Crypto in a minute: how does Cardano work and why is it the cryptocurrency of the future?

The economist Damián Di Pace analyzes the fundamentals of this network and its strengths to become a very valuable asset in this video

After the arrival of Bitcoin, known as a coin first generation when starting these new assets; arrival Ethereum, which added to the blockchain a programming layer with its smart contracts, inaugurating the networks of second generation.

But for some years now, currency like ADA (Cardano), DOT (Polkadot), SOL (Solana) and ALGO (Algorand) started those of third generation.

The one that grew the most in recent times was Cardano: designed by Charles Hoskinson, co-founder of Ethereum, offers 1,000 operations per second and connects to hundreds of other blockchains.

Its ADA currency is one of the stars of the year: it went from $ 0.18 to $ 2 so far in 2021 and is third on the global capitalization list, surpassing Binance Coin.

The economic analyst Damián Di Pace, lists for iProUP the main advantages of this currency in the following one minute video:

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What are third generation networks

The networks mentioned in the previous paragraphs mainly seek to solve the following questions:

  • Scalability: consists of the possibility that millions of users can operate at the same time. This also results in higher fees for transactions, mainly in the use of the Ethereum network and its decentralized investment options (DeFi)
  • Sustainability: based on the work test (PoW), the two leading currencies require thousands of supercomputers around the world to validate transactions. Thus, the energy expenditure is very large. In fact, Bitcoin consumes the same amount of energy as all of Argentina
  • Speed: Bitcoin processes some four transactions per second and Ethereum, nine. Far below, for example, Visa, that exceeds 50,000 operations per second. It also impacts operating costs
  • Interoperability: Bitcoin and Ethereum only allow transactions in their own ecosystems. But the new proposals allow connecting with other networks and offering alternatives

“The main advantage they would have at this point is that propose a solution to scalability“, affirms to iProUP Nahuel Burbach, Argentine representative of the Zerion wallet, indicating what is the most important problem that Bitcoin and Ethereum are going through today.

Bitcoin and Ethereum lead the first and second generation, respectively, of cryptocurrencies

Bitcoin and Ethereum lead the first and second generation, respectively, of cryptocurrencies

At this point, Nicolás Verderosa, leader of Arum Trade Alliances, agrees that these new networks “come to solve the problem that Bitcoin and Ethereum did not take into account.”

“At the time of their creation, it was not possible to foresee the degree to which these technologies would advance and become widespread. Therefore, Third-generation cryptocurrencies focus their goals on stability, sustainability, and speed of transactions“, remarks.

Maximiliano Hinz, Maximiliano Hinz, Latam Operations Director of Binance, affirms to iProUP that “when Bitcoin was introduced, it received criticism and ridicule. In the case of Ethereum, there was quite a bit of uncertainty. But the time was demonstrating the potential of both technologies“.

“In the case of the third generation, there is already a precedent: when they began to develop Binance Smart Chain and other networks decentralized it was known that there was a market demand“, says the manager.

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And he expands: “Then, the project could be optimized and certain problems that Ethereum had, such as the transaction costs or network speed“.

In this way, third-generation networks are making a place for themselves by offering not only the possibility of being a faster and more sustainable medium of exchange than Bitcoin, but also a more scalable and cheaper decentralized investment platform than Ethereum.

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Crypto in a minute: how does Cardano work and why is it the cryptocurrency of the future?

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