What Is Cardano (ADA) and Is It a Good Investment? (2021)

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ADA is a Cardano utility token that is used as a medium of exchange. By integrating the distributed ledger technology and the smart contract infrastructure, the Cardano Blockchain ics created as a twin of Ethereum.

There are thousands of different blockchain projects in the market, and it may be difficult for an uncanny investor to select worthy options. Cardano (ADA) has become one of the fastest-growing blockchain assets in the cryptocurrency industry, attracting investors’ attention. Today, we will take a closer look at Cardano and its underlying technology to find out why so many investors are so sure about its future and what makes it so attractive.

What Is Cardano (ADA)?

Created as an alternative to Ethereum, Cardano is the first peer-reviewed decentralized blockchain protocol utilizing a scientific approach. Cardano’s developers aim to create a blockchain platform that can process more transactions at a low cost. At the same time, to protect users’ data by integrating the distributed ledger technology and the smart contract infrastructure.

The Cardano blockchain allows people to build smart contracts, create decentralized applications and protocols, and instantly send and receive funds with minimal fees. The Cardano utility token ADA is used as a transfer of value like many other tokens. But it differs from other cryptocurrencies with its functionalities. Stake pool operators use it in the staking system to maintain the security of the protocol. And those who stake their ADA tokens on the blockchain use them to verify transactions.

Apart from that, active users are also rewarded with ADA coins for participation in safety provision. For instance, ADA holders use their coins to vote on changes or improvements to the protocol, thus taking part in its development. In contrast, the developers use it to power their smart contracts that run on the Cardano blockchain. 

Cardano vs. Bitcoin vs. Ethereum

Though Cardano combines Ethereum and Bitcoin features, it has some other twigs and features inherent to third-generation blockchains that help it overcome its limitations. One of Cardano’s unique approach is based on scientific philosophy and peer-reviewed scientific evidence. That means that all changes or new features must be developed, reviewed, and agreed upon by academics before implementation.

It’s also worth noting that Cardano was created while Ethereum was still in its early stage of development. All Ethereum’s limitations that will be given below refer to its version 1.0 and are now irrelevant since the project has finally switched to PoS and implemented sharding technology.

Security

As a smart contract platform, Cardano provides safety and scalability through its unique two-layered architecture. The Cardano Settlement Layer (CSL) handles all the transactions with Cardano cryptocurrency with minimal transaction fees. Simultaneously, the Cardano Computation Layer (CCL) is a set of protocols that help run smart contracts. It enables developers to create decentralized apps, ensures security, and makes small changes for end-users.

Proof of Stake Consensus Algorithm

Bitcoin and Ethereum networks follow the Proof of Work protocol that requires a massive amount of electricity for verifying transactions. On the contrary, Cardano relies on the Proof of Stake (PoS) process, which is much less energy-consuming and helps to reduce transaction fees.

Scalability

Bitcoin, Ethereum 1.0, and other previous generations’ blockchains can manage only a limited quantity of transactions per second (TPS) known to be inefficient. Cardano saw the problem and aim to solve this problem by implementing the Ouroboros protocol built on top of the Proof of Stake model to ensure high transaction speed and a fair chance of earning everybody’s reward. It offers such advanced features as separation of layers, mathematical security in choosing blockchain validators, a secure voting mechanism for token holders, and an infinitely scalable consensus mechanism.

The Ouroboros Protocol 

In a PoS algorithm, nodes create new blocks by staking their cryptocurrency as collateral to validate transactions. Ouroboros relies on a different algorithm. The blockchain is split into epochs, each lasting for about 20 seconds, and is made up of fixed periods called slots. Each slot gets its slot leader elected by stakeholders and responsible for adding one block to the protocol. 

The slot leaders must create at least 50% transaction blocks within a given epoch. Each block is approved by input endorsers whose election is based on stakes. An epoch can be partitioned infinitely, making it possible to run as many transactions as needed. All users who participate in mining an epoch receive rewards for their services. 

