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Cardano price reaches all-time high ahead of smart contracts launch

Chief developer announces September release date for the upgrade

SAMAA | - Posted: Aug 23, 2021 | Last Updated: 2 months ago
Posted: Aug 23, 2021 | Last Updated: 2 months ago

ADA, the native token of Cardano blockchain, set a new all-time high of $2.6 last week (on August 20), beating its previous best of $2.3, ahead of the blockchain’s much-anticipated upgrade expected next month.

Cardano is the world’s third-largest cryptocurrency with a market cap of $90.7 billion, just a notch below its main blockchain rival Ethereum. The latest rally started earlier this month after its founder Charles Hoskinson, also known as co-creator of Ethereum announced they would soon release the date of its next upgrade, which will allow the blockchain to run smart contracts on Cardano and added it would be implemented before the Cardano Summit in September. 

Smart contracts are a technology that removes the need for an intermediary and enables a wide variety of decentralised applications, such as non-fungible token platforms, games, lending protocols, and exchanges. 

Launched in 2017, Cardano became the third-largest cryptocurrency, hitting then all-time high of $2.3 in Mid-May. However, it could not sustain there because of the delayed implementation of smart contracts. The announcement about the expected upgrade fueled the latest rally, translating to a 140% return since July 20 when it hit a low of $1.02. Once the upgrade is implemented, it will allow Cardano to compete on relatively equal terms with its peers.

What is cryptocurrency?

Cryptocurrency is digital money in form of computer codes. There is no physical money or coins involved. A person by the name of Satoshi Nakamoto launched it in 2008 without revealing his identity. Digital coins have become quite popular in the last decade or so as evident from the phenomenal success of the world’s first cryptocurrency: Bitcoin, which is now worth $50,000 a unit, an increase of 328% over the past 12 months. People who support the concept have called it “breakthrough technology” that will change the way financial systems work.

A cryptocurrency is different from conventional digital currencies because it bypasses intermediaries, usually a bank, and enables instant peer-to-peer payments. Nakamoto launched it in the wake of a financial crisis to give people control over their money and exclude banks or governments from the process. 

It works on blockchain technology—a decentralised model of the ledger. That is, no central bank or government can place any limit on its production or transfers. In a cryptocurrency, a vast network of computers validates all transactions by solving a complex mathematical problem, making it impossible to counterfeit a coin. This solves the problem of double-spending. These computers are called miners and whoever validates the transaction first gets a reward. This new currency is added to the system without creating inflation.

Since Bitcoin’s launch, more than 10,000 cryptocurrencies—together known as AltCoins—have been introduced and become a new asset class for investors. The combined market cap of all cryptocurrencies is around $2 trillion.

The increasing popularity of cryptocurrencies has, however, become a concern for legacy banks and central banks across the world because they take control away from them and give it to the people. This money is not regulated and given the anonymity around, it can be used for tax evasion, money laundering, other criminal activities. To counter this, governments across the world are exploring different options including regulating cryptocurrencies or even launching their own digital currencies.

Another risk associated with these currencies is their volatile and speculative nature. Pick any cryptocurrency and you can spot its volatile price history as they move up or down very fast even on speculations. Academics and financial regulators warn investors not to invest in these volatile assets or they can lose all of their money.

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