Is Cardano A Good Buy Or Goodbye

Cardano has come a long way and still has a long way to go, making now an excellent time to buy ADA.

Last Updated January 31st 2022
5 Min Read

Cardano is a popular, fast-growing blockchain technology that stands for secure and sustainable blockchain with ground-breaking use cases. According to the developers, Cardano is capable of “redistributing power from unaccountable structures to the margins.”

Cardano (ADA) is a third-gen blockchain available to all and a reliable dApp advancement platform. Third-gen cryptocurrencies generally improvise on the constraints of first and second-gen cryptocurrencies (like Bitcoin and Ethereum). The Cardano platform has used new advancements, including security, sustainability, and multiple-layer architectures, to develop versatility. 

Cardano is the first blockchain platform to have acquired worldwide media consideration by including a companion investigated research plan into its core standards. Additionally, founder Charles Hoskinson made Cardano more than just a store of value, opting to focus on utility and user retention, creating more of an app store ecosystem that spans a variety of verticals, including banking, healthcare, education, and more. 

Its most developed use case is decentralized finance (DeFi) and various decentralized apps (dApps) that enable activities such as person-to-person lending, interest-earning staking, passive income creation from referral rewards, and yield farming. All without the intermediaries, delays, or excess fees of traditional finance.

This success has been reflected in an astronomical increase of 2,000% in ADA's value over the past year. 

Cardano: What Makes It A Good Investment?

Many factors make Cardano a stellar investment choice. 

1. Speed 

One of the biggest problems for most cryptocurrencies is scalability. Large crypto tokens such as Bitcoin and Ethereum can process around 4.6 and 15-20 transactions per second (TPS), respectively. However, Cardano is right up there with the highest speed. The network was tested in 2017, showing it can handle 257 transactions per second. That is heads and shoulders above most of its peers.

Transaction speed is a metric that is being watched closely by investors because micropayments and micro tipping will become possible on the Cardano network once its Hydra protocol is fully implemented. This protocol has taken five years to develop. However, experts believe this could allow Cardano to process as many as 1,000 transactions per second. To put this level of speed in context, the Visa network processes approximately 1,700 transactions per second. 

2. Versatility

Thanks to its advanced features, Cardano has risen to prominence so quickly. After all, the ability to utilize smart contracts on a given network is game-changing. Smart contracts are digital contracts between two parties, which automatically execute when certain conditions are met. These are the building blocks of decentralized finance (DeFi) and decentralized application (dApp) movements.

Cardano's versatility in being a real innovative and disruptive force to sectors such as finance, healthcare, and law is notable. However, another critical factor investors note as a reason to own Cardano is the network's proof-of-stake protocol. Unlike Bitcoin and other proof-of-work miners, proof-of-stake mining allows investors in Cardano to stake their tokens to validate the blockchain. This requires much less computing power than the traditional PoW model and is appreciated by environmentally conscious investors.

Another side effect of proof-of-stake validation protocols is these allow for relatively low transaction fees and improved transaction times, along with less energy usage. Cardano was one of the early adopters of this mechanism, and it has propelled this cryptocurrency up the market cap list rather quickly. Other cryptocurrencies are likely to follow Cardano's lead over time.

Check Out: What Might Happen If You Invest $100 In Cardano (ADA) Today?

3. Supply Dynamics

Unlike some other cryptocurrencies whose supplies are not capped at a limit, Cardano has a fixed supply. Unlike Bitcoin, which capped its total token supply at 21 million, Cardano chose an arbitrary value of 45 billion for its supply cap. Currently, there are approximately 33 billion ADA tokens in circulation today. 

Accordingly, investors in ADA know that approximately 75% of all ADA tokens that will ever exist already exist today. By limiting supply, investors have a theoretical floor underneath the price of ADA, assuming supply and demand fundamentals remain intact.

As with other cryptocurrencies, supply and demand are chief factors in valuation. Thanks to Cardano's supply-demand structure, the asset could gain more popularity and soar in 2022, reaching new all-time highs.

4. Consensus Mechanism 

Cardano uses a proof-of-stake (PoS) consensus model to settle transactions, which means that users need only stake their ADA coins to participate in the network and earn new coins. A PoS model is cheaper to run than Bitcoin, which uses a proof-of-work system that requires a lot of expensive computer servers, cooling gear, and energy. 

Ultimately, Cardano’s PoS system is more sustainable, inexpensive, and environmentally friendly in the long run. 

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

Cardano: The Downside 

Investing in Cardano does not only have benefits. As newer technologies take over, the limitations of older blockchain networks come to light. 

Cardano has low fees, which is good but indicates a low level of demand for space on the network. However, this might change when more smart contracts start flowing through the network. 

Cardano is still a relatively young cryptocurrency. However, the extent to which it succeeds at remaining a top cryptocurrency for investors depends on how competitive the network is over time. In this regard, Cardano seems like a strong bet.

Don't Miss: Pros and Cons of Investing in Cardano

In Conclusion 

Every project in crypto has its ups and downs. But very few have the leadership, vision, superb programmers, foundational technology, and proven developmental roadmap of Cardano. Nevertheless, based on network fundamentals, it looks like this crypto is likely to thrive and make headlines in the future. 

Cardano has already inked some notable partnerships with universities, governments, and businesses, including the University of Illinois, Ethiopia, and New Balance. Hoskinson has pushed hard to see its potential come to fruition in Africa, where he believes blockchain can make a huge impact. Investing in Cardano now is likely to pay off in the long run in the form of massive returns.

That said, ADA has been volatile, both this year and historically. So potential investors should be aware of that and consider Cardano as part of a broader diversified cryptocurrency portfolio.

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Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

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