Anybody who owns a 2% stake in the Cardano blockchain can choose to mine a block. However, nodes with more significant stakes have more chances to be elected slot leaders. While the multiparty computation (MPC) to achieve a form of randomness is to make the slot leaders’ election as unbiased as possible. With this approach’s help, each elector acts like coin tossing and shares a fair result with everyone else.

What Are The Uses Of Cardano (ADA)?

Centralized structures and archaic management procedures have many issues: poor governance, high amounts of manual workflow, limited transparency, procedural inefficiency, high costs, fraud, and data breaches. Cardano, based on blockchain technology, aims to solve these problems.

As an open-source platform for smart contracts, Cardano accommodates a wide range of use cases solving problems across multiple industries. That includes education, retail, agriculture, government, finance, and healthcare. 

Counterfeit

IOHK (the company behind Cardano) offers Atala SCAN. This tamper-proof system establishes product provenance and an auditable system to protect brands and customers from counterfeit goods in the retail sector. 

Education

The education sector can benefit from Atala PRISM, an ID and credentials solution, which secures academic certifications within a tamper-proof ecosystem. 

Government

Atala PRISM can be used in the government sector for credential issuance and verification systems to avoid issuing authorities’ dependency. 

Digital Identity

It also provides digital identity to the unbanked citizens from developing countries of Africa and Asia. In 2019, the Cardano team started the cooperation with 54 countries to build blockchain governance tools. 

Agriculture

In the agricultural sector, the Cardano blockchain is used for product certification and traceability via Atala Trace or EMURGO solutions. 

Healthcare

The healthcare sector can use Atala SCAN to authenticate and verify the origin and supply chain of pharmaceutical products, guaranteeing patients’ safety worldwide.  

Generally, Cardano ADA coin can function as a payment method, spent, sold, or serve as a voting tool for ADA holders concerning changes and developments within the ecosystem. It helps to maintain security by verifying transactions on the blockchain being staked to it by stake pool operators who get more ADA coins as rewards. 

Though the ADA coin can be stored on exchanges or different crypto wallets, Cardano provides its native wallet called Daedalus for holding it as an investment tool. Token holders can earn coins for delegating ADA or running a staking pool within the Daedalus wallet.

Cardano Pros And Cons

Among Cardano’s pros are a great development team, unlimited scalability potential, quick and cheap transactions with ADA cryptocurrency, and a fair consensus mechanism, and the possibility to create decentralized applications.

Cardano’s drawbacks include the fact that the blockchain is still under development. It needs to improve its scalability issues as it’s only capable of processing 257 transactions per second (TPS). Also, it has problems with the official wallet sync and network connectivity. Another issue is the double-spending or 51% attack as there is still the danger that input endorsers may approve the same set of transactions from two different slot leaders.

The History Of Cardano

Charles Hoskinson is a mathematician that co-founded Ethereum and Cardano. The ICO of Cardano’s token ADA in December 2016 helped the team raise over $62 million. Subsequently, the project was launched on September 29, 2017.

The full rollout of the Cardano blockchain will be executed in five separate stages. Byron (foundation) was tested the initial functionality. In Q2 2018, on the next stage, Shelley (decentralized), the mainnet was launched, the system’s decentralization and Proof of Stake implementation began. Cardano has already started the Goguen (smart contracts) rollout to integrate the smart contracts platform. Basho (scaling) will implement blockchain optimization by scaling solutions. Voltaire (governance) will add treasury and governance systems.

Is Cardano A Good Investment?

The price of any digital asset depends on many factors. To critically answer whether an ADA token is worth holding, it is best to know the factors that drive its value.

Since the total number of ADA coins is limited, the coin is inflation resistant as the demand for the coin keeps growing. The decentralized nature of the Cardano blockchain makes it secure, while the layered architecture provides scalability. Put together, these technical characteristics are what make Cardano a unique coin with good potential. 

Cardano’s success also depends on the number of DApps and smart contracts built on its blockchain. A rigorous process of peer-reviewed research makes the blockchain stable and durable.

