Learn more about the pros and cons of investing in Cardano pushing you ahead to know if it is a good idea to invest in Cardano.
Wondering ‘should I invest in Cardano?’ or ‘is Cardano worth buying?’ Perhaps you’re not sure if Cardano is still a good investment? We’ll break Cardano down by looking at the pros and cons!
After an excellent start to 2021, Cardano (also referred to as ADA, its token) just might be the missing piece in your investment portfolio.
In this article, we’ll cover why you might consider investing in Cardano in 2021, the pros and cons, and what exactly to look for in this crypto.
But before investing in Cardano, you must understand what it is that you’re getting into. Only then can you really judge if ADA is a good investment for 2021.
Cardano is not just another form of cryptocurrency, like Ethereum or Bitcoin, but a new kind of decentralised blockchain-based platform that features a variety of nuanced differences.
So, let’s learn more about Cardano - one of the leading cryptocurrencies worth watching this year. But first, what is Cardano in the first place?
What Is Cardano?
Before we analyse the benefits and downsides of holding and investing in Cardano, we should explain more about the actual coin.
Cardano is a decentralised public blockchain-based platform that is also one of the first open-source and peer-reviewed networks in existence.
It aims to deliver advanced features based on a rigorous scientific and research-based process.
Cardano was created by Input Output Hong Kong and led by founder Charles Hoskinson who was one of the many co-founders of Ethereum and has also worked on Bitshares and Ethereum Classic.
Early on, they assigned academics and specialists from various educational institutions the task of reviewing Cardano’s protocol.
The main aim was to create a third-generation platform that can improve smart contract deployment and resolve the scaling issues of Bitcoin, a first-generation coin.
No wonder why many experts believe that if Cardano fulfils its promises, it may replace Ethereum, a second-generation coin.
Cardano uses two-layers: one to settle transactions and one for smart contracts; the Cardano Settlement Layer (CSL) and the Control Layer, respectively.
The heart of Cardano is its proof of stake algorithm called Ouroboros. Unlike proof-of-work protocols, Cardano’s protocol is less energy-consuming and more affordable.
Curiously enough, Ouroboros is an ancient image of a dragon eating its tail.
How Does Cardano Work?
Cardano has a unique two-layered architecture. As stated above, one is used to handle transactions with minimal transaction fees, the other one is used to run smart contracts and decentralised apps.
It’s noteworthy that unlike proof of work protocols, proof of stake blockchains do not require a massive amount of electricity and are more environmentally-friendly.
Yet, the Ouroboros protocol is quite different from other proof-of-stake algorithms. The blockchain is split into epochs, which are made of fixed periods called slots.
There are slot leaders that are responsible for adding blocks. They must create 50% transaction blocks within a single epoch, with blocks being approved by input endorsers whose election is based on their stakes.
To ensure unbiased participation and fair validation processes, Cardano has employed a multi-party computational system, which acts as a digital coin toss.
Economic rewards are split between the input endorsers, multi-party computation stakeholders, and slot leaders.
With its scalable consensus mechanism, Cardano’s model also allows more transactions to be processed per second, which helps it remain competitive with traditional payment systems, such as Visa.
What Is ADA?
Cardano’s native coin is called ADA. ADA has a limited supply of 45 billion coins. Currently, there are 31,948,309,441 coins in circulation.
Interestingly, ADA gets its name from the 19th-century mathematician and writer Ada Lovelace (the daughter of Lord Bayron) who proposed the first mechanical computer.
Being a decentralised currency, ADA is an attractive asset across different industries as it provides increased transparency and procedural efficiency.
So far, the company behind Cardano, Input Output Hong Kong (IOHK), has been offering different services, including:
- Atala SCAN that aims to protect users from counterfeit goods and unauthorised pharmaceutical products;
- Atala PRISM that provides a tamper-proof ecosystem for academic certifications and credential issuance;
- Atala Trace/EMURGO for product certification in the agricultural sector.
Of course, ADA can be used also as a payment method or a voting tool within the ecosystem.
But what are the other advantages of investing in Cardano in 2021?
Would You Consider Investing In Cardano (ADA)?
The Pros of Investing In Cardano
What are the benefits of investing in Cardano?
Knowing the pros of investing in Cardano is essential to help you decide for yourself if ADA is a good and potentially profitable investment.
So, here’s a quick look at the pros of investing in Cardano.
✅ Great development team:
Founded by Charles Hoskinson and Jeremy Wood, co-founders of Ethereum, Cardano gained a lot of popularity after its official release in 2017. Cardano is also peer-reviewed to ensure there are no weaknesses in the protocol (more on that below).
Note that to prevent bugs and hacks, Cardano tested various protocols and developed an advanced blockchain.
✅ Academic backing:
As mentioned above, Cardano benefits from being one of few coins that has been reviewed by academics who largely praise it.
