. Last week, the new chairman of the Securities and Exchange Commission (SEC), Gary Gensler, suggested that the agency might be preparing for a long-awaited crackdown on cryptocurrencies in light of the recent market boom, telling CNBC : “To the extent that something is a security, the SEC seeks to give it a lot of authority and many crypto tokens (I won’t call them ‘cryptocurrencies’ at this point) are in fact securities.”
The SEC is investigating Ripple for the alleged sale of securities. Announced in December, the investigation briefly wiped out more than half the token’s market value before cryptocurrencies began to skyrocket again. The SEC has added pressure to the investigation in recent days and while it is another more sustainable bitcoin alternative, XRP is down 4% in the last 24 hours.
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Cardano soars during $ 300bn crypto crash, following Musk tweet