Summing up, Cardano has good chances to get its fair share of the crypto market. Thus, it is continually moving upwards, becoming an excellent choice for traders and new investors who just entered the crypto market. Simultaneously, the ADA crypto remains the right choice for traders who wished to diversify their portfolios.

Is Cardano A Better Investment Than Other Altcoins?

Cardano has been steadily occupying the Top10 at CoinMarketCap for a significant period of time now. It is competing with and in some cases beating XRP, Tether, Litecoin, Bitcoin Cash, and Chainlink regarding its value and market capitalization. Though Bitcoin’s and Ethereum’s capitalization may be higher, ADA has shown considerably more growth over the last 12 months. 

Understanding Cardano’s ADA Prices

Current Price Analysis

After reaching the all-time high price of $1.33 on January 4, 2018, Cardano’s value steadily declined after this, reaching the lowest point of $0.027 on December 15, 2018. After that, the price fluctuated within $0.03-$0.06 until it reached the highest mark of $0.090 on April 6, 2019.

Cardano started from $0.032 for one ADA coin with a tendency to grow and reaching $0.181 on November 24 2020. It was followed by a drop to $0.128USD and fluctuated from $0.131 to $0.16 afterward.

Echoing other cryptocurrencies, its price went on a meteoric rise through the early stages of 2021. It finally breached the $1 mark again in February 2021, before hitting an all-time high of $1.48 on February 27. Although it pulled back from this, at the time of writing it had consolidated its price at above the $1 mark, significantly above where it found itself months earlier.

What Do The Analysts Think?

Using opinions from some crypto experts below, we can attempt to determine what Cardano’s price could be by 2025.

Most of the ADA forecasts agree that the coin price will continue to be in bullish momentum. In 2020, Ryan Selkis, the CEO of the cryptocurrency-tracking site Messari mentioned in a Crypto Theses saying that he believed that Cardano will jump from the 8th to 5th spot in the world’s biggest cryptos list. Indeed, this prediction has been proven to be right.

CoinSwitch is optimistic about the ADA’s growth. As far as Cardano is gaining more and more partnerships, which will positively influence ADA’s price. It is speculated to touch at most $3 by 2025. While Cryptoground and Coinliker support these predictions and foresee ADA’s price hitting $2 or $3 respectively in 2025.

Crypto-rating.com are even more bulish on Cardano’s prospects, predicting it could reach $6 by 2025, and $10 by 2030.

The Bottom Line

One of the most significant market caps and a huge daily trading volume prove that Cardano is very popular among cryptocurrency enthusiasts. Its four-year history shows a stable growth of the coin’s value despite periodic price drops. A large number of partners support Cardano’s long term growth potential. 

All this and the latest technical analysis, market trends, and expert opinions prove that Cardano is a good investment option to bring great profit to its investors. However, the crypto market remains volatile, and cryptocurrencies are fairly difficult to predict. It would be best to consider all factors before choosing a digital asset to invest in and do your research.

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*This article is intended for and only to be used for reference purposes only. No such information provided through Bybit constitutes advice or a recommendation that any investment or trading strategy is suitable for any specific person. These forecasts are based on industry trends, circumstances involving clients, and other factors, and they involve risks, variables, and uncertainties. There is no guarantee presented or implied as to the accuracy of specific forecasts, projections, or predictive statements contained herein. Users of this article agree that Bybit does not take responsibility for any of your investment decisionsPlease seek professional advice before trading.

Disclaimer

This article is intended for and only to be used for reference purposes only. No such information provided through Bybit constitutes advice or a recommendation that any investment or trading strategy is suitable for any specific person. These forecasts are based on industry trends, circumstances involving clients, and other factors, and they involve risks, variables, and uncertainties. There is no guarantee presented or implied as to the accuracy of specific forecasts, projections, or predictive statements contained herein. Users of this article agree that Bybit does not take responsibility for any of your investment decisions. Please seek professional advice before trading.

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