SWOT Analysis: Cardano

What is a SWOT analysis? SWOT stands for strengths, weaknesses, opportunities, and threats. Looking honestly at these criteria can help reveal a project’s worthiness of an investment from you. Keep in mind, this analysis should be paired with other research in a project before making a final determination. Do your due diligence. This write-up’s subject: Cardano.

Strengths

Let’s not bury the lede here: Cardano’s use of smart contracts is a potentially revolutionary technical advancement. Imagine a world where you can eliminate your dependence on expensive, white-collar professionals like real estate agents or lawyers and instead rely on smart contracts to complete deals. While there is a lot of work to be done to get to that point, in time, smart contracts could get that job done. They’re not there yet, but smart contracts could soon begin eating away at market share in those fields.

Additionally, environmentalism is increasingly relevant to a great number of the world population today, and Cardano has an answer for that: proof of stake. Some family who know I’m invested in Bitcoin and other crypto projects have advised me to sell because it’s so harmful to the environment. I’ve been scolded, “Bitcoin uses more energy than Argentina!”

Well, Cardano is different. Its proof of stake structure cuts down immensely on power consumption, so it is, in a word, future-proofed. Let no one tell you that Cardano is bad for the environment. Its use of staking rather than mining is the key. The alternative, proof of work, is a a much larger drain on power. It is what is relied upon by competitor Ethereum. More on Ethereum later.

Weaknesses

Cardano appears to have no notable applications operating on its platform. In fact, StateoftheDapps.com lists no apps on Cardano at all. The one app exclusive to Cardano I have experience with is the Daedalus app, and the experience has been, well, memorable for all the wrong reasons.

I moved my Cardano holdings to the Daedalus wallet in September 2019 when Binance was implementing changes to its US services. After confirming the move, I logged out of Daedalus and exercised patience. Fast forward a few years, and Cardano was on the rise. My modest holdings had turned into a nice little chunk of change.

When I logged into Daedalus again, it failed to connect to the network. I upgraded the wallet, recovered my previous Byron wallet, and found a balance of 0 Cardano. After searching online for answers, I found I was merely one of a larger group of individuals who had lost their Cardano to the advancement of the project. Reaching out to IOHK Support also went nowhere. The support staffer I communicated with also seemed to try to tell me that I had forgotten my recovery phrase, which was not the case. It only added more frustration to the situation.

While I’m hopeful a solution is forthcoming, it is still quite stressful to open my wallet and see that my investment has evaporated. This is quite black eye for the Cardano community that it has successfully downplayed so far. As crypto continues to climb in value and more and more people return to find their Cardano investment long gone with no explanation, I feel like this has the makings of a scandal. It is also worthy of its own write-up.

Opportunities

Cardano is currently in the sweet spot of sorts in its roadmap when compared to Ethereum. Ethereum is battling some unusually high gas fees, which leave it vulnerable to Cardano. If Cardano can capitalize on this, it can steal future market share from Ethereum from those who will be forever turned off by being charged $32 to simply move $10 from one wallet to another.

My belief is that Cardano needs to take advantage of this while they can. Simply tout its lower fees, lack of network congestion, and its energy-saving Proof of Stake method and Cardano can gain not just users but disciples.

This is definitely time sensitive, however. Ethereum is already rolling out layer 2 solutions to remedy a congested network. This layer 2 solution means handling transactions off-chain to reduce wait times and expenses.

Threats

Ethereum is a direct competitor to Cardano in the dApp arena but is only capable of a handful of transactions per second. This limitation makes gas fees high, stresses the network, and can sometimes take an extended period of time. That makes simply sending ETH from one person to another unusually expensive. Anyone who remembers the Crypto Kitties craze will remember how one simple app appeared to so stress the network.

Ethereum 2.0 looks to solve the gas fee issue, however, as well as many other issues already discussed. According to ethereum.org, Eth 2.0 is “an interconnected set of upgrades that make Ethereum more scalable, more secure, and more sustainable.”

Ethereum’s roadmap aims to roll out shard chains later this year, which will expand Ethereum’s capacity to process transactions and store data. It also estimates that 2022 will bring about staking, thus eliminating the energy-sucking proof of work method.

Bullish Outlook

Cardano is a technological advancement that could help to revolutionize the way we live and conduct business, and it’s only getting started. There is so much room to grow, and if this blockchain technology can make good on just a fraction of what it promises then you stand to make massive gains by getting in relatively early.

Bearish Outlook

Cardano competes directly with Ethereum, and Ethereum is out to a big lead. Eth also has plans to remedy its issues with fees, scalability, and energy inefficiency — the only areas that Cardano has the advantage on its competitor. And the Eth 2.0 rollout will only be hastened due to founder Vitalik Buterin’s open war with miners.

Disclosure: At the time of this writing, I am a holder of both Ethereum and Cardano.