2021-04-01 21:55:57

With Utility and Differentiation, Cardano Is a Buy

Cardano (CCC:ADA-USD) is absolutely an intriguing cryptocurrency play right now. I’d venture to guess that most investors with minimal knowledge of the altcoin space could accurately answer that Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD) are the number one and number two players by market capitalization, respectively. Beyond that, I’d imagine most, myself included, would have a hard time naming more. 

Source: Shutterstock.com

Cardano is the fast-rising placeholder at number five in the cryptocurrency world as ranked by market cap. Indeed, it currently carries a market cap of $38 billion.

Frankly, there’s a lot to like about Cardano beyond that. There are legitimate reasons to believe in the crypto and its ability moving forward. It isn’t a joke like other cryptos. It certainly deserves a real look for investors who intend to add a crypto position to their portfolios. 

Cardano: Added to Coinbase

Coinbase earned a Coinbase listing on March 19 just days after being listed on Coinbase Pro. Supporters of the coin had long hoped for the ADA coin to gain listing with Coinbase and now that it has, it’s available for retail trade among Coinbase users. 

The move should allow Cardano to garner greater support moving forward. The fortuitous news is important for anyone interested in establishing a stake in Cardano surely. It’s also important to understand what doing so means. 

Proof of Stake Vs. Proof of Work

Cardano’s native ADA coin is referred to as “stake” in the ecosystem. This all works based on the principle of proof of stake (POS).

Proof of stake is a mechanism by which consensus is reached in blockchain transactions. Proof of stake means that holders of more coins have more power. A person or entity that owns more coins has greater ability to mine coins and more power to validate block transactions in said coin.

Cardano uses POS as its consensus mechanism, and it is fundamentally different from Bitcoin in the way that it is produced. 

Bitcoin uses distributed computing power to solve algorithms which in turn mines a coin. In Cardano’s system a randomized stakeholder is elected to produce a block rather than it being mined. Proof of work systems like Bitcoin’s can arguably lead to more centralization because proof of work leads to powerful participants having higher hash rates. Users in such a system delegate their hash rate to larger pools because those pools can win more easily, rewarding contributors.  

In Cardano POS all ADA holders can participate in reaching a consensus. The company also claims that its ADA coin is more scalable than Bitcoin. 

Anyway, proof of stake rewards engagement, whereas proof of work rewards the raw ability to produce. That’s a reasonable argument for Cardano vis-a-vis Bitcoin.  

Cardano: Uses

Cardano already has a leg up on many other altcoins because it lays out use cases across education, retail, agriculture, government, finance, and healthcare. 

As an example, Cardano is working to accelerate onboarding and identity verification in finance. Verification and authentication via the blockchain and ADA is one example of how it will be used. 

Another interesting application is in supply chain traceability. Cardano is looking to apply blockchain certification and traceability from farm to table with ADA. 

All in all, Cardano is a very promising participant in the cryptocurrency space. It has risen over 1,000% since November. A lot of pundits are very excited about its prospects as a cryptocurrency and about its potential to appreciate in price. There is plenty of money to be made in the daily transactions alone. But that’s true of many altcoins today. The company was founded by the co-founder of Ethereum and it is looking to make something tangible with real utility. Cardano is refreshing for that alone.

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.”

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