Many crypto projects have turned to POS mining, for the energy efficiency it brings over Proof-of-work. One of the most common variations of POS that is commonly used by most projects is the delegated proof-of-stake (DPOS) algorithm. This entails selecting a fixed number of validators to validate transactions and keep the network working efficiently. However, delegated proof-of-stake always presents a risk of centralization. That’s because the fixed representatives that are selected can collude, and take the network in the direction that they want, even though it may not be in the best interests of the other investors. Simply put, there is always a risk that they can confirm cartels.
Cardano took cognizance of this and uses dynamic proof-of-stake. Though it is also written as DPOS, it is completely different. Dynamic Proof-of-Stake means that there are no fixed validators. Anyone can choose to stake their coins or join a pool. The pools in Cardano (ADA) have to be within specified parameters. This is to ensure that the mining pools are not too many to eat into the efficiency of the network, or too few that the network becomes centralized. The centralization aspect is avoided by the fact anyone can create their own pool and if it meets the set parameters, then they can become validators. In short, there are no fixed or predetermined validators as is with the case with delegated proof-of-stake.
How does this impact on Cardano (ADA) going into the future? Well, by maintaining true decentralization, Cardano is free from the risk of censorship. The fact that the network cannot be shut down, gives it a huge intrinsic value, as an investment. Censorship proof is what also gives Bitcoin (BTC) a huge value in the market. This will play a huge role in drawing in Dapp’s developers especially those targeted at industries where censorship could be a huge hindrance to their operations.
On top of that, by maintaining true decentralization, Cardano (ADA) is safe from regulations against unregistered tokenized securities. The U.S, for instance, is keen on cryptos that are more of securities than decentralized entities. Cardano (ADA) holders are pretty much free from the possibility of their token ever being declared a security. This gives Cardano a good chance of making it to top U.S exchanges like Coinbase at some point in the future.
In essence, the Cardano DPOS points to a project that is following on the principles of research and scientific review. Cardano (ADA) may not be quick to make moves, but whenever they implement something, it is well thought out, and practical for real-world usage. This explains why this project has made significant in-roads in different countries and could be the platform that decentralizes government services for better efficiency. It also stands to gain adoption in key industries like finance. That’s because it balances between decentralization (censorship proof), efficiency, as well as adherence to regulations.
With the complexity of what Cardano is doing, it becomes clear that Charles and the team could actually be building a trillion dollar crypto. This is not a project that is built on hype, but rather on cold hard science and research. The best part is that the market is beginning to take note. Cardano’s google trends are on the rise, and its price has stabilized too. This is a sign that as Cardano continues to meet milestones on its roadmap, its value in the market will rise significantly. It’s also supported by the return of bullish sentiment to the crypto market. $1 Cardano is very possible in Q4 of 2018.