If you’re looking to invest in cryptocurrencies, you may have come across Cardano. In this article, we take a closer look at Cardano and its native coin, ADA and decide whether it makes for a good investment looking forward.
Cardano has been one of the few cryptocurrencies that have consistently been in the top 10 cryptocurrencies by market cap. Founded by ex-Ethereum co-founder Charles Hoskinson the often maligned coin has many advantages that are often overlooked.
It’s often forgotten that Cardano is extremely reliable. The Cardano blockchain has had a total of zero outages in over five years. Yes, you read that right zero, outages, zero shutdowns and zero reboots. This is absolutely phenomenal, for comparison blockchains like Solana have crashed at least seven times in the last year alone.
If one of the criteria for investment in a chain is reliability, Cardano is certainly up there with the best.
Critics of the Cardano blockchain often point out that progress is often slow and important developments such as smart contracts have taken exceptionally longer than other chains to implement.
It’s true that Cardano does take its time with regard to adding new functionality to the chain. however, the care Cardano takes in ensuring only fully tested upgrades to the system are implemented is a testament to the professionalism of the Cardano software developers.
The implementation of smart contracts is paramount to the development of decentralised finance applications (DeFi). The creation of such platforms means users can utilise applications without the need for middlemen or centralised entities controlling their ADA.
All transactions are handled by pre-programmed smart contracts that carry out the required instructions without human interaction. Despite Cardano implementing smart contracts following the Alonzo hard fork in 2021, many outside the Cardano community believe that this functionality is missing from Cardano. That is simply not the case.
If DeFi capability is something that makes a blockchain investible, Cardano certainly has that functionality locked down.
Decentralised Exchanges (DEXs)
Another criticism often directed at Cardano is a lack of decentralised exchanges or DEXs. Having functional DEXs on a blockchain is paramount since it allows users to swap tokens and this in turn increases liquidity in the chain and its associated native tokens.
Unfortunately, Cardano did take a relatively long time to launch its first DEX and as such that hampered the perceived usefulness of the chain. However, since the launch of smart contracts in 2021 several high-quality DEXs have launched including Minswap, MuesliSwap, SundaeSwap and Wingriders amongst more.
The issue of a lack of DEXs has now been rectified and Cardano has a thriving network of DEXs. Some like MuesliSwap are even collaborating with wallet developers to include in wallet swapping of native tokens. Features like this can only make Cardano easier to deal with for the end user.
The whole point of blockchain is to create a decentralised system, as such any exchanges would need to be decentralised. Decentralisation ensures that issues with users getting locked out from accessing their funds as seen in the recent centralised exchanges, Celsius and FTX dramas are unlikely unless there is a major hack of some sort.
If a choice of functional DEXs is a requirement for investing in a blockchain, Cardano certainly has that now across several popular platforms.
Cardano the “Ghostchain”?
Another criticism levelled up against Cardano is that of being a “Ghostchain'” or a blockchain that does not offer many functional or useful projects.
Well, if we are looking at the number of active projects on Cardano we can say that Cardano is definitely not a “Ghostchain'” as there are over 1000 projects building on Cardano.
In addition, Cardano has been found to be the most developed crypto on GitHub in 2021.
Sites such as CardanoCube show that Cardano offers a wide range of projects from crypto wallets to NFT projects to Launchpads all looking to develop and grow within the Cardano ecosystem. It should also be added that Cardano and IOHK also provide their own project accelerator “Project Catalyst” that directly funds promising projects. Successful projects are voted on by ADA holders.
Cardano has dropped from all-time highs of over 3 dollars, to just over 30 cents at the time of writing. However, all cryptocurrencies have seen the impact of a dramatic bear market and the impact of large-scale bankruptcies and scandals within the crypto industry has not helped.
Cardano has a loyal following of supporters and the chain has several network improvements in the pipeline including an upgrade that will allow for easier integration with the Bitcoin and Ethereum networks. The SECP256k1 support will allow Cardano to be an “internet of blockchains” and is a significant addition to functionality.
With these factors in mind, the current low price of Cardano is probably temporary and is likely to go up in future given the successful launch of the scheduled upgrades.
One of the key use cases for Cardano and ADA is the ability to stake your ADA and earn passive income.
Staking is a method of delegating ADA to a Stake Pool Operator who helps to process transactions on the network by running nodes on the blockchain. The operator gets rewarded every 5 days (Epochs) should he manage to produce a complete block on the chain.
The great thing about Cardano is users do not have to lock up their ADA when they stake. Instead, they simply delegate their ADA and they are free to spend their ADA as they wish.
Users are rewarded at the end of each epoch if their chosen stake pool completes a block within that period. This really is a no-brainer for all ADA holders and offers a relatively risk-free method of growing their ADA passively.
This system is innovative and useful as it means users can support decentralisation in the network without losing control of their ADA. It also means that Stake Pool Operators and users can earn passive income from the network without unnecessarily risking their ADA to a third party. All rewards are distributed automatically by the network.
Cardano certainly has its detractors but if we look at Cardano dispassionately we can clearly see that it’s a top-level contender in crypto and that much of the negativity with Cardano is for the most part unjustified. As with all crypto investments there are risks associated but not any more than other crypto projects. In fact, due to its reliability, its robust staking system and its loyal followers it is probably one of the less risky options out there.
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