Is Cardano (ADA) a Good Investment? In-depth Analysis and Near to Longer-Term Expectations

Is Cardano (ADA) a Good Investment? In-depth Analysis and Near to Longer-Term Expectations

By CryptoBoomer | Investments | 9 Dec 2019


A lot of cryptocurrency projects have emerged since Ethereum showed the world that a blockchain network could be used for much more than payments. If Bitcoin was the king of cryptocurrencies, Ethereum and the countless altcoins that followed were the heirs in waiting that had their eyes on the throne.

Bitcoin and Ethereum (and the few others that have survived) are built on protocols that, in the crypto space, are quite old. They have survived time and time again, but newer projects have the benefit of working with new ideas from the ground up, which has been both good and bad for them. Some have done well to establish a position for themselves, while others have struggled to provide anything of real value.

Newer cryptocurrency projects saw that the potential right in front of them, but they wanted to improve on what came before. It would take a good deal of work and research, because they were moving in uncharted territories, with little to guide them forward. Many projects have been formed with the goal of improving upon privacy, scalability, payments, smart contracts and all of the other individual aspects of crypto, and many of them have failed. 

One project that is attempting to be that “next generation” blockchain platform and cryptocurrency, and has done well by all measures, is Cardano (ADA). 

The brainchild of Charles Hoskinson, who is very popular in the cryptocurrency community, Cardano has a very academic and methodical approach towards building its platform. It has done well with regard to its price and looks like a good project for the long run, even if it is competing with the likes of Ethereum (of which Hoskinson is a co-founder and former CEO). 

I’m going to look at whether Cardano is a good investment and what one can expect from the project in the next 5 years or so.

What is Cardano (ADA)?

Cardano (ADA) is essentially a smart contract platform that hopes to improve upon current smart contract platforms in every which way possible. The project was launched by Charles Hoskinson in 2015, and features a tripartite government to oversee various aspects of the project’s development. These entities Input Output Hong Kong (IOHK), Emurgo and the Cardano Foundation.

A blockchain “evolved out of a scientific philosophy”, Cardano and its token ADA (which is named after Ada Lovelace) are primarily intended as a means of exchange - digital currency. Think of it as a marriage of Bitcoin (BTC) and Ethereum (ETH). While it does intend to be used as a currency, the team is also developing a strong smart contracts platform that lets decentralized finance (DeFi) applications run on top of it and we all know how much of a phenomenon DeFi is becoming. Decentralized application (DApp) support will also be offered.

There is also a strong theme of integrating existing entities into the infrastructure i.e. it is not seeking to disrupt industries by leaving incumbents in the dust, it wants to work with regulators as well, and balance privacy with regulatory compliance.

351665157-932e25bf31d306e0f02d88b181a765e4946bd3edb3db3152b11b9295b2b99fc8.jpeg

Source

From a technical perspective, there are several design philosophies that guide the development of the project. These include establishing modular functional code, interdisciplinary collaboration, development of a decentralized funding mechanism, allowing for network upgrades that don’t function as inconvenient hard forks and, of course, making heavy use of peer reviewed research. 

Cardano’s ambition is no less than to “change the way cryptocurrencies are designed”, as stated in the project’s documentation,

...the power to bundle a payment system, property rights, identity, credit and risk protection into a single application running on a cell phone is not just useful, it is life changing. The reason we are building Cardano is that we feel we have a legitimate shot at delivering — or at least advancing — this vision for the developing world.

If we can change the way cryptocurrencies are designed, evolved and funded, then there is a great accomplishment.

What Sets Cardano Apart from the Rest?

351665157-2be626046113667ce75b2f5ed7f167a977ba6aab14665e12e8546653511d67aa.jpeg

Source

Cardano’s general approach was borne out of a desire to use strict research methodology and academic approaches to developing the various features and fundamental protocols that give its unique flavour. The team itself describes this as “It is the first blockchain platform to evolve out of a scientific philosophy and a research-first driven approach.” 

There are 3 main elements to the platform that are currently worth talking about in detail (and several more that are planned): the blockchain platform itself, the Ouroboros Proof-of-Stake (PoS) protocol and the Daedalus wallet.

