Cardano Crypto: Worth Investing Or Just Another Bubble?

Cardano is a blockchain platform designed to be secure, scalable, and sustainable. It is a third-generation blockchain that uses a unique proof-of-stake consensus mechanism called Ouroboros, which is more energy-efficient than the proof-of-work system used by Bitcoin and Ethereum. Cardano's native token, ADA, is currently trading at $0.43, around 50% higher than in October 2023. With its innovative features, strong support from its community, and potential for positive long-term growth, is Cardano a good investment?

Cardano's unique features and competitive advantages

Cardano is a blockchain platform that stands out in the crowded crypto market due to its unique features and competitive advantages. Here are some of the key features that make Cardano a compelling choice:

Layered Architecture

The Cardano blockchain is composed of two main layers: the Cardano Settlement Layer (CSL) and the Cardano Computational Layer (CCL). The CSL handles all the transactions, while the CCL is used for deploying smart contracts and governing the network. This separation allows for seamless interoperability and communication between the layers. Additionally, they can function independently, enabling transactions to continue even when the network is undergoing essential updates or computing smart contracts.

Ouroboros Proof of Stake

Cardano's proprietary consensus mechanism, Ouroboros, is a unique aspect of its blockchain. In this mechanism, users can become full node validators or delegate their stake to superusers for transaction validation. Ouroboros divides time into epochs and introduces a new set of validators for each epoch, promoting better diversity and decentralization. Validators are rewarded with new ADA tokens, creating passive income opportunities for delegators.

Fast Transactions

Cardano is designed to be highly scalable, offering 250+ transactions per second compared to Ethereum's 15. This enhanced scalability ensures faster transaction processing.

Cheap Gas Fees

The Proof-of-Stake model enables Cardano to offer nominal transaction fees. On average, a transaction on Cardano costs around 0.1 ADA, equivalent to a few cents, whereas Ethereum transactions cost around $15 each.

Higher Degree of Decentralization

The Ouroboros mechanism allows anyone to become a node validator, increasing the network's decentralization. As of now, there are over 1500 validator pools in the Cardano ecosystem.

Eco-Friendliness

Cardano, with its Proof-of-Stake mechanism, consumes 99% less electricity than Bitcoin and Ethereum, which use the Proof-of-Work model. This makes Cardano an environmentally sustainable alternative.

Passive Income Opportunities

Cardano offers passive income opportunities for its users. By simply purchasing and locking up ADA tokens in a wallet, users can earn rewards through staking.

Cardano's price history and future predictions

Cardano's price history has been marked by volatility and market fluctuations. It debuted in 2017 at $0.0024 and soon faced criticism and scepticism. However, in 2021, Cardano's price surged by 30 times, reaching an all-time high of $3.09 to $3.10. This surge was attributed to the Alonzo hard fork, which unlocked its smart contract capabilities, and the 2021 crypto bull market.

However, following this peak, Cardano's price trajectory became varied, with precipitous drops and teetering highs. In 2022, the ADA coin value dropped to around $0.50 and suffered further due to the collapse of the FTX exchange. Despite a brief recovery, the ADA coin closed 2022 with an annual loss of over 80%.

In early 2023, Cardano's price showed some improvement, reaching a high of $0.4606 in April, but it was still far from its previous highs. As of June 2024, Cardano's price stood at $0.43, a 50% increase from October 2023.

Looking ahead, Cardano's price predictions vary. Some sources suggest a bullish market scenario, where increased adoption, technological advancements, and positive regulatory developments could drive Cardano's price higher. In this case, if the crypto market cap reaches $3 trillion, Cardano's price could ascend to $0.522, and if the market surges to $10 trillion, its price could soar to $1.74.

On the other hand, a bearish market scenario could see Cardano's price experience a correction. If the crypto market cap hits $3 trillion in a bearish market, Cardano could trade around $0.261 in the short term and struggle to surpass $0.870 by 2030.

It is important to note that these predictions are subject to change and that the cryptocurrency market is highly volatile and unpredictable.

Cardano's scalability, interoperability and sustainability

Cardano is a proof-of-stake blockchain network that is being developed into a decentralised application (DApp) platform with a multi-asset ledger and verifiable smart contracts. Cardano is designed to be the platform of choice for large-scale, mission-critical DApps that will underpin the economy of the future.

Cardano's scalability, interoperability, and sustainability are key to its ability to achieve this goal and compete with other blockchain projects.

