What Is Cardano and Is It Worth Investing In ADA In 2021?

Last Updated July 23rd 2021
21 Min Read

What Is Cardano And How Does It Work?

Cardano made incredible gains in 2021 and is still going strong after the crash in May. But to many holders and crypto enthusiasts, this is just the beginning - big things are coming this year that could significantly increase its value.

But hold on! If 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 Cardano in 2021?”

Contents:

In this guide, we will cover:

What Is Cardano?

How Does Cardano Work?

What Is ADA?

Is It Worth Investing In Cardano In 2021?

Is Cardano Better Than Bitcoin?

How Much Will Cardano Be Worth In 2021?

What Will Affect ADA Price In 2021?

Should I Invest In Cardano?

Key Points

Where To Buy Cardano?

FAQs

 

What Is Cardano?

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

What Is ADA?

Cardano’s native coin is called ADA. ADA is one of the top-performing digital assets in 2021.

Though this crypto has been on the market only for a few years, it managed to become one of the most traded coins in the crypto field. Note that there is a max supply of 45 billion ADA coins.

ada price chart

Cardano’s price history. Source: coinmarketcap.com

At the moment of writing, ADA has a market cap of $40,794,021,387 and a 24-hour trading volume of $2,988,054,953.

Among its various benefits, ADA is also one of the cryptocurrencies with the best use cases with possible applications across several industries. Most notably, it can be used for product identification and supply chain traceability.

On top of that, the Cardano Foundation is collaborating with different countries in Africa and other places to improve sustainable growth and open access to financial services.

To Cardano, the third world is the perfect place to test out its effectiveness.

Is It Worth Investing In Cardano In 2021?

Yes, given its strong development roadmap and high market cap, there’s no doubt that Cardano is worth watching in 2021.

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.

That said, despite all these promises and tech advancements, even the experts cannot say if Cardano is a good investment for you. Cryptocurrencies continue to remain volatile and risky!

Would you Consider Investing in Cardano ADA?

Is Cardano Better Than Bitcoin?

Charles Hoskinson certainly believes Cardano is better than Bitcoin, particularly in energy efficiency, supposedly using less than 1% of Bitcoin.

After Tesla decided to drop Bitcoin (and then later say they might accept it later), Musk explained that they will look for a cryptocurrency that consumes less than 1% of Bitcoin.

And Hoskinson believes that Cardano is the perfect candidate. On top of its proof-of-stake algorithm, which is a lot less energy-intensive than Bitcoin, Hoskinson also pointed out that Bitcoin doesn’t have a built-in mechanism to constrain energy consumption.

Supposedly, Cardano consumes 6 gigawatt hours of energy per year. To make sense of how much power that is, 1 gigawatt can power 3.125 million photovoltaic panels (solar panels) or 110 million LEDs, according to Energy.gov.

By that logic, if Cardano consumes 6 gigawatts, it would mean it consumes as much as 18.75 million solar panels.

In comparison, Bitcoin consumes 131.07 TWh (terawatts per hour), which is comparable to the power consumption of Argentina, according to Digiconomist.

Hoskinson also pointed out that Cardano is more programmable than Bitcoin, giving them more options for how Tesla could use it.

However, despite all of the above. It should be noted that Hoskinson has a habit of bolstering Cardano, putting it above all other cryptos. He has done this plenty of times with Ethereum.

But even more importantly, there is one vital way in which Bitcoin will always triumph over Cardano - popularity.

Most people who know what cryptocurrency is can at least name Bitcoin - not everyone knows what Cardano is. And when people start investing in crypto, Bitcoin is their first choice.

They are also more likely to understand more about how it works. Supposedly, 100 million people around the world now own Bitcoin.

Shark Tank’s Kevin O’Leary said in June 2021 that nothing will replace Bitcoin. Institutional investors are finally getting comfortable with it and so it will be hard to convince them to change their minds a second time.

Read More: Bitcoin vs Cardano

How Much Will Cardano Be Worth In 2021?

Though 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.

Note that Cardano was $0.021 when it was launched and reached $1.22 on Jan 4th, 2018, which is a return of 6,000% in a few months. For the same period, its market cap grew from $0.56 million to over $31 billion.

Looking back, Cardano’s team raised over $63 million during Cardano’s ICO and as mentioned above, ADA hit all-time highs of almost $1.22 in January 2018.

The first half of 2019 was also positive, with buyers showing interest and pushing ADA to $0.10 on April 3rd, 2019. In December 2019, Cardano found support at the $0.03 price mark.

Cardano started 2020 ready for a bull run, which was the aftermath of its consolidation in 2019. By the end of February 2020, ADA was trading at over $0.07.

Yet, Cardano experienced a dramatic drop in March 2020 when the ongoing coronavirus pandemic caused the first wave of the bear market.

Many experts believe that the coin’s price will reach its all-time high of $1.2 in 2021.

Cardano’s development may push mass adoption further and influence prices moving forward.

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 2021.

Can Cardano Hit $10?

By January 2022, Cryptocurrency Price Prediction believes Cardano will reach $9.11 and then shoot to $13.89 by February.

WalletInvestor also believes that Cardano can hit $10 by March 2025. But most price forecasters do not agree with them.

DigitalCoin does not see Cardano reaching further than $6.63 in September 2028.

Trading Beasts is even more conservative, believing Cardano will not reach higher than $2.90849 by October 2024.

The Economy Forecast Agency has a similar outlook, predicting the highest price Cardano can reach is $3.32 by September 2022.

But from then onwards, their forecast seems to suggest a continuous decline in value for the next few years.