The Ouroboros protocol is arguably the most important part of the Cardano platform. “A provably secure” PoS algorithm, an algorithm with strong security properties. Besides preserving privacy, it also has interesting incentive mechanism for good behaviour.  

The Daedalus wallet is self-explanatory, it is a wallet which you can store ADA. However, it does plan to include Ethereum Classic and Bitcoin support, as well as an application store and support for any cryptocurrency in the future.

The team is also working on a novel approach to sidechains, a notable development in recent months. Cardano’s Proof-of-Stake sidechains. Sidechains are a little down in the line in Cardano’s roadmap, arriving with the “Basho” phase, which will also bring scaling and interoperability improvements.

Interoperability, an increasingly growing area of research, in the industry, is also a key part of development focus. Cardano is integrating a sidechain protocol that will allow for transfer of assets between different blockchains. It is widely agreed that, for any blockchain to be considered worth its weight in the future, interoperability will have to be supported.

One critical component of Cardano’s vision that is not talked about enough its goal of self-sustenance. The last phase of the project, “Voltaire”, will introduce a voting and treasury system. It is here that holders of ADA will be able to stake their holdings and govern the direction of the network. IOHK will hand over control of the network to the users and a treasury will be set up to fund future development on the network. You can see how Cardano has built its vision in a calculated long-term way.

Most recently, Cardano launched its “Shelley” phase onto the testnet, a milestone for the project as it brings greater decentralization to the network. The team is on the cusp of releasing the “incentivized phase”, whereby users can stake their ADA tokens or running staking pools to earn rewards. These rewards are actual ADA tokens. 

What Does Cardano’s Prospects Look Like?

In a nutshell, Cardano appears to be doing very well and the future looks bright for the project. Even a quick scan of the project’s documentation and public communication will tell you that the team and the general purpose of the project is solid. 

It’s not just the fact that Cardano has a strong approach to developing its platform or a believable long term vision. There is an authenticity to the project that many other cryptocurrencies simply lack. If you’ve done at least a little research on the cryptocurrency market, you’d know that many portray themselves as solutions to a large number of problems. When the industry is in such an early stage, it’s hard to think of that as anything but outlandish. Why not take development and long-term value step by step?

It’s that reasoned approach and steady chipping away at the fundamental requirements for a decentralized network that really make Cardano a standout project that is likely to do very well in the future.

What has Cardano’s Prices Been Like?

351665157-ce2a7202e4456c74ed5898888b57988dec42847b59dbd9eba138436d12622a7c.jpeg

Source

Cardano sits at $0.03 currently, but it’s been as high as $1.11. There is definitely room for growth here and, as a top 15 cryptocurrency, it’s almost certain that investors will flock towards it once the market picks back up. Currently, many are sitting on top of BTC holdings, but the altcoin resurgence - at least those altcoins that matter - will see many buy back in to the likes of Cardano.

But how high can it go? That of course is an open question. If Cardano does become a premier payments token and smart contracts platform, the value can certainly go over its previous all-time high and even reach double digits sometime in the near future. All that one can say now is that it is a cryptocurrency that must be monitored closely, for there’s a lot to be gained here.

Conclusion

Many people consider Cardano to be a unicorn project and although that thought gets thrown around quite generously in the cryptocurrency space, Cardano actually merits that and has time and again proven that it accomplishing its agenda. Development progress, adoption strategy and the quality of communication from the team, and especially from founder Charles Hoskinson, have contributed to the stellar reputation that the project holds.

Having said that, it is hard to say precisely where Cardano will be in the next 5 years or so - it’s impossible to do this for any network (except perhaps Bitcoin) - but it is almost certain that Cardano will be among the most used platforms. There’s visible growth and development on the network and no fluff backing it up.

For these reasons, Cardano is a definite recommendation for investment for those who are willing to go beyond Bitcoin and Ethereum. How high this project can go and what returns ADA can offer is not something that in good faith we can say with certainty, but everything about this project screams work ethic, sincerity and technical soundness.




CryptoBoomer
CryptoBoomer

Always DYOR :)


Investments
Investments

Be careful, these are not a financial advice :)

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.