Cardano, a proof-of-stake (PoS) consensus protocol-based cryptocurrency, has overtaken Litecoin to become the fifth largest cryptocurrency in the global market.
The market valuation of Cardano has surpassed the $20 billion mark, recording a 12 percent increase in value over the past 24 hours.
What is Cardano?
Created by IOHK, a blockchain technology company that actively contributes to the codebase of Ethereum Classic, ScoreX, and RSI Coin, Cardano is a blockchain network developed by a team of developers led by Charles Hoskinson.
Cardano operates on top of a PoS algorithm known as Ouroboros and technologies created from scratch through peer reviewed academic research. It has been around since 2015, and has evolved into an innovative and advanced smart contract platform.
In addition to providing an Ethereum-like smart contract ecosystem, Cardano also operates as a Litecoin-like payment settlement platform, processing quick and cheap payments efficiently.
The exchange market of Cardano remains weaker than most major cryptocurrencies in the global market, with a relatively low daily trading volume of around $213 million. Its trading volume is heavily concentrated in two cryptocurrency exchange Bittrex and Binance, which process more than 90 percent of global Cardano trades.
In terms of market structure, Cardano falls behind other top cryptocurrencies in the market that have lower market valuations, such as Litecoin and Stellar.
However, regardless of its weak market, analysts believe that Cardano’s technology is more sophisticated and advanced than most cryptocurrencies in the market, because it operates as a multi-layer protocol. The first layer of the blockchain network works like a payments platform. The secondary layer, or the control layer, runs smart contracts and recognize identity.
Cardano Surpasses Litecoin
Last month, in December 2017, Litecoin creator and former Coinbase executive Charlie Lee criticized Cardano and the cryptocurrency market due to the sudden increase in the valuation of Cardano. Lee wrote:
“I just noticed Cardano (ADA) is #6 on CoinMarketCap. How did it become a $10 billion coin when it’s only 3 months old and the only major exchanges trading it is Bittrex and Binance and without even any fiat trading pairs? Either the market is crazy or Cardano will end world hunger.
To be clear, I have nothing against Cardano or its tech. And I have a ton of respect for Charles Hoskinson and I’m sure the project has a ton of potential. But at $10 billion valuation right now, how can that possibly be a good value.”
Understandably, Lee was met with criticism for his comments by the Cardano community. But, ultimately, the market and investors within the cryptocurrency space decide the valuation of cryptocurrencies. If the market decides that the market valuation of Cardano is $20 billion, it is worth $20 billion.
More importantly, Cardano has been around since 2015, although it initially launched in 2017.
Still, a fair criticism of Cardano can be the lack of decentralized applications and active smart contracts. On the Ethereum protocol, applications like CryptoKitties and EtherDelta are procesing hundreds of thousands of transactions on a daily basis.
The rise of Cardano and other alternative cryptocurrencies such as Ripple and Ethereum pose a worrying trend for the bitcoin market because as a result, the dominance index of bitcoin has hit an all-time low at 36 percent.
This article was curated from Google News. You can read the original article here.