Meaningful Innovation Makes Cardano an Altcoin to Watch

If you’re more of an observer than an investor in cryptocurrencies, Cardano (CCC:ADA-USD) may seem easy to dismiss as just another altcoin. If that’s the case, then one of the best things that investors can say about Cardano at the time of this writing is that it’s not Bitcoin (CCC:BTC-USD).

The Cardano logo and description on a smartphone.
Source: Grey82 /

As the number of altcoins has expanded, Cardano faces a marketing problem. If Bitcoin is the “gold” of digital currency and Ethereum (CCC:ETH-USD) is the silver, then each altcoin is competing with the other to prove its utility in the crypto ecosystem.

In my opinion, this is a reason that digital currency has a reputation as a collectible more than a currency. If price is the only thing that novice investors have to focus on, then it’s tough for any altcoin to stand out.

This is amplified by the fact that many altcoins have a price that correlates closely with Bitcoin. Cardano does not. And with Bitcoin dropping nearly 50% from its record high, that’s been bullish for investors in ADA — the native altcoin of the Cardano blockchain.

However, Cardano looks to offer its owners real innovation that even novice owners can explain to their friends. And that’s why it’s an altcoin that may be able to stake out a meaningful position in the altcoin universe.

The Next Generation of Ethereum 

To be fair, this blockchain network has never tried to be like Bitcoin. For the uninitiated, it shares more in common with Ethereum.  

In that sense, Cardano has always had an advantage. With its emphasis on smart contracts, it has been position as the next, nimbler version of Ethereum. One way it does this is by using a Proof of Stake (POS) mining protocol which holds that a person can mine or validate block transactions according to how many coins they hold.

POS addresses some of the environmental concerns of mining Bitcoin. However, what I like about the protocol is that it gives Cardano owners a reason beyond price to buy the coin. Cardano isn’t the only altcoin to feature proof of stake, but it’s one of only a few. That scarcity may not last forever, but for crypto traders living in the now, it’s a nice benefit.  

Building the Internet of Blockchains 

In early June, Nervos Network (CCC:CKB-USD) and Cardano took what may be the first step to create a universal public network for cryptocurrency. Nervos is an open-source blockchain ecosystem and collection of protocols. The project, which is named Force Bridge, will allows two important kinds of transactions.  

First, it will allow users to interchangeably buy and sell the Nervos or Cardano native currencies (CKB and ADA). Second, it will allow users to create wrapped tokens across both chains.  

It remains to be seen if this will make owning Cardano more valuable. It may not make it a true medium of exchange, but it does add more utility to the digital currency.

Cardano Is an Altcoin to Watch Closely 

My reasoning may seem too simplistic for more experienced crypto investors. But if you’re on the outside of the crypto sphere and still hesitant to buy Cardano, I suggest you read what InvestorPlace contributor Nicolas Chahine wrote about ADA. When you begin to look at altcoins in terms of precious metals rather than currencies, the case for Cardano becomes clearer.  

I’m not convinced that every altcoin has, or should have, a future. That’s a question that crypto investors will decide. But it appears that Cardano has one of the more compelling altcoin stories out there. By starting the conversation on what an internet of blockchains might look like, it’s attempting to provide a solution to one of the nagging issues that prevents widespread adoption of cryptocurrencies.  

With that in mind, Cardano would appear to be not just an effective hedge against Ethereum but also, perhaps, the coin that will change the way investors think about cryptocurrencies.  

On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines. 

Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019.

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