What Is Cardano and Is It Worth Investing In ADA In 2022?

Last Updated February 5th 2022
21 Min Read

I you’re looking to invest in Cardano you must know how it works. Never trade a crypto just because someone told you that you can make money from it.

If you want to assess if Cardano is the right investment for you, you’ve got to know its ins and outs and be able to objectively compare it to the rest of the market.

We will introduce and explain why Cardano is expected to become one of the most important cryptocurrencies worldwide.

We will also try to answer the following questions - What is Cardano? Is it a good investment?” And “Should I invest in it in 2022?

Cardano is a decentralised platform that allows people to execute transactions beyond borders and deploy smart contracts and decentralised apps (dApps). 

Launched in 2017, Cardano was designed to restore trust in economies through the integration of technology and also to allow unbanked individuals to access financial services.

Interestingly, Cardano’s founders Jeremy Wood and Charles Hoskinson worked on the Ethereum ecosystem but then split from the team after disagreements on how Ethereum should be developed.

Why Cardano Is The Future

Cardano is not your average digital asset. It is defined as a third-generation cryptocurrency with potential implementation in supply chain traceability and governance.

This means that theoretically, Cardano might be able to overtake Bitcoin, a first-generation cryptocurrency, by resolving its scalability issues and overtake Ethereum, a second-generation cryptocurrency, by providing a safer peer-reviewed platform for smart contracts.

As Why Cardano explains: “[to] provide a more balanced and sustainable ecosystem that better accounts for the needs of its users as well as other systems seeking integration”.

Additionally, Cardano differentiated itself from other cryptos as it attracted professors and researchers to incorporate peer-reviewed and academic principles into its design.

No surprise that Cardano managed to raise $62 million during its Initial Coin offering (ICO) and started collaborating with high-level companies across FinTech and academic sectors.

Plus, Cardano’s implementation of a second parallel chain was huge news when it started, making it one of the most important cryptocurrencies to have been created.

This idea has since been copied by many of the leading cryptocurrencies since then, such as Binance Coin and Polkadot.

But more importantly, Cardano brought an air of academic professionalism to cryptocurrency. Before Cardano, everyone was just experimenting with the technology, testing it out and seeing what the results were.

Cardano’s peer-review system means that changes are scrutinized much more before they are implemented.

Before cryptocurrency, particularly Bitcoin was about subverting the current economic system. Cardano’s seriousness changed that, showing the world that cryptocurrency can be used everywhere. 

How Does Cardano Work?

Cardano is a third-generation coin that aims to improve scalability, interoperability, and sustainability to reach large-scale blockchain adoption.

Its development has been supported so far by three different organisations: the Cardano Foundation that oversees the development of the Cardano community; Input Output Hong Kong (IOHK) that builds the blockchain; and EMURGO that takes care of the promotion of Cardano’s commercial applications.

Cardano’s development is scheduled in five stages or eras: Byron, Shelley, Goguen, Basho and Voltaire, with Goguen being scheduled for 2021.

But do note that Cardano is typically slow with these things, and it can be frustrating (it is notoriously difficult to find out when updates will be released).

A unique feature of Cardano is its two layers: the Cardano Settlement Layer (CSL) used as a balance ledger to settle transactions and the Computational Layer used for smart contracts.

This separation allows organisations to custom-make the design and privacy of their contracts.

Here we should note that at the start Cardano could only process 10 transactions per second, while now it can process around 257 transactions per second.

Hydra, Cardano’s Layer 2 scaling, may help Cardano process over one million transactions per second in the future.

Another unique feature is its consensus mechanism Ouroboros. Ouroboros is a chain-based proof-of-stake protocol, which features mathematically verifiable security to reduce cyber-attacks. 

Cardano also relies on a decentralised autonomous organisation (DAO) to approve new initiatives and prevent splits.

Here it’s worth mentioning that different Cardano epochs consist of slots, with slot leaders being chosen through a coin-tossing protocol.

What Will Cardano Be Used For?

Cardano plans to create a sustainable blockchain ecosystem to create a more efficient world, starting with education, retail, agriculture, government, finance and healthcare. 

While many cryptos are focused on being transactional cryptos or fuel for a smart contract ecosystem, Cardano aims to focus more on the underlying technology that makes crypto possible - blockchain technology.

Hoskinson views the uses of Cardano to be endless and it can fuel whole societies. He has said in the past:

“My goal is to lead countries on this blockchain. I am not interested in Uniswap, CryptoKitties and other things. It’s a bubble and it comes and goes, like pet rocks and beanie babies”.

