Key advantages and disadvantages of Cardano
- Cardano is a newer cryptocurrency with its own unique advantages and disadvantages.
- It’s important to weigh the risks and rewards before you invest.
- Investing for the long term is a wise move when buying cryptocurrency.
Cryptocurrency has made waves during pandemic in the investing world this year, with big names such as Bitcoin (CRYPTO:BTC) and Ethereum (CRYPTO:ETH) regularly making headline attracting the attention of common man now too.
One of the newer stable players emerging in the crypto space is Cardano (CRYPTO:ADA), and it’s been steadily gaining traction among investors. Over the past month, the price of Cardano has sharply rise by more than 66% — If we compared with Ethereum’s 4% gain and Bitcoin’s 1% drop.
While Cardano is emerging with solid base points, New crypto on the block, it has some big advantages. But is this the right time to invest?
The advantages of Cardano
Cardano was originated by the co-founder of Ethereum, so the both cryptocurrencies share some features. Both allow the development of smart contracts, for example, which are digital agreements that use blockchain technology to verify transactions. According to the views of investors they believe smart contracts have the potential to revolutionize society, particularly the legal industry.
If we Compared with Bitcoin, Cardano’s energy consumption is more efficient. Bitcoin uses a proof-of-work protocol during the cryptocurrency mining process. That means that to verify transactions and earn tokens, Bitcoin has drawn criticism for its impact on the environment.
Cardano, on the other hand, uses a proof-of-stake protocol, through which miners must put their own crypto holdings at stake to verify transactions. This results in faster transaction times and significantly less energy usage.
Where it falls short
While Cardano has many advantages, but it also has its downsides as well too — primarily that it’s not fall in its competitors. Bitcoin is the most popular oldest cryptocurrency and has earn name recognition, giving it the first-mover advantage in the crypto space.
Second most popular crypto currency is Ethereum which shares many of the same advantages as Cardano. Not only does it also host smart contracts, but it’s planning to move to a proof-of-stake network as well. Ethereum is also home to non-fungible tokens and the decentralized finance movement, giving it more real-world utility than Cardano.
Of course, this doesn’t necessarily mean Cardano won’t find ways to outperform its competitors down the road. It is still a relatively new cryptocurrency with room for growth. Also, cryptocurrency isn’t a zero-sum game, so it’s possible for multiple currencies to coexist with their own advantages.
Is Cardano right for you?
According the big money giants and resarch You should only invest in Cardano if you believe it will perform well over the next several years or decades.
Nobody knows for certain whether cryptocurrency will succeed, but if you believe in its long-term potential, be prepared to hold your investments through the waves of volatility. Bitcoin has lost more than 80% of its value in the past, and Ethereum’s value has plummeted by nearly 95% on occasion. If you’re not comfortable with short-term volatility, cryptocurrency may not be the right investment for you.
Will Cardano eventually become a mainstream form of currency? Nobody knows for sure. It does have its advantages, but it’s still highly speculative at this point. If you believe in its potential, it could make for a solid long-term investment. Otherwise, there are plenty of other investment options out there.