I pulled the Cardano (CCC:ADA-USD) straw today. I’m tasked with discussing the cryptocurrency. It’s only the second time I’ve had the privilege of talking about what I consider to be one of the most interesting crypto bets available today.
In my first piece about ADA, I recommended Cardano for anyone interested in betting on a cryptocurrency that’s moving beyond a basic store-of-value. There’s no question that founder Charles Hoskinson has done his best to make people understand that the world’s big enough to support both Cardano AND Ethereum (CCC:ETH-USD) and many other possibilities to come down the pipe in the years ahead.
As I write this, Cardano has appreciated by 650% so far in 2021, putting it in the sixth spot (market capitalization) in the CoinDesk 20. Of the five ahead of it, none have appreciated to the extent Cardano has in the past four months.
In February, BusinessCloud said Hoskinson was 18th on its Crypto Rich List, a group of primarily younger people who’ve struck it rich through cryptocurrencies. In Hoskinson’s situation, the publication put his estimated wealth at $500 million at just 33.
There’s a good chance he’s about to get even wealthier. Here’s why.
Cardano Looks Unstoppable
In 2018, Forbes contributor Angel Au-Yeung wrote a short piece about Hoskinson’s startup, Input Output Hong Kong (IOHK for short). The Ethereum co-founder established the company in 2015 with Jeremy Wood, another former Ethereum colleague.
The plan was to build cryptocurrencies and blockchains for academic institutions, government agencies and private corporations.
“‘We put in a few hundred thousand dollars initially and started getting contracts to build cryptocurrencies,’ says Hoskinson. With all their revenue coming in the form of Bitcoin (CCC:BTC-USD), IOHK saw huge returns as the coin soared in value,” Au-Yeung wrote in February 2018.
The duo sold out their Bitcoin when the price took off in late 2017. At the time, it was trading near $20,000 before dropping below $5,000 in 2019. The sale ensured IOHK had plenty of capital to finance its projects for decades.
At the time of the article, Cardano had a market cap of $16 billion. IOHK was thought to hold 6% of ADA or more than $1 billion of the cryptocurrency.
Ironically, the $16 billion is the same amount as the Bitcoin transacted in the past 24 hours. In three years, its market cap has grown to almost $42 billion, 160% cumulative appreciation.
Au-Yeung also pointed out that IOHK also operated Ethereum Classic (CCC:ETC-USD). At the time, it had a market cap of $3 billion. Today, it’s worth approximately $3.9 billion.
Clearly, however, Cardano is the vehicle that will continue to make Hoskinson even wealthier than he already is.
There’s Even an ETF
On April 26, Swiss-based 21Shares launched the Cardano ADA ETP to enable institutional investors to invest in a regulated vehicle without having to set up a crypto wallet. Each unit of the Cardano ETF at launch was backed by 16 ADA. The management fee for this opportunity doesn’t come cheap. 21Shares charges an annual fee of 2.5%.
“As the leading crypto ETP issuer, Swiss and European institutional alike are asking us for simple and effective access to new blockchain technologies. These new ETPs deliver what they asked for, and we expect to add another two new crypto ETPs this quarter on top of new listing venues,” 21Shares CEO Hany Rashwan stated.
21Shares now offers nine single-asset crypto products and four multi-crypto products. I would love to see an equal-weighted multi-crypto product at some point in the future.
In the meantime, the fact that 21Shares has added Cardano to its list of products is an indication that Cardano has arrived as a crypto asset.
InvestorPlace’s Chris MacDonald recently commented that Cardano’s proof-of-stake model, based on the Ouroboros consensus protocol, is much more environmentally friendly than Bitcoin’s proof-of-work model.
I, too, believe this could become a factor in what cryptocurrencies investors choose to own in the future. Sure, Bitcoin has a seemingly insurmountable lead, but as Hoskinson says himself, the world can support more than one cryptocurrency.
If IOHK continues to innovate, I see no reason why the founder’s net worth doesn’t continue to move higher.
Cardano continues to be a winner from where I sit in the cheap seats.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.