Is Cardano (CCC:ADA-USD) the next big thing in cryptocurrency?
A growing number of investors think so and are increasingly bullish on the Zug, Switzerland-based company. It was founded by Charles Hoskinson, a co-founder of the popular Ethereum (CCC:ETH-USD) cryptocurrency.
Cardano aims to create a public blockchain platform for so-called smart contracts that automatically execute the terms of a contract or legally binding agreement. Launched in 2017, Cardano is still very much in its infancy. But there is a lot to like about the digital coin and its evolving place in the quickly growing cryptocurrency space.
A Crowded Market
Cardano is an altcoin, or a cryptocurrency other than Bitcoin (CCC:BTC-USD). While some altcoins, such as Ethereum and Litecoin (CCC:LTC-USD), are growing in popularity and gaining name recognition among investors, there are many smaller altcoins that nobody has heard of yet. In fact, today there are more than 9,000 altcoins available. And more of these cryptocurrencies are being developed all the time. These altcoins include everything from mining-based cryptocurrencies to security tokens and utility tokens.
Ether is currently the largest altcoin by market capitalization, as it is the most widely held and valuable cryptocurrency after Bitcoin. Where does Cardano fit into this crowded market? It is actually one of the fastest growing of the smaller altcoins. Classified as a utility token because it helps to facilitate smart contracts, Cardano distinguishes itself by taking a scientific approach. The company’s open-source blockchain is peer-reviewed by scientists who work in academia as well as by professional computer programmers.
This approach lends an air of legitimacy that many other altcoins lack. Investors feel they can trust Cardano because its underlying technology has been rigorously scrutinized.
Cardano is currently worth $1.43 per coin. That might seem like peanuts, but the cryptocurrency is up more than 715% year-to-date and 4,200% in the past 52 weeks. And, while its exact standing fluctuates day to day, Cardano is firmly among the top-10 largest cryptocurrencies, with a market capitalization approaching $40 billion. When you consider the thousands of cryptocurrencies that are flooding the market, being among the top 10 is an impressive feat. And it’s even more impressive when you consider that it has been around less than five years.
In addition to its strong growth, Cardano is also now available to be bought and sold on the Coinbase cryptocurrency exchange that is in the process of going public via a direct listing. Coinbase is the largest and most widely available cryptocurrency exchange to offer ADA-USD. Previously, Cardano was only available on much smaller and more obscure crypto exchanges, putting it out of reach of many investors. The inclusion on Coinbase can only help to broaden Cardano’s appeal and strengthen investor demand.
Credibility and NFTs
The fact that Cardano is being developed by Charles Hoskinson, one of the developers of Ethereum, lends ADA-USD a considerable amount of credibility in the world of crypto. It also recently received a significant endorsement from the University of Zurich, which declared in a paper that Cardano represents a “Proof-of-Stake (PoS)” blockchain technology that is far more advanced than many similar cryptocurrencies.
Investors were equally excited by the recent news from Charles Hoskinson that Cardano will soon use its blockchain technology to support non-fungible tokens (NFTs), which have become white-hot in recent months. So far in 2021, NFT sales are up more than 2,000%, and individual NFTs have commanded millions of dollars at auctions around the world. Cardano getting into NFTs could further boost the price of ADA-USD.
All cryptocurrencies are speculative at this point. Whether it’s Bitcoin, Ether, Litecoin or Cardano, the market for these digital coins still has to grow and mature before it can be considered truly mainstream.
That said, the crypto space is evolving at an incredibly fast rate, and Cardano is one to definitely watch. The altcoin’s underlying technology, the experience of the people who developed it and its current market capitalization make Cardano one of the better cryptocurrency investments people can make right now. And it would be advisable to take a stake in Cardano before it reaches the lofty heights of Bitcoin, which is now more than $60,000 for a single coin.
To put it simply, Cardano is a buy.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.