As investors diversify away from Ethereum (CCC:ETH-USD), altcoins like Cardano (CCC:ADA-USD) are all the rage. Although its price has fluctuated significantly in the last few months, the overall trajectory is healthy. One of the main reasons why Cardano investors are bullish is because of its many use cases.
It was initially designed with a focus on scalability, sustainability, and interoperability. Unlike other blockchains that rely heavily on developer input for changes or upgrades, Cardano uses peer-reviewed scientific research that helps assure any proposed updates come from experts within this field so that there are no issues when an upgrade is released and affects millions of users simultaneously.
Another thing Cardano has going for it is that it is environmentally friendly. Concerns regarding sustainability and environmental damage from crypto mining are rising. With governments worldwide getting more conscious about the environment, Cardano becomes a great altcoin to have in your portfolio, considering it was one of the first blockchain platforms to adopt the concept of proof of stake (PoS). For all these factors and more, ADA is becoming more and more attractive these days.
Leaner, Meaner, and Faster
Cardano aims to solve the problems associated with current cryptocurrencies such as slow transactions and high fees through utilizing two layers of its architecture: Cardano Settlement Layer (CSL); Cardano Computation Layer (CCL), which gives developers more options for applications entering into this network due in part by reducing congestion within networks caused from heavy traffic loads at present because they can enter their modules without sacrificing security measures.
It is a highly scalable and fast currency that could support one million transactions per second (TPS) in the future. The Cardano team’s goal has always been to solve real-world problems with their technology. It is most beneficial for emerging countries like India, where financial access for citizens isn’t as easy or conventional banking options are scarce at times.
For example, it has partnered with the Ethiopian Ministry of Education earlier this year to fight corruption and provide financial inclusion for more than 3 billion people. The African country is one of several that don’t have access to an affordable banking service. The blockchain platform aims not only to help fund schools but also to lower costs so that families can use their money as wisely as possible while providing security by having records stored securely through nodes across many servers instead of one big database like other popular systems such as Bitcoin (CCC:BTC-USD).
Alonzo Upgrade and What It Means for Cardano
We are just a few weeks removed from the very important Alonzo upgrade. Among the many changes introduced, it added smart contract capability to the blockchain network.
The Cardano team has said the upgrade would allow them to compete with the likes of Ethereum while paving the way for more smart contracts on the blockchain, which can revolutionize decentralized finance applications. It will also allow Cardano to take advantage of the red hot non-fungible tokens (NFTs) space. Cardano can now mint NFTs, a major boon in value for the altcoin’s value. Regardless of what you think about the long-term future of these digital assets, one of the major reasons ETH has done so well in the last few months is because most NFTs are part of the Ethereum blockchain.
Finally, the platform enables anyone to build and run oracle programs. These applications draw in external data, triggering smart contracts on the network. Upgrades like these are a major reason why digital currencies are doing so well. In the runup to such updates, you will see a substantial uptick in the price of coins. As it has a very active developer team, this is an additional reason to purchase more Cardano.
Not Quite the Finished Article but Getting There
Ethereum and Cardano are duking it out to become the internet’s main host of dApps. In this battle, Ethereum seems to have the upper hand, considering history and volume. However, several altcoins like Cardano are gaining momentum.
Although Ethereum too has a bright future, it certainly is not inexpensive. During the last few months, principally because of the London Hard Fork upgrade, the ETH price has soared. And Ethereum has not fully transitioned to proof-of-stake (PoS). Two major upgrades will take place at the year-end and next year to complete the transition. When that happens, one can hardly fathom how ETH will grow. Meanwhile, ADA is already on PoS, offering a more environmentally friendly ecosystem with lower fees and quicker transactions. All of these factors make it a more attractive alternative to Ethereum among the sea of altcoins on offer.
On the publication date, Faizan 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 InvestorPlace.com Publishing Guidelines.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio. Faizan does not directly own the securities mentioned above.
