Currencies in the crypto market are subject to crazy volatility, both scaring and attracting investors. But to achieve successful results in crypto trading, you need to be able to anticipate the future price movement of a crypto asset.
Cardano price movement analysis
Cardano may be the missing piece of a crypto investor’s investment portfolio, but before talking about investing in Cardano, it’s important to understand what a crypto trader is getting into.
Cardano is not just another form of cryptocurrency, such as Ethereum or Bitcoin, but a new kind of decentralized platform based on blockchains. So, let’s learn more about Cardano – one of the leading cryptocurrencies to consider this year.
- What is Cardano?
Before we analyze the advantages and disadvantages of Cardano, we need to talk more about the coin itself.
Cardano is a decentralized public blockchain-based platform that is also one of the first existing open source and peer-reviewed networks. The project aims to provide advanced features based on a rigorous scientific and research process.
The founders of Cardano, led by Charles Hoskinson, commissioned scientists and specialists from various educational institutions to analyze the Cardano protocol. The main goal was to create a third-generation platform that can improve the deployment of smart contracts and solve the scaling problems of Bitcoin, the first-generation coin. It’s no wonder why many experts believe that if Cardano fulfills its promises, and that it could replace Ethereum, the second-generation coin.
Cardano uses two layers: one for calculating transactions, and one for smart contracts-the Cardano Settlement Layer (CSL) and the management layer, respectively.
The project is based on a Proof-of-Stake (pos) algorithm called Ouroboros. Unlike proof-of-work (pow) protocols, the Cardano protocol is less energy-intensive and more affordable.
How does Cardano work?
Cardano has a unique two-level architecture. As mentioned above, one is used to process transactions with a minimum transaction fee, the other is used to run smart contracts and decentralized applications.
It is noteworthy that unlike proof of work protocols, blockchains with proof of ownership do not require a large amount of electricity and are more environmentally friendly. However, the Ouroboros protocol is very different from other proof-of-stake algorithms.
The blockchain is divided into epochs, which consist of fixed periods called slots. There are slot leaders who are responsible for adding blocks. They must create 50% of transaction blocks within a single epoch, with the blocks having to be approved by input endorsers, whose selection is based on their bids.
To ensure unbiased participation and fair verification processes, Cardano used a multi-party computing system that acts like a digital coin flip. The economic reward is distributed among those who approve the input, stakeholders in multi-party computing, and slot leaders.
Thanks to its scalable consensus mechanism, Cardano’s model also allows it to process more transactions per second, which helps it stay competitive with traditional payment systems such as Visa.
What is the ADA?
Cardano’s native coin is called ADA. ADA has a limited supply of 45 billion coins. Currently in circulation 31 112 484 646 coins. Interestingly, ADA got its name from the 19th-century mathematician and writer Ada Lovelace (daughter of Lord Byron), who proposed the first mechanical computer.
As a decentralized currency, ADA is an attractive asset for various industries, as it provides increased transparency and procedural efficiency. So far, the company behind Cardano, Input Output Hong Kong (IOHK), has offered various services, including:
- Atala SCAN, which aims to protect users from counterfeit goods and unauthorized pharmaceutical products;
- Atala PRISM, providing a tamper-proof ecosystem for academic certification and credential issuance;
- Atala Trace / EMURGO for product certification in the agricultural sector.
Of course, ADA can also be used as a payment method or voting tool in the ecosystem.
What are the advantages of Cardano?
Knowing the pros of Cardano is important to help you decide for yourself whether ADA is a good and potentially profitable investment. So, here’s a quick overview of the benefits of investing in Cardano.
- Excellent Development Team: Founded by Charles Hoskinson and Jeremy Wood, co-founders of Ethereum, Cardano has gained a lot of popularity since its official release in 2017. Cardano also undergoes an expert evaluation to ensure that there are no weaknesses in the protocol. Please note that to prevent errors and hacks, Cardano has tested various protocols and developed an improved blockchain.
