Cardano is going to the moon. Here's what you must know.

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What is Cardano? Cardano is a cryptocurrency similar to Bitcoin, but more like Ethereum. It's competing to become the best platform for smart contracts - it promises to be faster, cheaper, and better than Ethereum. Let's talk about where the price is going, and what's happening with Cardano.

The creator of Cardano is Charles Hoskinson who was one of the cofounders of Ethereum. Both technologies share a lot of the same ideas and goals. To understand Cardano and why it's so popular, it’s important to understand the problem all cryptocurrencies have - specifically Ethereum’s problems and how Cardano is going to solve them.

Problem 1: Ethereum is too expensive to use, imagine a car with a driver in it, anyone can get in but each interactive action from opening the door, getting in, how far you go, and even getting out of the car costs gas (called GWei, a small unit of Ethereum). You can imagine when you’re creating apps, testing the network, or creating a business on top of Ethereum, it becomes prohibitively expensive to do even the smallest of things.

Solution: Cardano is trying to solve this problem is by making their blockchain proof stake rather than proof of work which gets rid of the need for miners aka the people driving the car - they want to make it driverless.

Problem 2: Scaling is cryptocurrency’s way of competing with Visa, Mastercard, AMEX as a settlement layer. Most cryptocurrencies are limited in terms of how many transactions they can process. For example on Bitcoin, we’re averaging about 2 transactions per second. On Ethereum, we’re averaging 20+ transactions per second. Not bad, but Visa is capable of handing more than 65,000 transactions per second. The reason credit card companies can do this is because they operate based on a private database which allows them to play by their own rules. The truth is, decentralization comes at expense of network security. That's the fundamental problem of all blockchains and by extension - cryptocurrencies.

Solution: Instead of decentralizing the network with miners, aka the car with drivers in it, instead Cardano wants to decentralize with proof of stake - which is a fancy way of saying people with ADA tokens can come together to vote on the validity of transactions almost like in a democratized voting system. Cardano is safe because of people who hold Cardano tokens. People are incentivized to keep things fair because if you had power over a financial system, you’d make honest decisions not to ruin the system because you have a vested interest - you have a "stake", in the technology to work properly so that it goes up in value - hence proof of stake. That's called game theory and it uses our greed to make itself stronger.

Problem 3: Interoperability. This is just a fancy way of saying the technology’s ability to communicate with other technologies. That’s because the way crypto is now is like a zero sum game, everyone is treating it like there can only be one winner. But what if you could create a technology that can go outside of its own blockchain and speak to other blockchains without destroying the code, the network and the network security?

Solution: The real world solution is Amazon’s AWS - a platform that helps other businesses scale and grow without affecting Amazon's bottom line. That's what Cardano is trying to do with things like sidechains and other concepts so that it can help other cryptos integrate technologies to help them scale and grow. Cardano wants to be a team player.

My thoughts: I bought 2,592 Cardano tokens and I’m playing it as hedge against Ethereum 2.0. I always use 1 trillion dollars as my benchmark for the market cap which is 10% of gold’s market cap which Bitcoin surpassed this year. Doing that same math, that would put the price of ADA at 25x from the current levels which is roughly $33 per coin. This is NOT an investment - it's purely a speculative bet.

*None of this is meant to be construed as investment advice, it's for entertainment purposes only. Links above include affiliate commission or referrals. I'm part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.