Why I Made A Small, But Hopefully Long-Term Investment In Cardano.

Bitcoin and Ethereum are the two heavyweights of the cryptocurrency world. Bitcoin was the first decentralized cryptocurrency ever created and over time has found its niche as digital gold and functions as a store of value against inflation. Many think that it will make them crazy rich.

Ethereum is a 2nd generation cryptocurrency which is incredibly functional. It supports decentralized apps and smart contracts, allowing entire autonomous organizations to be created on it. Today there are more than 3000 decentralized apps running on Ethereum including Chainlink, AAVE and Opensea.

Combined, Bitcoin and Ethereum have a market cap of close to 1 trillion US$ at the time of writing.

But moving forward, could it be Cardano’s time to shine?

Enter Cardano

Cardano is considered a 3rd generation cryptocurrency, and is mostly positioned as an Ethereum competitor. It aims to cover any weaknesses and issues from the first two generations by building a solid foundation with the end goals in mind. Cardano is by far the most ambitious project (under the company IOHK) which was founded by Charles Hoskinson and Jeremy Wood in 2015. Both of them previously worked on Ethereum. Its token is called ADA, named after mathematician and also the first computer progammer, Ada Lovelace.

Here’s a brief overview of how Cardano differs from other cryptocurrencies today.

The Slow And Steady Swiss Army Knife Of Crypto.

Ethereum’s growth explosion as a first mover has seen its processing fees skyrocket to exorbitant levels, and the creators are trying to fix the issue with a 2.0 upgrade. Also, Ethereum has been vulnerable to hacking in the past, resulting in millions lost.

Cardano aims to get new developers on board (as well as potential defections) by providing a better offering and allowing seamless conversion from Ethereum.

In today’s digital world, can slow and steady ever win? Each stage of Cardano’s development is academically peer reviewed and rigorously tested instead of being released and progessively fixed. This long-term way of thinking is a double-edged sword as their smart contracts are only targeted for launching this August (around 4 years in development). This is one of the biggest and most awaited updates in the Cardano community.

In terms of interoparability, Cardano is being developed to support cross-chain transfers, multiple token types, and commonly used smart contracts languages. Currently, you need a centralized exchange for this.

To solve scalability issues, Cardano uses a proof-of-stake model which uses only a fraction of processing power versus traditional models. It is able to scale at reasonable bandwidths and therefore not bring down network performance.

This is in line with the goal of bringing Cardano towards mainstream adoption. So far they have even established partnerships with governments in Africa for microcredit.

Eventually Hoskinson envisions Cardano being commonly used by institutions and billions of people worldwide. Ambitious goals, but are they overly so?

Sustainability, Long-Term Survival And Roadmap.

In order to ensure long-term survival in a volatile industry, Cardano has a unique treasury system where a small amount from each transaction is set aside as reserves. This means that it will not require external funding should it run into serious downturns along the way.

The general project roadmap has also been outlined until 2025 and eventually once it is complete, IOHK will step back and allow Cardano to run fully decentralized. That’s why the treasury system is designed to be controlled by the community.

For more details on why Cardano, check out their documentation here.

Risks And Cons

Many believe that Ethereum’s huge headstart means that Cardano and the hundreds of other Altcoins will be competing for only 20% of the leftover market share. There are countless other cryptos working hard to win in their specific smart contract niches, which means heavy competition.

Ethereum is also not sitting idle on its lead and has plans to fix its issues, although it is harder since its already widely adopted. For Cardano, the launch of smart contracts will shed some light on its potential and then developers will decide who to work with in the future. Nothing is guaranteed at this point. Of course, the more developers support Cardano, the price will likely move up and then it will be a lot more expensive to invest in. Some might argue that it is currently already overpriced for something that has only promised a lot on paper.

Others have an unfavorable opinion on the character of Charles Hoskinson, alleging that he is technically weak and unqualified, hard to work with, has a huge ego and is basically a snake oil salesman. He is also said to be persona non grata among the top tier crypto industry leaders.

A lot of this seems unjustified (some points are valid of course). You can do the research, watch his interviews and AMAs online and decide for yourself. Personally he seems remarkably normal to me. By general accounts, Steve Jobs was an unlikeable person, but he delivered for his investors. A lot of people trashed Elon Musk for similar reasons for years before his companies made it too. Also, we are probably kidding ourselves if we expect a billionaire to look and act normal.

Some of the intense dislike comes from people who are invested in other competing cryptos and some who are somewhat justifiably impatient with Hoskinson’s promises and Cardano’s slow progress. There are also a portion of blind faith Cardano followers who worship Hoskinson, thereby adding fuel for the haters.

So will Cardano be the next evolution in cryptocurrency? The next few months will give us a huge clue in the direction, as we head towards the Alonzo update under the Goguen Phase. At the time of writing, the price of ADA is hovering at around US$ 1.36.

Final Notes

This is not investment advice, and I try to give a balanced and fair assessment of Cardano based on my own research. As with anyone else, the risk of losing the entire investment in the blink of an eye are very very real. It is a common sense tenet in the crypto world to trust no one and always do your own research (DYOR).

More advice for newbies: There are also crypto scams everywhere online so be extremely cautious. It will be a lot less stressful to learn from an experienced friend or trusted person instead of just diving in headfirst. DYOR still applies though.

Finally, I confess that from a technology standpoint, 99% of it is above my head and I don’t really have the time to do a deep dive study into it.

If you’re interested in starting your own cryptocurrency portfolio, Binance is a simple and good platform to trade on and you can transfer your crypto to a cold wallet later on. You can sign up with my referral link here and get 10% off your first trade. For full disclosure, I may earn a referral fee of up to 10% as well.

PS: I’ve written so many posts recently, am just sitting on the right time to publish them. The topics include starting an Instagram account, my everyday carry gear (EDC), weight loss & fitness updates, home cooking recipes and balcony garden progress. Oh, I’m also moving to this blog over to wordpress.org as soon as I have time. See you soon and thanks for reading.

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