Scalability

Cardano is undergoing steady upgrades and optimisations to increase its scalability. This includes implementing layer 1 and layer 2 solutions to create a faster and more resilient blockchain. Layer 1 solutions involve direct upgrades to the main-chain protocol, while layer 2 solutions introduce additional chains or layer 2 protocols to boost main-chain performance. For example, Cardano plans to implement pipelining and input endorsers as on-chain solutions. Pipelining improves block propagation times by allowing nodes to pre-notify downstream peers of an incoming block, reducing the time needed for block validation. Input endorsers improve block propagation times and throughput by bundling transactions into pre-constructed blocks, allowing for higher transaction rates.

Interoperability

Cardano's interoperability is enhanced through its use of sidechains, which are additional blockchains that operate alongside the main chain. The 'Proof-of-Stake Sidechains' paper, published in 2019, provides a security definition that safeguards each blockchain from its sidechains, limiting the impact of potential sidechain failures. This allows for the secure movement of assets between sidechains. IOG (the company that develops Cardano's technology) has also developed the Cardano EVM sidechain toolkit, which enables the creation of custom sidechains on Cardano.

Sustainability

Cardano has an ethos of openness and transparency, with all research and technical specifications publicly available. The project is designed by a global team of experts and is based on peer-reviewed academic research. Cardano also utilises formal development methods, rigorous mathematical techniques for testing software, which are typically employed in high-stakes applications such as avionics software and systems for space flight. This ensures that Cardano's development is robust and secure.

Additionally, Cardano has implemented a treasury system to promote decentralisation and diversify funding sources. The project also plans to deploy a formal process for proposing, vetting, and enacting changes to the protocol, allowing the community to have a say in its future through advanced governance features.

Cardano's smart contracts and DApps development

Cardano is a blockchain project that facilitates peer-to-peer transactions. It has a layered architecture that facilitates smart contracts, enabling a platform that is both adaptive and scalable without compromising security. Cardano's smart contract technology will enable the platform to establish self-executing agreements that do not require professional oversight. With smart contracts, anyone on the platform can input a particular condition that will be automatically executed without the need for constant user involvement.

The deployment of smart contracts on the Cardano network will enable the support of decentralised applications (DApps). These DApps function like computer programs and are designed to run specific purposes for users. A DApp is also used by network participants to interact with a blockchain through an abstracted user interface.

The Cardano blockchain is named after 16th-century Italian polymath Gerolamo Cardano. Its native coin, ADA, is named after Ada Lovelace, the 19th-century British mathematician recognised as one of the first computer programmers.

Cardano's smart contract platform, Plutus, is built on top of Marlowe, its DeFi platform. Marlowe is a high-level, domain-specific language for financial contracts. Marlowe comes with the Marlowe Playground, an easy-to-use application-building platform that non-programmers can use to build financial smart contracts. The combination of Plutus and Marlowe will enable a new class of enterprise-level smart contracts with verified functionality, capable of underpinning large-scale implementations in the real world.

The Goguen era of Cardano's development will add the ability to build decentralised applications on Cardano's solid foundation of peer-reviewed research and high-assurance development. The Goguen era will also see the addition of a multi-currency ledger, enabling users to create new natively-supported tokens, including fungible and non-fungible tokens.

Cardano's native token ADA and its utility

Cardano's native token, ADA, is named after Augusta Ada King, Countess of Lovelace, an English aristocrat commonly regarded as the first computer programmer. It is the only currency used for special purposes such as paying fees or earning rewards on the Cardano platform.

ADA can be used to pay fees, cover the minimum, and receive rewards on the Cardano blockchain. It is also used to stake on the Cardano blockchain, where users can "stake" the blockchain's cryptocurrency for the opportunity to become a validator. A stake is a pledge of a certain amount of ADA cryptocurrency to represent and secure validator rights in the Cardano network.

ADA also has utility outside of the Cardano platform. It can be purchased on most major cryptocurrency wallets and cryptocurrency exchanges. Additionally, it can be sent in transactions, kept in UTXO outputs, locked with script outputs, sent to an exchange address, and minted or burned.

The utility of ADA has made Cardano stand out in the crowded crypto market. Its unique features, such as its proof-of-stake consensus mechanism and its layer-2 scaling solution, Hydra, have also contributed to its appeal.

Frequently asked questions