While Uniswap is by no means small time, the point Hoskinson is probably trying to make is that he is not interested in enabling specific applications. He wants to build a world in which other people can create those things if they so wish.

There’s not an industry the Cardano team doesn’t see themselves improving. To them, it is not a cryptocurrency revolution, but a blockchain revolution that utilises cryptocurrency.

Read Also: 11 Reasons Why You Should Invest in Cardano ADA Today

Is It Worth Investing In Cardano In 2022?

Yes, given its strong development roadmap and high market cap, there’s no doubt that Cardano is worth watching in 2022. Some of the factors in Cardano’s favour are its strong team of computer developers and scientists. Also, let’s not forget that Cardano is supported by three organisations, which improves its adoption and development.

IOHK, for example, managed to open a research lab at Wyoming University to develop a crypto-authentication microchip that can provide experiences similar to using fiat money without connecting to the Internet.

Cardano is also worth considering because of its vision to resolve scalability and improve sustainability and safety. 

Besides, Cardano provides two strong and secure wallets to store ADA, Daedalus and Yoroi.

Would you Consider Investing in Cardano ADA?

Read More: Bitcoin vs Cardano

How Much Will Cardano Be Worth In 2022?

In terms of price, Cardano has an outstanding potential to reach new heights. It is forecast that ADA will increase in value. According to experts and analysts, Cardano can hit the highest price of $5.10 by 2022.

Though Cardano price predictions remain speculative, many experts believe that based on past and technical analysis data, ADA prices will continue to grow. The good news is that ADA has overcome numerous milestones and has grown significantly over the years.

As Cardano keeps boasting one of the most supportive communities of crypto traders and blockchain enthusiasts across forums and platforms, there’s no doubt that Cardano is here to stay long after the end of 2022.

Can Cardano Hit $10?

As per Cardano price forecast, the ADA coin can hit the $10 mark in the long-term. WalletInvestor believes that Cardano can reach $10 by April 2025. While DigitalCoin does not see Cardano reaching further than $6.36 in December 2028.

Don't Miss: What Will Cardano (ADA) be Worth In 2030?

Can Cardano Be Worth More Than Ethereum?

If Cardano’s smart contract capabilities prove to be better than those offered by Ethereum, Cardano could become worth more than Ethereum.

Cardano has the upper hand in several ways. The most obvious being that it was created with a proof-of-stake mechanism which makes it more efficient while Ethereum is still transitioning from proof-of-work, which could be painful.

But then again, Ethereum has a wide user base and is interconnected with much of the cryptocurrency ecosystem.

Eth’s popularity also means that it is easier to find people to work on the project and it is better funded. Theoretically, this could mean that Ethereum can develop faster and react to changes quickly too.

Cardano has at times appeared to have lost a lot of investor support because of how slow it has progressed. Heralded as the best smart contract platform, Cardano still does not have working smart contracts, at the time of writing.

And without smart contracts, much of what Cardano is supposed to do is not possible.

This makes investing in Cardano very speculative, possibly more so than other cryptocurrencies, such as Ethereum, that already deliver the service they aimed to provide.

However, when smart contracts do come to Cardano, expect the value to likely increase dramatically. Mark R Hake of InvestorPlace believes that the price of Cardano could double when smart contracts are launched.

But do not expect Cardano’s price to be near that of Ethereum’s overnight. It took years for Ethereum to get to its current point.

Furthermore, for Cardano to be worth more than Ethereum, it also needs to make sure it can keep the Binance Smart Chain at bay too, which is currently developers’ second favourite chain for smart contracts after Ethereum.

Check Out: Ethereum vs Cardano

Should I Invest In Cardano?

With different tech advantages, a strong development roadmap, and a variety of use cases, Cardano is considered a good investment.

Who should consider adding Cardano ADA in their portfolios?

  • Crypto investors who believe that ADA will reach new highs beyond 2021.
  • Crypto day traders who see potential in ADA and its high trading volume in the short term.
  • Blockchain enthusiasts who believe that as third-generation crypto, ADA will overtake Bitcoin and Ethereum in the years to come.
  • Large institutions and online services that support ADA use cases and mass adoption.

ADA is also a great choice for investors who simply want to diversify their portfolios and reduce risks.

No wonder that the number of ADA wallets is increasing. In January 2021, the number of ADA wallets increased by approximately 37.8%, according to CryptoSlate.

That said, though buying and trading Cardano is alluring, cryptocurrencies remain volatile, and investors might risk all their funds without the possibility of returning them.

That’s why always do your research before you invest in any asset and decide for yourself if the possible returns outweigh the potential risks.