Further to that, many academics work for IOHK and write papers on what they propose the project do next to improve Cardano.
This gives Cardano a lot of credibility that most coins do not have and is very useful for those who want to learn more about Cardano too.
✅ Cardano uses multiple layers:
This is one of the main advantages of Cardano.
By implementing a settlement layer and a computational layer, Cardano ensures unlimited scalability and quick transactions.
It also allows updates to be performed without interfering with payments and transactions.
✅ Open-source platform:
Cardano’s potential as a fully open-source platform with a code written in the Haskell programming language is also worth considering.
Here we should note that Haskell is a functional language that is all about functions and blocks that perform tasks when needed.
✅ Third-generation blockchain:
Cardano is proclaimed to be a third-generation blockchain. It is considered to be more reliable than other cryptocurrencies as ADA keeps overcoming challenges that other platforms have encountered.
It is also more scalable than Ethereum (second generation) and more decentralised than Bitcoin (first generation) as it scales horizontally (through its protocol Ouroboros Hydra).
✅ Cardano is secure:
Cardano is a proof of stake protocol that ensures mathematically proven safety. Given the increased number of cyberattacks in the crypto sector, there’s no doubt that security is crucial.
Note that Cardano’s system has unparalleled plans for managing security and privacy.
✅ Cardano can provide digital identity:
Just like other cryptocurrencies, Cardano relies on decentralisation. The good news is that Cardano can provide digital identity to unbanked citizens throughout the globe, especially in developing countries across the globe.
In fact, Cardano has started to cooperate with over 54 countries. Note that according to the World Bank, the world’s population with no access to financial services is over 1.7 billion.
✅ Companies are flocking to Cardano:
The number of companies investing in Cardano is predicted to increase with the announcement of Cardano’s recent upgrade and the surge of Cardano’s price.
Charles Hoskinson claims there are now more than a hundred companies looking to switch from Ethereum to Cardano.
(Do note though, there is some speculation over the validity of these claims - we’ll dive more into Hoskinson and his claims in a moment!)
✅ Cardano is now listed on Coinbase:
As of the 16th of March 2021, Cardano joined Coinbase which is a huge achievement because Coinbase is generally very careful with the coins they decide to list. They don’t just list any coin.
To give you an example of how cautious Coinbase is, at the first sight of Ripple’s debacle with the SEC, they cut them loose!
Cardano’s availability on Coinbase will make it easier for more traders to purchase it which will likely increase trading volume.
✅ Cardano’s price increased by 720% in the first three months of 2021:
As we mentioned at the beginning of the article, Cardano has had an amazing 2021 so far.
According to Capital.com, Cardano’s price had increased by 720% by the end of February 2021 since the start of the year, reaching an all-time high.
Cardano even managed to overtake Binance Coin and Tether in terms of market capitalisation too! And temporarily became the third largest coin.
This shows us the kind of potential Cardano has.
✅ Proof of stake algorithm:
Cardano was one of the earliest adopters of the proof of stake algorithm which is seen by many as more efficient than proof of work.
Proof of stake is said to reduce the amount of computing power needed which means that it is more energy-efficient, cheaper and better for the environment as well.
Hoskinson, when discussing Bitcoin, which uses proof of work, said to The Independent:
“Bitcoin’s energy consumption has more than quadrupled since the beginning of its last peak in 2017 and it is set to get worse because energy inefficiency is built into Bitcoin’s DNA”.
Theoretically, this should not be the case with Cardano.
✅ Cardano can host assets without needing smart contracts:
The Mary hard fork which took place on the 1st of March, finally made Cardano a multi-layered blockchain (delivering one of their primary promises).
But also, as equally interesting, it gave the platform the ability to host other assets on the Cardano blockchain from other blockchains and custom tokens, without needing to create smart contracts (like Ethereum requires), and no need to customise code to do it.
This upgrade likely drastically increased the price of Cardano in early March, bringing it to its current valuation.
✅ Further upgrades are coming very soon:
Aside from the Mary hard fork, the Cardano team is planning on releasing their Goguen update at some point in the first quarter of 2021.
While it appears that they are running a little late (not too surprising), this upgrade could finally allow developers to build smart contracts and dApps on Cardano!
If Cardano manages to pull this off, it might just skyrocket in value.
✅ Cardano price predictions for 2021 look positive:
Looking into the wealth of Cardano price predictions online, it becomes pretty clear quite quickly that experts do not believe Cardano has finished increasing in price.
Elsewhere, Trading Beasts predict that by December 2021, Cardano could reach a low of $1.30 (which is still higher than the current price at the time of writing) and a high of $1.91.
The Economy Forecast Agency is the most grounded in their predictions for Cardano, believing that by December 2021, it will be between a low of $1.33 and a high of $1.65.
Read our article on Cardano’s price predictions here.
