By John Foley
NEW YORK, Sept 3 (Reuters Breakingviews) – Watch out, bitcoin and ether. Cryptocurrency platform Cardano had its ADA token pass the $3 mark for the first time on Sept. 1, just weeks after becoming the world’s third-biggest virtual tender. While its total value at that price of $96 billion is roughly a fifth of that of Ethereum’s currency and a 10th of that of leader bitcoin, according to Coinbase, the No. 3 has doubled in a month.
Cardano differs from its bigger cousins because transactions are verified using “proof of stake,” which rewards ownership, rather than “proof of work,” which rewards effort. The former uses much less energy. Ethereum is switching to proof of stake, but maybe not for a year or two. On the other hand, Cardano is less suited to so-called smart contracts, which automatically execute certain agreed actions, until a revamp later in September. Another difference is that the supply of Cardano’s ADA is limited, like bitcoins but unlike ether’s.
Crypto-believers may just hedge their bets by investing in all of them. But Cardano’s rise shows how the space is evolving – collectively. New entrants from Polkadot to Iota each bring some perk that the others don’t. Variations run into the thousands. Cardano’s success could be fleeting as copycats take its charms and build on them to create more appealing alternatives.
Those with long memories might remember Altavista, the 1990s search engine that introduced firsts like web-page translation. It stormed ahead until Google wiped it off the map, in part by piggybacking off the advances of its predecessors. A dollar invested in Google’s forebears might have been wasted, but without that, search wouldn’t be what it is today. That’s the paradox of crypto too: only through today’s investors losing fortunes will the sector deliver sustainable riches.