Like many altcoins, 2021 has been a roller coaster ride for Cardano (CCC:ADA-USD). At this time, the entire crypto market is moving more or less in tandem. However, when you’re evaluating whether to buy the ADA coin, it’s important to understand why Cardano is different.
My InvestorPlace colleague and contributor Dana Blankenhorn recently described Cardano as “the computer geek’s crytpocurrency.” Now, I could make a case that most cryptocurrency might fall into that category. However, I understood Blankenhorn’s point.
Cardano is building the code for its network slowly and methodically. It’s a measure twice, cut once approach that you might expect from computer geeks. But it’s also an approach that’s likely to give Cardano staying power. And staying power is half the battle in a cryptocurrency investment.
Moving Along the Roadmap
I believe in value beyond price. That’s the one thing that may separate the contenders from the pretenders in the cryptocurrency space. And that’s one reason I believe that ADA is one of the more solid investments of the current altcoins.
Cardano has a plan. And it is executing that plan in a methodical manner. The network’s complete launch will not occur until each of five phases is complete. Currently, the company has fully completed two phases. The initial phase, the Byron phase launched in September 2017 with the launch of the Cardano blockchain that operated as a federated network (i.e., it only supported ADA transactions).
The next phase, Shelley, launched in 2020 and initiated Cardano’s Proof-of-Stake (PoS) protocol named Ouroboros. In 2021, the company has started to roll out the third phase, Goguen, which is adding support for smart contracts and issuing ADA.
That brings us to the last two phases, named Basho and Voltaire respectively, which Cardano is working on in parallel to the launch of Goguen. The focus of Basho will be the scalability of the Cardano network. Voltaire will provide the protocols for on-chain governance and treasury.
Leaving Nothing to Chance
Coinbase recently reported that cFund, a hedge fund that backs the Cardano network, donated to Runtime Verification, a blockchain security auditor. The auditing firm was founded in 2010 and conducts security audits by using mathematical verification on virtual machines and smart contracts.
The goal of cFund is to grow the Cardano ecosystem, which is currently seen as existing outside of the traditional crypto universe. This provides fuel for Cardano’s detractors to suggest that the network lacks the value of Bitcoin (CCC:BTC-USD) or Ethereum (CCC:ETH-USD).
Therefore, its investment in a blockchain security auditor appears to be a positive step towards adding credibility.
Understand Why You’re Buying Cardano
In the past, I’ve spent more than my share of time on thankless naming assignments. So I can support Cardano simply for the creativity that it had in naming its five stages. But that’s obviously not the reason to invest in any altcoin.
Rather, I believe that the thoughtfulness displayed in its naming conventions is, for the time being, playing out on its network. If that continues, it will be a serious alternative to Ethereum. And in the world of cryptocurrency, staying power is a good bit of the battle.
The road forward won’t be smooth. Bitcoin and Ethereum will both launch upgrades in the near future. These may encroach on Cardano’s use case. And that’s a reminder that while Cardano may enjoy a first mover advantage of sorts, it does not have a moat. The Cardano network is likely to face competition from other altcoins that enter the space.
Keeping in mind that all cryptocurrencies entail risk, Cardano gives investors tangible reasons to believe that ADA will be around for the long haul. However, in an asset class where coins are sent “to the moon” on a lot less, those reasons may be enough to consider an investment.
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 InvestorPlace.com 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.