The recent volatility in cryptocurrency markets has rattled Cardano (CCC:ADA-USD). The altcoin has pulled back 28% from its highs reached on April 15.
It’s likely that most Cardano bulls aren’t terribly concerned. ADA-USD still has gained 700% so far in 2021. And a recent short-term sell-off, one that was part of a broader decline in most cryptos (Bitcoin (CCC:BTC-USD) has dropped 25% from its highs), hardly broke the long-term case.
Of course, it’s equally likely that the lower price doesn’t move Cardano skeptics all that much.
Some crypto adherents dislike the coin’s centralized nature. Cardano’s developers want to be part of an evolution in finance, not the revolution promised by other coins and other developers.
Others, somewhat rightly, see a platform that still has very little in the way of actual activity to this point. Cardano remains a “work in progress.”
Even relative to other altcoins, the bull and bear cases here are stark in their divergence. Bulls see it as an “Ethereum (CCC:ETH-USD) killer.” Bears see another centralized and overhyped offering like Ripple (CCC:XRP-USD) that simply reorients the existing structures of the financial world instead of finally tearing them down. That measured approach hasn’t been enough so far — and to skeptics, won’t be enough going forward.
The volatility of late won’t change either camp’s mind. Price aside, both sides can point to recent developments as further evidence for their arguments.
Cardano Moves Forward
Cardano executed a “hard fork” last month. Named Mary, the fork was a big step toward the platform’s development.
Notably, Mary added the ability to create native tokens on Cardano. This month, the developers behind the platform added a token registry.
The tokens allow Cardano to run DeFi, or decentralized finance, applications. Put simply (at least as Cardano uses the term), a token is the “representation of an asset stored on the Cardano blockchain.”
After the Mary hard fork, those tokens now are native to the blockchain. They don’t need the specialized code required for so-called “smart contracts” on Ethereum.
The token registry, meanwhile, will be centrally managed. But it will provide a clearinghouse for information about the tokens, as well as proof of authenticity that can prevent fraud or confusion.
The combination of native tokens and the registry should make Cardano an attractive platform for developers and users. In theory, it provides security, ease of use, and lower “gas fees” relative to Ethereum and other networks.
Again, not much activity is happening on the Cardano platform yet. But with the higher price of ADA-USD and the new features, its promise could soon turn into reality.
Who’s Jumping In?
But there’s another announcement from last month that is worth keeping an eye on as well.
IOHK, a Cardano partner, is offering a free course in Plutus, the programming language that underpins DApps (decentralized applications) on the platform.
The two pieces of news perfectly encapsulate the case for and against Cardano. In theory, the platform, driven by principles of “evidence-based development,” has a use case that rivals that of any other blockchain-based system.
In practice, however, there are real stumbling blocks. The lack of developers is one. The relatively small amount of attention relative to Ethereum, in particular, is another.
We’ve seen in so many other markets that the best product doesn’t always win. Cardano might have the best product. It might not win.
On the date of publication, Vince Martin did not have (either directly or indirectly) any positions in the securities mentioned in this article.