Gov Capital, however, is much more positive, foreseeing Cardano reaching $7.4704 by May 2026. But still not to $10 yet.

Coin Price Forecast predicts a maximum of $6.08 by 2032.

So, based on the information we have at the moment, Cardano reaching $10 is not yet seen as a real possibility. But generally speaking, price forecasters see an increase in Cardano’s price.

What Will Cardano Be Worth In 2030?

Cryptocurrency Price Prediction believes that Cardano could start January 2030 at $127.52 and reach $157.21 by December. This is extremely bullish.

Meanwhile, Coin Price Forecast estimates that Cardano will be worth between $4.98 and $5.20, an increase of +284%. This is more plausible.

However, remember that 2030 is very far away and so it is pretty hard to predict what the situation will be like by that point. Hence why many price forecasters avoid making predictions this far.

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

Can Cardano Beat Bitcoin?

While Cardano is an excellent asset to trade, it can’t beat Bitcoin yet because it is far too popular - even if it is technically superior.

With Cardano’s current valuation at $1.27 and Bitcoin’s valuation at $32,265.26, it would require a monumental change to take place.

And you have to remember there are crucial differences behind why Bitcoin and Cardano were created.

Bitcoin started as a peer-to-peer cryptocurrency. It was designed just to facilitate transactions. It has since become a store of value.

Cardano has much wider goals that supersede facilitating transactions; to be the fuel and network of a digital revolution.

Furthermore, Cardano would also not want to be valued as much as Bitcoin - and maybe even Ethereum - because it could make it too expensive to use.

And looking towards the future, Cardano’s highest prediction is $157.21 by December 2030 while Bitcoin’s highest prediction is that it could replace gold as the ultimate store of value.

Perhaps no one is brave enough to believe that ADA will beat Bitcoin, except Hoskinson.

Can Cardano Make You A Millionaire?

For Cardano to make you a millionaire, it would need to reach $100 per coin and you would need to have invested approximately $15,000 to $20,000, according to Isaiah McCall.

Currently, there are no reputable sources that claim Cardano can reach $100 any time soon.

Don't Miss: Can Cardano Make Me Rich?

What Will Affect ADA Price In 2021?

Many factors will affect Cardano’s price in 2021, including crypto news, tech developments, supply and demand, and market sentiment.

As stated above, Cardano has managed to overcome different milestones and boast a vibrant community. Cardano moved to the Shelley era in July 2020, boasting its decentralisation nature and delegation principles.

The Goguen mainnet planned for 2021 is another milestone that may affect prices.

Note that Goguen aims to improve smart contracts and dApps functionality, which will also expand use cases.

This will bring Cardano a step closer to establishing itself as a real Ethereum killer.

Another factor that will drive ADA prices up is the fact that the Cardano Foundation is expanding and welcoming new members and researchers.

For instance, Cardano has teamed up with Wolfram Alpha, the largest computational knowledge engine globally.

Additionally, Cardano published its voting app Catalyst on Google Play Store, enabling mass adoption.

That’s not all! At one point Cardano was planning to establish ATMs for ADA in Japan - and that would have been huge! Japan is a leader in blockchain and crypto acceptance and regulation.

So, based on its strong team and superior technology, ADA predictions for 2021 look good.

Should I Invest In Cardano?

trade 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.

Ready To Invest In Cardano ADA?

Key Points

If you remember anything from What Is Cardano and Is It Worth Investing In It In 2021? Make it these key points.

  • Cardano is one of the top cryptos in terms of market cap and technological advancements.
  • Its two-layered architecture and Ouroboros mechanism make Cardano unique. Cardano is considered third-generation crypto.
  • Cardano’s native coin is ADA. Interestingly, the number of ADA wallets keeps increasing.
  • The Goguen mainnet, planned to launch around March 2021, is one of the milestones that may affect Cardano and its prices in 2021.
  • Based on past performance and technical analysis data, as well as Cardano’s development roadmap and vision for the future, experts believe that ADA prices will reach new highs in the next five years.

If you decide to invest in Cardano this year, we at Trading Education can help learn more about the complexities of the crypto market and establish an effective trading strategy and trading habits.

Where To Buy Cardano?

eToro – Best Broker to Buy Cardano ADA 

 

eToro have proven themselves trustworthy within the crypto industry over many years – we recommend you try them out.

Virtual currencies are highly volatile. Your capital is at risk.

How Can I Buy Cardano?

You can buy Cardano from many of the top cryptocurrency exchanges or via a broker. Most brokers and cryptocurrency exchanges have the same requirements.

Below we’ll show you how to buy Cardano from eToro in four easy steps.

Step 1. Go to eToro’s home page and click ‘Join Now’ and fill out the registration form. There are also options to create an account using Facebook or Gmail.

Step 2. Next is the KYC process and you’ll need to upload some proof of your identity and address. This is required to prevent fraud and to comply with anti-money laundering laws.

Step 3. Now you’ll need to make a deposit. You need to do this to buy your Cardano. In most countries the minimum deposit is $200 or $50 in the USA, though there are several countries where the minimum amount is significantly larger, so do check what the minimum amount is in your country.

Step 4. Once you have made your deposit and your account has been created, you can start buying Cardano. Go to ‘Trade Markets’ → ‘Crypto’ → ‘ADA (Cardano)’. Note that there are multiple ways in which you can trade Cardano.

Woo hoo! You now have Cardano!

FAQs

Still have questions about Cardano? Perhaps these frequently asked questions will help.

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 in June 2021.

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.

If you found our article What Is Cardano & Is It Worth Investing In Cardano In 2021 interesting and informative, please share it with anyone who might be interested in crypto investing.

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