Cardano Is a Buy as It Looks To Outshine Ethereum This Year

Cardano (CCC:ADA-USD) is one of those cryptocurrencies that have flown under the radar. Since the beginning of the year, the ADA token has gained a massive 620%. In comparison, industry leader Bitcoin (CCC:BTC-USD) has grown by just 43%.

A concept token for Cardano (ADA) with a trading chart in the background.
Source: Shutterstock

ADA also leapfrogged BTC on eToro as the most-held cryptocurrency in the second quarter of this year. The third-generation crypto has held its own in a time where most digital assets have sold off. Moreover, it has some exciting developments this year, which should boost its price further.

Launched in 2017 by Ethereum (CCC:ETH-USD) co-founder Charles Hoskinson, Cardano hasn’t gotten much mainstream attention yet. The altcoin builds on what the industry juggernauts in Bitcoin and ETH have done while working toward becoming more scalable and sustainable in the process.

This essentially means that it’s much more energy-efficient, robust and secure. Ever since Cardano’s release, there’s been an apparent ETH-ADA tug-of-war. So much so that the altcoin has been dubbed as the “Ethereum Killer.” Cardano can become a strong alternate to Ethereum if it continues to execute on its roadmap.

How Cardano Can Beat Ethereum

Before getting into how the two stack up against each other, it’s important to discuss the two key factors which will underpin their success. The first is smart contracts, which are essentially pieces of self-executing code that are on the blockchain. Without them, the blockchain can only record transactions. They are the driving forces behind non-fungible tokens (NFTs) and decentralized applications (Dapps).

Ethereum has the upper hand in the smart contract realm. Not only does it have them enabled but it has over 2,500 Dapps on its network. In comparison, Cardano has successfully tested out its Alonzo white hard fork upgrade, enabling it to launch smart contracts by this month.

The other key factor is energy efficiency, particularly linked to the proof-of-stake model. The model enables users to mine or validate transactions according to the coins they currently hold. It essentially limits the energy that mining the cryptocurrency consumes and is, in turn, faster and cheaper. As I wrote in May, Cardano has immense potential to become the top green coin in the market.

Cardano has been designed as a proof-of-stake platform from the get-go. It’s a sustainable digital asset that will process about one million transactions in a second. Ethereum is also transitioning to the new model with its latest update. With Ethereum 2.0, it will be able to process close to 100,000 transactions with at least 90% less energy than it currently does at this time.

Could This Be Cardano’s Year?

This year is critical for both Cardano and Ethereum. Regulation has been a major thorn in the side of the crypto market. China has taken a highly aggressive approach against cryptocurrencies, and other countries might soon follow suit. More regulation is likely to weigh in on Cardano’s price in the future.

Ethereum will be launching its much-anticipated 2.0 update while Cardano plans to debut its smart contracts. The goal for both is to ensure that they implement their respective plans without any technical hiccups.

Ethereum’s first-mover advantage is massive, though. To be sure, Cardano could pick up the pace and prove spoilsport with its technology. However, it’s still a long way before it reaches the end of its technical roadmap.

The “but” on ETH is that Ethereum is highly congested and pricey. A number of developers have moved away from the platform due to network congestion. A lot rides on its proof-of-stake transition to win over these disgruntled users.

Till then, Cardano should have smart contracts enabled and will have become a major contender in the decentralized finance sector. Additionally, the transition for Ethereum to a proof-of-stake model won’t be easy either. Therefore, there are many variables, but Cardano can break away this year and fulfill its potential.

On the date of publication, Muslim Farooque 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.

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.

Article printed from InvestorPlace Media,

©2023 InvestorPlace Media, LLC