The Cons of Investing in Cardano
While Cardano has some impressive advantages over other coins, both traders and investors should be familiar with the cons of investing in ADA in order to make an informed decision.
Like any investment, putting your money into Cardano isn’t risk-free. Here are some serious drawbacks of investing in Cardano:
❌ Cardano is still in development:
Though Cardano is known as the ‘academic blockchain’ that has undergone essential review and testing, the truth is that Cardano is still developing, and is developing slowly.
This is by far the biggest reason to be cautious of Cardano!
While trying to keep up with competitors and tech advancements, Cardano takes its time to develop.
Because of this, for a while, Cardano has been losing its position against Ethereum and EOS as it’s still dealing with incomplete smart contract and token standards.
Cardano is still primarily working on its scalability aspect and while cryptos like Ripple can process 1,000 transactions per second, Cardano can process only 257 transactions per second, theoretically.
Indeed, Cardano is very much behind where it should be with many delays pushing back releases in the past.
But perhaps the most worrying of them all is that Cardano does not have smart contract and dApp capabilities yet!
Yes, while we mentioned the Goguen upgrade should be happening soon to add these features, until it is implemented this is definitely a con as we cannot rely on these promises.
This is a major concern because they are the primary features we are all waiting for! (As it would mean Cardano could be a viable alternative to Ethereum.)
It increases the fear that most of Cardano's value is based on hype. Insisting that they are the best in research papers but not delivering much in the way of evidence.
Unfortunately, investing in Cardano at this point is largely speculation until they deliver.
❌ Cardano wants to implement a voting system:
Though having an open voting system where upgrades can be proposed and vote for/against is an appealing factor, this is one possible drawback.
Simply because token holders are not always tech-savvy and may vote for an unreasonable decision!
Ethereum’s proof of stake researcher Vlad Zamfir claims that on-chain voting can be dangerous and may force changes on full nodes.
❌ Issues with its synchronisations between ledgers:
Though Cardano has implemented a unique algorithm, some critics claim that Cardano’s assumptions that ledgers will be synchronised at any given point of time are unrealistic for a global blockchain.
On top of that, many say that double-spending or 51% attacks are still possible. Input endorsers, for instance, may end up approving the same transactions from two slot leaders.
❌ Having multiple chains is now old news:
When Cardano first appeared on the crypto scene, the idea of multiple chains working together was brand new. No one else had thought about this idea until now.
But times change and people catch up. Now Cardano has to contend with many projects that also have multiple chains such as Binance Coin’s Smart Chain (which works separately from their primary chain) and Polkadot for starters.
Unfortunately, that’s just one of the downsides of being open-source, all open-source cryptos face this risk.
❌ Charles Hoskinson can be his own worst enemy
You can’t write an article about Cardano without mentioning Hoskinson several times! (He’s turning into a bit of an Elon Musk of crypto.)
Charles Hoskinson can be a bit of a controversial figure, with some labelling him as egotistical, particularly when communicating to people online.
There have also been several incidents where he has had to backtrack on comments he has made, such as the comment we mentioned about 100 companies jumping ship from Ethereum we mentioned above.
But this is just the tip of the iceberg. YouTuber Chico Crypto has unearthed what he believes to be questionable motives of Hoskinson, largely revolving around the short time IOHK worked with Ethereum Classic.
While we may never know the whole story, Hoskinson also had a major falling out with Dan Larimer (the founder of EOS) when the two worked on Bitshares too.
However, it is difficult to take all the allegations against Hoskinson seriously. Some may just be an attempt to slander him and lower the price of ADA.
You may wonder why this drama is so important. Quite simply, it can damage Cardano’s perception which can negatively affect the price.
❌ Not fully decentralised yet:
In mid-2020 Cardano went through a lot of work to decentralise when they released their Shelley upgrade, but unfortunately, decentralisation is still an issue.
However, according to U.Today, Cardano is expected to become fully decentralised very soon.
It was suggested in early March 2021 that it would be within a month, however, with Cardano’s track history, it’s best not to bet on that. (It might even coincide with the Goguen upgrade.)
For the time being, we’ll count this as a con, but very soon could turn into a pro when they are fully decentralised!
❌ Highly suspicious marketing strategy in Japan:
Interesting fact for you: Cardano is sometimes nicknamed the ‘Japanese Ethereum’ because much of its initial ICO investors (supposedly 95%) came from Japan and made up the bulk of the $63 million it acquired to get started.
However, Cardano’s ICO was fraught with controversy in Japan, with claims they were targeting the elderly and were associated with several shady figures, such as Tadashi Izumi, who worked on ‘scamcoin’ NoahCoin.
Hoskinson has denied these claims.
Conclusion: So, is Cardano a Good Investment?
Yes, despite all the criticism, Cardano is likely a good investment. In fact, Cardano is more than a good investment.
