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Is Cardano a Smart Cryptocurrency to Buy Now?

Is Cardano a Smart Cryptocurrency to Buy Now?
Written by publishing team

In recent years, the cryptocurrency space has become very crowded. Gone are the days when a few digital assets grabbed the headlines. There are now over 8000 different crypto assets, and new tokens are joining the fray all the time. Of course, the cryptocurrency market itself has already created a massive fortune, which has increased by 240% in the last year alone. But given the sheer scale – not to mention the hysteria around meme icons like Shiba Inu And Dogecoin It can be hard to separate the good from the bad.

What was said, Cardano (CRYPTO: NO) Stand out from the packaging. Not because of its functionality – at least, not yet – but because of its experienced developer team and solid growth strategy. Does this mean Cardano is worth buying? Let’s take a closer look.

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value offer

In 2015, Charles Hoskinson, the former founder of Ethereum, started the Cardano project with his former colleague Jeremy Wood. Two years later, the Cardano blockchain (powered by ADA token) debuted, featuring the first peer-reviewed consensus protocol: a type of Proof of Stake (PoS) known as Ouroboros.

Compared to Ethereum, which relies on the energy-intensive Proof of Work consensus, Cardano’s PoS consensus makes it more green and sustainable. Moreover, rather than rushing to implement new features, the developer team based each decision on academic research, dividing the Cardano project into five phases addressing its founding, decentralization, smart contracts, scalability, and governance.

The project is currently in the third phase, and smart contract functionality was added to the blockchain in September 2021. If you are new to cryptocurrency, smart contracts are just computer programs that run under predetermined conditions, and form the heart of decentralized applications (dApps), including Decentralized Finance (DeFi) applications. Of course, this functionality is new, which means that Cardano’s ecosystem of dApps is very limited compared to other blockchains like Ethereum And Solana. But this must change in the future.

There is also another point to consider. Cardano is clocked at 257 transactions per second (TPS) – making the platform much faster than the likes of Ethereum, which can handle nearly 30 TPS. But it pales in comparison to VisaTheoretical limit of 24,000 TPS. If Cardano is going to achieve widespread adoption, it has to be faster (i.e. more scalable).

The fourth stage will solve this problem by implementing Ouroboros Hydra, which is an upgraded version of the consensus protocol. Specifically, Hydra will enable multiple side chains to be added to the main blockchain, thus distributing network load more efficiently. Hydra is still in development, but the simulation has side chains clocking at 1,000 TPS, and with 1,000 side chains, Cardano could theoretically support 1 million TPS in the future.

A woman analyzes graphs on her computer.

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investment thesis

Cardano is definitely a more speculative bet than other cryptocurrencies, and that means something. However, the academically driven development team is implementing a smart growth strategy. Assuming Cardano delivers on his promise of massive scalability, the platform could be very popular with dApps builders and DeFi investors a few years from now.

On this note, the increased reliance of services on the Cardano blockchain may translate into more transaction fees, which means increased demand for the ADA underlying token. This should lead to its price going up over time. Likewise, owning ADA tokens makes you a stakeholder in the network. You can start your own stake pool to help verify transactions and secure the blockchain, or you can simply lend your tokens to your existing pool of stocks – either way, you’ll earn rewards.

Of course, it all depends on Cardano achieving the necessary scalability, and its adoption by dApp developers and consumers. But with 4,000 projects currently underway, I don’t think it’s an exaggeration to imagine Cardano as a thriving ecosystem after a few years. This is why this cryptocurrency seems like a smart long-term investment.

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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