- Cardano uses multiple layers: this is one of the main advantages of the project. By implementing a settlement layer and a computational layer, Cardano provides unlimited scalability and fast transactions. It also allows you to perform updates without interfering with payments and transactions.
- Open Source Platform: It’s also worth considering the potential of Cardano as a fully open source platform with code written in the Haskell programming language. Here we should note that Haskell is a functional language dedicated to functions and blocks that perform tasks when needed.
- Third-generation blockchain: Cardano is declared a third-generation blockchain. It is considered more reliable than other cryptocurrencies as the ADA continues to overcome the challenges that other platforms have faced. It is also more scalable than Ethereum and more decentralized than Bitcoin, as it scales horizontally (via its Ouroboros Hydra protocol).
- Cardano is safe: it is a proof-of-stake protocol that provides mathematically proven security. Given the increasing number of cyberattacks in the crypto sector, there is no doubt that security is critical. Please note that the Cardano system has unprecedented security and privacy management plans.
- Providing digital identification: Like other cryptocurrencies, Cardano relies on decentralization. The good news is that the crypto project can provide digital identification to citizens without bank accounts around the world, especially in developing countries. In fact, Cardano has started to cooperate with more than 54 countries. Please note that according to the data, the world’s population without access to financial services is more than 1.7 billion people.
Drawbacks of Cardano
Cardano has a number of impressive advantages over other coins, but both traders and investors need to know the downsides of investing in ADA to make an informed decision. Like any investment, it is not safe to invest in Cardano.
Here are some serious disadvantages of investing in this crypto asset:
- Cardano is still in development: Although Cardano is known as an academic blockchain that has undergone substantial review and testing, the truth is that it is still evolving, and developing slowly. Trying to keep up with competitors and technical achievements, the project is in no hurry to develop. It is currently losing ground among Ethereum and EOS as it still deals with incomplete smart contract and token standards. As a result, it is difficult for people who want to start their initial coin offerings (ICOs) on the platform. In addition, Cardano is still working on the scalability aspect, and while cryptocurrencies like Ripple can handle 1,000 transactions per second, Cardano can only handle 257 transactions per second.
- Cardano wants to implement a voting system: although having an open voting system where you can offer updates and vote for / against is an attractive factor, it is one of the possible drawbacks. Simply because token holders are not always technically savvy and may vote for an unreasonable decision. Ethereum proof-of-ownership researcher Vlad Zamfir claims that voting on the network can be dangerous and can cause changes on all nodes.
- Problems with its synchronization between registries: the project has implemented a unique algorithm, but some critics argue that assumptions that registries will be synchronized at any given time are unrealistic for a global blockchain. In addition, many say that attacks with double spending or 51% are still possible. For example, input endorsers may end up approving the same transactions from two slot leaders.
So, is Cardano a good investment for investors?
Yes, despite all the criticism, Cardano is a good investment. In fact, Cardano is more than a good investment. According to CoinMarketRate, it ranks ninth. Since the total number of tokens is limited, the risk of inflation is also limited as the demand for the coin continues to grow.
There are also many technical advantages, such as Cardano’s decentralized nature and multi-level architecture, which make the project a good investment.
However, to answer whether to hold on to the ADA, we need to consider a wide range of factors and potential risks. Cardano’s success also depends on the number of smart contracts and decentralized applications it can host. While its peer-reviewed nature makes it safe, there is still plenty of room for further development.
We can only say that ADA has a good chance of getting its fair share in the crypto investment sector. It is moving up and consistently ranks in the top 10 of CoinMarketRate in terms of market capitalization and trading volume. Its low entry level makes it an attractive investment for traders and beginners, as well as for long-term investors. ADA is also the right choice for people who just want to diversify their portfolio.
Simply put, Cardano is a low-risk investment with many potential benefits. This is something that a crypto investor should definitely study before considering adding ADA to their portfolio.