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1 Number Shows Why Cardano and Solana Are More Exciting Than Shiba Inu, Ethereum, and Bitcoin

1 Number Shows Why Cardano and Solana Are More Exciting Than Shiba Inu, Ethereum, and Bitcoin
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In the long run, investing in the stock market has been one of the most effective ways to build wealth and achieve financial independence. Although stocks don’t outperform bonds and commodities every year, they have easily outperformed bonds and commodities in terms of average annual profit over several decades.

But in the short term, cryptocurrencies have circles around Wall Street. while the standard Standard & Poor’s 500 More than doubling since hitting the pandemic bottom in March 2020, the market capitalization of nearly all cryptocurrencies has grown nearly 20-fold, from $141 billion to $2.74 trillion, over the same range.

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Crypto Investors Can’t Get Enough Of This Trio

Tops the charge, at least in terms of internet search hype Bitcoin (CRYPTO: BTC)And Ethereum (CRYPTO: ETH), And Shiba Inu (CRYPTO: gray hair). According to Bacancy Technology, these are the three most searched cryptocurrencies on Google, a subsidiary of the alphabet, in 2021.

Bitcoin has had a remarkable year as it reached an all-time high and was designated by El Salvador as a legal currency. This achievement paves the way for other countries to reduce crypto-regulation on Bitcoin, or even legalize it like El Salvador.

The hype surrounding Ethereum has to do with its role as the backbone of Decentralized Finance (DeFi). DeFi involves using smart contracts on a financially focused blockchain to complete payments without the need for financial institutions. Using DeFi means avoiding payment slowdowns or pauses that may accompany bank-initiated payments.

Then there is the very popular meme coin Shiba Inu, which has gained up to 17.3 million% in 15 months. Everything from the launch of the decentralized exchange ShibaSwap to regular tweets from Tesla Motors CEO Elon Musk of his Shiba Inu dog has sent SHIB symbols to heaven.

A person holds a glowing golden padlock surrounded by grid works representing blockchain nodes.

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Number one shows why Cardano and Solana are more interesting

But for all the hype this trio of famous coins has caused, it doesn’t hold a candle for excitement Cardano (CRYPTO: NO) And Solana (CRYPTO: SOL) Bring to the table.

To be fair, Cardano and Solana aren’t exactly under the radar. Cardano is up just over 1,000% year over year, as of November 6, while Solana’s annual gain so far is close to 16,800%. Remarkable increases in token prices tend to attract attention in the crypto space. However, it is not their overall performance so far that makes these coins exciting. It’s the scalability of their blockchain networks, as measured by transactions per second (TPS).

Bitcoin may be the most valuable cryptocurrency by value, but its processing power is particularly slow. The most searched digital currency can handle only about seven transactions per second.

Ethereum is not much better. Its blockchain network handles just 13 transactions per second, with those speeds experiencing slowdowns during periods of congestion. Since Shiba Inu is an ERC-20 token based on the Ethereum blockchain, it is also tied to a transaction cap of 13 TPS.

By comparison, the Cardano was tested at around 250 TPS four years ago, but that appears to be just the tip of the iceberg. The upcoming Hydra upgrade is a Layer 2 solution designed to improve the scalability of the rapidly growing Cardano network. It does this by processing off-chain transactions while still using the ledger in the main chain for settlements. This can significantly reduce transaction costs and quickly improve processing time. Virtual numbers of up to 1,000,000 TPS are rolled out with this upgrade. For some context, the payment processing giant Visa Peaks at 24,000 TPS.

As for Solana, it is capable of processing at 50,000 TPS. Solana’s Proof of History protocol creates a record of an event that occurs between specific times, rather than relying on validators to talk to each other and assess the time elapsed between events. This speeds up transactions and scales Solana’s blockchain network to breakneck speeds. According to Solana’s white paper, an estimated 710,000 TPS is believed to be possible using today’s devices.

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There is real-world potential here…with an advantage

The ultimate goal of blockchain technology is to provide faster transactions at a fraction of today’s cost, all while democratizing the process to include people who might otherwise be left out of basic banking. What Cardano and Solana offer can do just that, and much more (both are at the heart of decentralized applications). While the two blockchain networks are still relatively early in their trial-and-error/scaling-up phase, the foundation for a potential alternative to the existing payment infrastructure has been laid.

but there is a problem.

The current payment infrastructure is well known and time tested. For companies to make the costly and time-consuming switch to blockchain, the technology will need to demonstrate its ability to scale in the real world without compromising security. Although we have seen some early success stories, we have not yet seen the widespread adoption of blockchain in the real word. It’s something like Catch-22: companies won’t make the leap until the technology proves scalable at scale, yet no evidence of large-scale scalability will emerge until companies give blockchain technology a trial run.

Another thing to consider is the fact that investors have a habit of overestimating the adoption of new technology. Dating back more than a quarter of a century, bubbles have been observed with the advent of the Internet, B2B trade, genomics, marijuana, 3D printing, etc. This does not mean that blockchain technology will not become an essential part of our lives at some point in the future. Instead, it should be noted that investor optimism always appears to be managing capacity and/or adoption of new technology or products.

As a crypto skeptic, I find the solutions that Cardano and Solana cook up very exciting. But at the same time, I am also fully aware of the early track record of the next big investments.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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