It currently ranks as fifth by market capitalisation, as reported by CoinMarketCap.
Since the total number of tokens is limited, the risk of inflation is also limited as the demand for the coin continues to grow.
There are also many technical advantages, such as Cardano’s proposed decentralised nature and layered architecture that make Cardano a good investment.
That said, to answer if ADA is worth holding, we should consider a wide range of factors and potential risks.
Cardano’s success also depends on the number of smart contracts and dApps it would be able to host. Though its peer-reviewed nature makes it secure, there is a lot to develop further.
We can only say that ADA has a good chance to get its fair share in the crypto investment sector.
It is moving upwards and has been steadily occupying CoinMarketCap’s Top 10 in terms of market cap and trading volume, at points reaching third largest.
Cardano’s low entry-level makes it an attractive investment for traders and beginners, as well as long-term investors. ADA is also the right choice for people who simply want to diversify their portfolios.
Put simply, Cardano is a low-risk investment with lots of potential rewards. It’s something you should definitely do some research on before you consider adding ADA to your portfolio.
The real Cardano investing question then, does it really work? If you’re willing to invest the time and energy, then for you, it could well do.
How Much to Invest in Cardano?
If you believe that Cardano’s advantages outweigh its disadvantages, making it a good investment in both the short- and long-term, then you may want to know how much to invest in ADA.
As stated earlier, ADA’s current prices make it an attractive asset for both beginners and experienced traders.
Yet just because investing in Cardano is highly accessible that doesn’t mean you should risk all your savings. Never invest more than they can afford to lose!
Remember that cryptocurrencies are highly volatile and investing in ADA can be risky.
But here’s a tidbit: buying ADA can be easy. With eToro you can buy and sell ADA and trade CFDs of up to 90+ crypto pairs.
Ready to Invest In Cardano (ADA)?
Will Cardano Be a Millionaire Maker?
With a market cap of $37,757,039,324 (at the time of writing), we can say that Cardano is already a millionaire maker. And not just for traders who got in early if its price continues to rise.
Cardano most certainly has made Charles Hoskinson a millionaire. Supposedly, his wealth is somewhere between $500-$600 million, according to Market Realist.
Hoskinson even considers himself a billionaire. Stating in an article by The New Yorker:
“I’m basically a billionaire. At this point, I couldn’t care less about those six months of my life with Ethereum”.
It’s highly suggested that when he refers to himself as a billionaire, he likely means the value of the ADA tokens he has.
Interestingly, though Bitcoin is the largest coin in terms of market cap, ADA has been outperforming Bitcoin in the past months. Cardano has grown by more than 720%!
The general bullish trend now makes leading coins like ADA a profitable investment as well.
Most forecasts agree that ADA will continue to increase amidst the bullish momentum in the crypto sector.
And many believe that the coronavirus pandemic will lead to increased use of cryptos and blockchain technology, which could lead to an increase in ADA’s value.
Here we should note that ADA’s previous all-time high value took place on 4th January 2018, when ADA reached $1.33. In March 2021, ADA smashed that record by reaching $1.41 per coin.
If Cardano manages to establish itself as a smart contract operator, ADA may reach $1.5-$2 in the next few years.
Read our article on Cardano’s price predictions here.
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If you have learnt anything from Pros and Cons of Investing In Cardano, Will It Be A Millionaire Maker, make it these key points:
- Cardano is one of the leading blockchain platforms. They introduced the idea of multiple chains and were one of the first to adopt proof of stake.
- Charles Hoskinson’s erratic behaviour sometimes gets him in trouble. This may cause issues with Cardano’s price if he is not careful.
- Cardano’s native token ADA has seen an impressive increase compared to other digital giants. Some experts claim that its value may reach over $2 in the years to come.
- Investing in Cardano remains a risky financial venture. Primarily because it is still in development.
Do you think that Cardano’s pros outweigh its cons?
If you liked our article Pros and Cons of Investing in Cardano, then please share it with anyone who might be interested in cryptocurrency and blockchain technologies.
Is Cardano (ADA) better than Ethereum (ETH)?
Though Cardano has a more effective staking mechanism than Ethereum - with Charles Hoskinson claiming that Cardano has the best code in the cryptocurrency sector - Cardano is still in development, so it’s too early to tell.
While Cardano has a promising future, figures show that Ethereum is still a leader in the smart contract and dApps deployment sector, currently ranking second in terms of market cap, coin price and trading volume.
How to invest in Cardano? What’s the best way?
There are several ways in which you can invest in Cardano. Probably the best and safest way is via a broker in the form of a CFD (e.g., eToro, as mentioned above).
You could also buy ADA from a crypto exchange, but it may be more complicated and riskier as exchanges have a history of getting hacked.
If you do go down this route, do note that the Daedalus wallet is designed for storing ADA by the Cardano team.