Cardano (CCC:ADA-USD) is one of the foremost altcoins looking to compete with Ethereum (CCC:ETH-USD). Cardano took a completely different approach to build their blockchain. They started with “top engineers and academic experts” who used evidence-based methods to develop it. Investing in the altcoin is like buying stock for an exciting new cryptocurrency. The more valuable a project becomes, the higher its share price will climb, so it’s important to get on board early before everyone else does.
There are several use cases for Cardano. However, its bread and butter are decentralized applications (dApps) and smart contracts. We are moving towards an economy increasingly run on blockchains. So, this is a crucial aspect of Cardano’s value proposition. Some buyers consider it an opportunity because they believe that more users will bring up demand, thus increasing prices in return.
The greater fool theory is a well-known economic principle that argues prices go up because people can sell overpriced securities (i.e., assets) at an inflated rate of return — even though they may not be fully valued themselves — until there’s no higher bidder left in hope for more money than what was originally offered on these investments or goods.
The greater fool theory is a dangerous game to play when investing because you have no idea what the market will do. It could lead your portfolio down an unfortunate path in times of correction and make things worse for those who subscribe to this mindset, even if they were able to withstand some losses initially.
Cardano does not have this problem. It has many use cases. And its development roadmap is robust. Next year, ADA holders can look forward to several milestones.
Is Cardano the Right Fit for Your Portfolio?
Cardano founder Charles Hoskinson is also a co-founder of Ethereum. He’s been talking up his latest project as another logical step in the ideas that have long simmered within the blockchain space, saying it represents what we can expect next from this new technology era. Developers claim Cardano is one-of-a-kind because it uses evidence-based methods and peer-reviewed research.
Cardano is a new cryptocurrency that uses proof-of-stake voting to verify transactions. With this system, users who hold coins on their blockchain networks are encouraged to “stake” them and help make sure everything runs smoothly for everyone else in the ecosystem.
The mining process of Bitcoin (CCC:BTC-USD) and other cryptocurrencies is subject to criticism because it uses a lot of electricity. Crypto staking is an environmentally friendly alternative to proof-of-stake consensus algorithms for validating transactions on blockchain networks. It allows users to earn rewards without having to invest in expensive hardware like graphic processing units (GPUs) or central processing units (CPUs).
Cardano reached a major landmark on its roadmap for launching Plutus-powered smart contracts, introduced as part of the Alonzo hard fork upgrade. The long-awaited Alonzo hard fork is finally here. This exciting development will allow Cardano to become even more than just an altcoin. The platform can now support developers who want to create dApps and mint non fungible tokens (NFTs) with its smart contract functionality.
Several other milestones are coming up that will keep pushing the price upwards.
Cardano is building a sustainable ecosystem in five stages. These protocols ensure Cardano’s blockchain’s long-term stability while developing governing processes to address future needs.
The Cardano roadmap summarizes what the future holds for this currency. It is organized into five eras: Byron era, Shelley era, Goguen era, Basho era, and Voltaire era. Each era runs on one functionality, “delivered across multiple code releases.” Each new release brings something different from its predecessor, making it easier to understand how things evolve with time.
Cardano’s development team works on multiple streams at once, with research and prototyping often taking place simultaneously for each era.
The platform’s developers are committed to delivering the most trustworthy blockchain out there. And with their commitment comes a unique set of features that make them stand apart from other blockchains in existence today.
What makes Cardano so unique is its smart contract functionality. It’s similar in many ways to Ethereum, but there are some key differences that make it stand out from the crowd. It has its native token called ADA, which you can use for transacting on Cardano’s blockchain, much like how Ether performs for Ethereum’s platform. Ethereum is facing a strong challenge from Cardano, which has improved upon the original blockchain network of Ethereum by adding more advanced features.
However, Ethereum is the only blockchain enterprise that companies like Accenture (NYSE:ACN) and FedEx (NYSE:FDX) are using to process large volumes of transactions with low fees. The Enterprise Ethereum Alliance includes other companies like JP Morgan Chase (NYSE:JPM) and Microsoft (NASDAQ:MSFT). They have recognized this two-layer solution’s potential.
Cardano is making big promises to bring its own robust smart contract environment to compete with Ethereum’s decentralized finance (DeFi) platform. However, they’re not in the same league now, and it’ll take some time before this can happen. Ethereum is still the go-to for smart contracts. However, alongside its robust developer community, DeFi and NFT ecosystems are helping drive Cardano’s price upward. It’s no wonder why many people are turning their attention away from other blockchain platforms in favor of this one.
Cardano has a lot going for it. But the one thing they may need more than anything else is developers. It’s important to have an active community made up of people who want to work on and develop projects with your blockchain. That will help grow its ecosystem, which means more users in turn. The Cardano project has big shoes to fill if they want their blockchain to compete with Ethereum.
How to Play Cardano
The Ethereum blockchain was once considered the most cutting-edge of this technology. However, its scalability is an issue. Cardano addresses this because it is built for scalability. And it has the potential to be much faster than Ethereum because of its two layers. This means that by implementing a settlement layer and a computational one — which both have unlimited capabilities — we can ensure quick transactions while still maintaining decentralized blockchain technology.
Some people say that cryptocurrency is a good investment, while others disagree. Like Elon Musk of Tesla (NASDAQ:TSLA) and Space X fame, some celebrities are promoting crypto on social media platforms because they believe in its future potential. Consequently, their actions are having a massive effect on the price. Others think investing your money into an entirely new currency could be risky. Warren Buffett is one famous example who publicly criticized cryptocurrencies last year for their volatility risks.
Regardless, fear of missing out, or FOMO, is a strong sentiment among traders these days. Still, risk management remains very important. If you are going to pour your capital into any token, it has to be for solid reasons. That is why Cardano is an excellent altcoin at this stage.
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. You can check out his analysis on InvestorPlace and TipRanks.