As we may know, Cardano is a smart contract blockchain that works with the Proof-of-Stake (PoS) system. Its native token is ADA, which works as a means of payment and to make staking on this network. Of course, Cardano (blockchain and token) could work as an investment. But we need to know some important things first.
We can’t really know for sure if any coin is a “good” investment. There are no fixed answers in the investment world (let alone in crypto). Nonetheless, there are, indeed, some signs and factors we can consider before putting money into any project. So, to find out if Cardano could be a good investment, let’s explore its features and potential.
Developers and smart contracts
It must be said that Cardano has had a somewhat different development than other chains. It was released in 2017 by Charles Hoskinson and Jeremy Wood (previously, Ethereum co-founders), after several years of work. Their approximation has always been more academic and scientific than, probably, any other blockchain.
Their team explains it on the site officiel:
“Our protocol implementations and platform integrations are first researched, challenged, and mathematically modeled and tested before they are specified. These specifications then inform development which, in turn, is independently audited. The result is a codebase offering an unrivaled level of assurance.”
This way, Cardano was first a highly supervised centralized platform, instead of proper investment. The staking was opened to the community en 2020, et le contrat intelligent functionalities barely started in September 2021. Now, developers can use this chain to build their own Decentralized Applications (Dapps) with the programming language Plutus, enjoying low fees.
cependant, some issues with creating and using Dapps on this network have been constantly reported since the launch of its smart contracts. Congestion, transaction difficulty, or simple lack of interest are some of them. But not everything is lost here: according to Cardano Blockchain Insights, over 3,400 smart contracts are working now on the network. That’s a steady increase of over 260% since January 2022.
Additionally, there are around 137 weekly active developers doing at least 757 weekly commits for different projects inside this blockchain [Artemis Stats]. Cardano also has $67.8 million as Total Value Locked (TVL) on DeFi Dapps for exchange, lending, and staking [DeFi Llama]. Of course, this can’t compete with Ethereum, with over $31 billion TVL and +3,500 Dapps [DappRadar]. But it seems like Cardano is barely starting, while Ethereum has an advantage of years.
Adoption and partnerships
Beyond Dapps, we can point to an obvious thing: ADA has a market capitalization of over $12.9 billion, which makes it the #8 cryptocurrency by this factor [CMC]. If we just consider blockchains with smart contract capabilities opened to build any Dapp, then Cardano it’s only surpassed by BNB Chain (BNB) and Ethereum (ETH). Just for this, Cardano could be considered an investment tool.
And it’s growing: as indicated by Bankless, “ADA holding has increased by 40% in 2022.” Au Cryptwerk, we can find over 590 merchants worldwide accepting this coin as payment, including marketplaces of all kinds (art, vehicles, books, clothing, electronics, food…) and different services (Internet, traveling, delivery, education, entertainment, etc.).
Besides the coin itself, there are several companies, universities, and governments working with Cardano. A remarkable product is Atala PRISM, a self-sovereign identity (SSI) platform built on this blockchain by IOHK (one of the main Cardano developers). Atala PRISM can be used to make decentralized credentials for education, retail, agriculture, government, finance, and healthcare.
Right now, for example, it’s been used by Ethiopia’s Ministry of Education “to implement a national student and teacher ID and attainment recording system based on blockchain.” In addition, entreprises comme IBM, PwC, Samsung, New Balance, Sirin Labs, Strait Brands, and Dish Network are using this chain for their own goals.
Cardano has also partnered with several universities for research purposes. They include Edinburgh University, Athens University of Economics and Business (AUEB), Stanford University, and the University of Zurich.
Next updates
We can say that Cardano is still in development. Its roadmap describes five “eras” or phases: Byron (Foundation), Shelley (Decentralization), Goguen (Smart contracts), Basho (Scaling), and Voltaire (Governance). The network is currently passing through the Basho era, which is “about improving the underlying performance of the Cardano network to better support growth and adoption for applications with high transaction volume.”
During the Basho phase (which could take years), the development team is expecting to deploy new sidechains —secondary blockchains compatible with the mainnet, to expand and scale its current functions. As part of this phase, we already had the Vasil update, which meant increasing efficiency and decreasing the costs (especially for developers building on this chain). This could make Cardano a good investment in the long term.
The next step is the Hydra protocol, still in progress. This is a layer-2 scalability solution intended to enable even one million Transactions Per Second [TPS] at cheaper fees (by now, the network operates with 250 TPS and average les frais de transaction of $0.14). Finally, we’ll have the Voltaire era, dedicated to improving blockchain governance. They’ll add voting features, a treasury system, and a pool for development activities from transaction fees.
Cardano price predictions
At the time of writing, ADA has a price of $0.37 per token. It had an All-Time High (ATH) of $3.1 per token by September 2021 [CMC]. The opinions about its financial future are divided, with bullish and bearish sides. Considering the next years (until 2031), the price range has been calculated by several experts between $0.03 and $3.5 per token.
Wallet Investor is the most bearish gambler since it’s expecting ADA to fall to $0.0357 in a year. In the middle, we have sites like Coin Price Forecasts, CryptoNewsZ, and Digital Coin Prices calculating from $0.8 to $2.5 per ADA. At the other extreme, CryptoRunner reckons that each ADA may be worth $3.5 by 2031.
More than these, we also have some opinions from retail investors. They believe that ADA can reach $10 per token in the next few years if the adoption grows enough. If we consider that, currently, ADA has a circulating supply of $34.2 billion at $0.37 per unit, for a total market cap of $12.9 billion; to reach $10 per coin would mean a total market cap of over $342 billion. So far, only Bitcoin (BTC) has reached that goal, but we can’t call it impossible.
Cardano as an investment
So, after considering all of this, is Cardano a good investment or not? That may be relative. For the investors who bought since its launch in 2017 and sold during the ATH, the Return on Investment (ROI) was around +15,400%. Even if they bought in the beginning and are still holding, the ROI can be calculated at +1,750%. However, the price hasn’t been favorable Year-to-Date (YTD), decreasing by over 71% [CMC].
Is it too late to invest in Cardano, then? We can’t really say that. As we mentioned before, this blockchain is still in development. A huge community of retail investors, developers, companies, and even governments are expecting many more features and improvements. Its adoption is barely starting, and it’s already in the Top 10 cryptocurrencies by market cap. Therefore, we can say it’s very promising, at least. And we can’t forget that this 2022 has been bearish for almost all assets.
Can we recommend you an investment in Cardano? We can’t —with any asset, because, as we also mentioned, the investment world and cryptos are risky. But we can surely recommend you expand your portfolio. Just do your own research (DYOR) premier!
Wait! Before you leave and buy or sell: this isn’t financial advice, ok? We’re just informing you. Happy trading!
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