If you decide to get started with Cardano investing, remember an important rule: never invest more than 1-2% of your funds on a single move.

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FAQs

Is Cardano Unlimited?

Cardano has a maximum supply of 45,000,000,000 (45 billion), so no, Cardano is not unlimited.

Is Cardano A Privacy Coin?

Cardano purposely maintains transparency and traceability, similar to Bitcoin. It is not in any way a privacy coin and there are no privacy features.

Using Explorer Cardano, you can search epochs, blocks, addresses (wallets), and transactions.

How Do You Get Cardano For Free?

There are several sites online that claim to give away Cardano for free, claiming to be ‘faucets’, but actually require you to complete a task beforehand.

This could involve simple things like solving puzzles or even playing games, which all sounds perhaps more fun than it probably is.

Furthermore, if you need to complete a task, it is not really for free. Instead, what you are actually doing is working for ADA. It might not cost you money, but it will cost you time and what you get in the end might not be worth it.

A much better way to earn Cardano passively is by staking ADA.

You can get free tADA (test ADA) or Testcoin from Developers Cardano, a faucet for testing out Cardano’s features on the testnet. Note though that these test coins have no real-world value.

Does Cardano Have To Be Mined?

Cardano is a proof-of-stake cryptocurrency and so there is no mining required, instead, new coins are created by staking ADA tokens to validate transactions.

With Cardano’s Ouroboros proof-of-stake algorithm, transaction confirmations are completed using the ADA tokens you own, not with hardware which would be more similar to mining.

Can You Mine Cardano On Your Phone?

Yes, you can validate transactions using an Android phone and receive rewards. Unfortunately, it is not possible with an iPhone. And remember, it’s not technically mining, it’s staking.

There are several apps available on Google Play for mining Cardano and the quality can vary dramatically.

What Is Cardano Africa?

Cardano Africa is Cardano’s main arm in Africa and aims to spread adoption on the continent via several initiatives and by supporting entrepreneurship.

So far, Cardano has been most active in Ethiopia where they are working towards providing students with digital identities to track performance.

Ana Baydakova of Coindesk pointed out that the current civil unrest in the north of the country makes Ethiopia “a good example of the gap between the ambitious goals of modern technology and the actual circumstances on the ground”.

Cardano is also working with Ethiopia’s Ministry of Science and Technology to leverage blockchain technology for domestic agriculture.

And Cardano will train developers in Ethiopia to use the blockchain for free too.

Where Do Cardano Transaction Fees Go?

All fees collected for an epoch are pooled together and then redistributed amongst the elected slot leaders who created blocks.

Lars Brünjes, IOHK’s education director, explains:

“In contrast to Bitcoin, where new currency is created with each mined block, in Cardano, transaction fees are the only source of income for participants in the protocol”.

In Cardano’s early days, blocks were created by IOHK and their partners, but they were not redistributed (which would have created a self-serving network) but were instead burned.

Today, fees are more evenly distributed.

Why Are Cardano Fees So High?

Transaction fees fluctuate according to supply and demand. According to bitni, the average transaction fee is about 0.16-0.17 ADA per transaction.

Cardano enforces a minimum transaction fee which keeps the network secure because it makes it expensive for attackers to conduct DDoS attacks.

Other factors that could impact Cardano transaction fees include the cost of electricity, hardware capacity and competition between validators.

What Is Cardano Staking?

As a proof-of-stake cryptocurrency, Cardano uses staking instead of mining. This means to validate transactions, you need to ‘lock up’ - or stake - some of your ADA tokens.

Cardano staking allows ADA holders to earn passive income by locking up their tokens to keep the blockchain secure.

Holders can be rewarded up to 7.26%, according to Staking Rewards, however, Cardano’s website claims the actual number is 4.6083%, so sources vary.

There are some concerns over the amount of ADA that is currently being staked. Data from Staking Rewards concludes that 74.17% ADA is staked. In terms of the amount of crypto staked, it is the most in terms of value.

This has led some to believe that one of the primary reasons Cardano rose so much in value in early 2021 was because most of the ADA tokens were locked up.

With so many tokens effectively taken out of circulation, it created a sense of scarcity, which increased its value.

What Is Cardano Goguen?

Goguen is the third stage in Cardano’s roadmap and will introduce smart contracts. Cardano is still in the Goguen development stage at the time of writing.

Once Goguen has been fully developed, the next stage will be Basho, which will focus on scaling and Voltaire, which will focus on governance.

Like all of Cardano’s different stages, it is named after a famous figure, in this case, computer scientist Joseph Goguen.