Cardano (CRYPTO: ADA) has seen one of the biggest price increases of any major cryptocurrency so far in 2021. Priced at just $ 1.85 at the time of writing, the coin has over 10x more valuable than it was on January 1 and is currently in the top five cryptocurrencies by market cap.
The recent crypto market crash wiped out much of Bitcoin‘s (CRYPTO: BTC) recent gains (although they are still up around 32% since January 1), and at least temporarily dampened Ethereum‘s (CRYPTO: ETH) electrifying surge – it’s down about 35% from its recent all-time high. However, Cardano held onto more of its bullish stock amid heightened market volatility.
Cardano isn’t as well-known as Bitcoin or Ethereum, and its market capitalization and daily trading volume is only a fraction of those major coins. But that’s part of the draw: Cryptocurrency investors see vast potential in the so-called ‘Ethereum killer,’ who is on the verge of a massive blockchain network upgrade that could help live up to that moniker.
Here are five reasons why investors are so bullish on Cardano right now.
1. It gets a lot smarter
Cardano will soon be implementing the âsmart contractâ feature, which essentially means adding code to allow automated and self-executing contracts. Smart contracts allow developers to build apps on blockchain platforms, such as Ethereum’s hugely popular decentralized Uniswap exchange. The entire decentralized finance (DeFi) industry is built on smart contracts, much of it on Ethereum, and Cardano is about to join the party.
2. Cardano can handle high demand
Ethereum’s blockchain can only handle a very limited number of transactions at the moment – around 15 per second – which has resulted in immense congestion on the network. This means longer wait times to complete transactions and high âgasoline feesâ (or transaction fees) that you will have to pay to send them.
Future network upgrades should ease this pain, but Cardano is already poised to handle much larger transaction volumes. It has been tested at up to 257 transactions per second, but developer Cardano Input Output is investigating much larger counts – potentially up to 1 million or more transactions per second.
3. It is also more ecological
Bitcoin and Ethereum are both based on power-hungry ‘proof of work’ systems, which force miners to use powerful computers to solve complex mathematical equations – all in the hope of earning cryptocurrency for their efforts. . In fact, that’s part of the reason the crypto market has been so low lately, after Tesla decided to stop accepting Bitcoin due to the inordinate environmental impact of mining.
Fortunately, Cardano has a much more environmentally friendly “proof of stake” system, in which validators keep their coins within the network to participate and earn rewards. According to Cardano founder Charles Hoskinson, the network is “1.6 million times more energy efficient” than Bitcoin. It might seem like an impossible number, but it really speaks to the overwhelming amount of energy needed to power Bitcoin’s network. This is something that newcomers to crypto surely keep in mind when planning potential investments, and Cardano offers a better way forward.
4. Cardano is peer reviewed
As a third-generation blockchain network, Cardano has learned from its predecessors’ missteps in trying to create a more efficient, economical, and energy-efficient system. On top of that, it’s also based on peer-reviewed scientific research, with a lot of time and energy spent exploring the technical possibilities inside. You could call it the opposite of Facebook classic motto “move fast and break things”. Some would argue that this is why Cardano has been slow to implement features like smart contracts, but it could allay the fears of some investors given the already volatile nature of cryptocurrency.
5. It still seems early
If the bullish cryptocurrency analysts are correct, then the whole market may have a lot of room to develop in the years and decades to come. But the days of buying a single BTC or ETH for a few dollars and watching it grow to thousands (and beyond) are long gone. Could Cardano’s value eventually rise in the stratosphere like these coins did? Nothing to say for the moment. But Cardano’s fundamentals look strong, and given the coin’s low price today, many investors see it as a long-term bet on a promising cryptocurrency project.
This article represents the opinion of the author, who may disagree with the âofficialâ recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.