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The price action of Cardano has historically made it a great investment. There was a lot of hype around the digital asset in 2021, and many called it the Ethereum killer.
So, going by Cardano coin price, should you invest in this cryptocurrency?
A little bit about Cardano
Cardano was made to solve some of Ethereum’s problems in 2015 from its Proof-of-Work consensus model. The official founder of Cardano is Charles Hoskinson, a former Ethereum co-founder.
It has got multiple layers of computations and settlements, proof of stake consensus, and it’s easy to upgrade its network.
Cardano development
Cardano has between 100 and 150 developers working on it, and around 700 commits happen every week. The project’s active development makes it one of the busiest in the blockchain space today, so its ambitious roadmap should be met.
There’s no doubt Cardano will steal market share from Ethereum with this number of developers. Electric Capital Developers Report from 2020 says it’s far from Ethereum, Polkadot, or Cosmos in size or speed.
Smart contracts for Cardano
One of the biggest criticisms of Cardano is the DeFi ecosystem. Investors look forward to an ecosystem being built out soon after smart contracts are released on September 12th, 2021. Cardsano’s smart contract upgrade didn’t go smoothly because the new software couldn’t be used by applications, causing its price to drop.
Cardano developers are working on new releases in 2022 to improve smart contracts’ performance and scalability. According to Cardano’s communication director, the first code drop will be in February, followed by two more in June and October. Cardano smart contracts will run on a computation layer that supports Plutus and Solidity contracts.
Partnerships
Cardano has partnered with the University of Illinois, Ethiopia, and New Balance. Hoskinson thinks blockchain can make a huge difference in Africa, so he’s trying to make Cardano’s potential a reality there. This is because most of Africa’s population needs access to banking.
New Balance will also use Cardano’s network to track shoes.
What is Cardano’s working principle?
Cardano is a proof-of-stake (PoS) blockchain that aims to solve the scalability problems associated with other Layer-1 blockchains like Ethereum. Validating and securing transactions on blockchain networks is done with PoS.
Token holders stake (lock up) their holdings in a wallet or node. They then validate transactions and add new blocks to the blockchain at random. The more tokens a holder stakes, the more likely they will be picked to validate transactions. It’s called staking. Like Cardano, proof-of-stake (PoS) blockchains are cheaper and more efficient than proof-of-work (PoW) blockchains like Bitcoin and Litecoin.
The slashing mechanism is used to achieve security in PoS blockchains like Cardano. A portion of their staked tokens is confiscated permanently as punishment. Thus, validators don’t engage in malicious activities since they’ll lose a lot of staked tokens if they do. PoS encourages validators to align their financial interests with blockchains.
Cardano Pros
- Cardano’s settlement and computation layers are separated, so transaction fees are lower.
- Cardano is now even more competitive than Ethereum, thanks to smart contracts.
Cardano Cons
- It’s hard to beat Ethereum’s army, which is ten times bigger than Cardano’s. Solana has a much bigger team and is growing faster than its competitor.
- Low fees are nice but indicate low demand for network space. Eventually, more smart contracts will flow through the network, taking up more space than payments.
How safe is Cardano?
Cardano is generally considered a safe investment. As with other cryptocurrencies, ADA is volatile and regarded as high risk. A co-founder of Ethereum, Charles Hoskinson, makes the team reputable in the blockchain space. The ADA project is a Layer 1 project with its own blockchain. Several staking options allow traders to earn passive rewards while holding ADA.
So finally, is Cardano a good investment?
Cardano’s momentum makes it one of the most promising blockchain applications today.
Ethereum has been dubbed its killer, but that’s not true. Cardano will carve out its niche in the global blockchain ecosystem, but it can’t replace Ethereum. If you’re bullish on crypto in general and blockchain in particular, Cardano is a good investment. Ethereum owners should consider Cardano as a hedge that’ll most likely boost their gains. There’s no downside.
Keep in mind that this is just our opinion, not financial advice. Investing in cryptocurrencies is risky, so don’t put your life savings in them. Cryptocurrencies are highly volatile, but that’s probably why you’re here.
