Cryptocurrencies took a mini-break over the hot summer months, but are back making some interesting moves, and there’s much to pique our curiosity as we look forward to what could, potentially, be an eventful few months through to end of year and into 2022.
In the long term, the crypto world looks likely to evolve into a broad sphere of financial sub-communities. Overlapping realms will serve different purposes, from gaming, to art, to loans and investment, and different tokens will fulfill different purposes.
Bitcoin itself may well take on the role of store of value, and be something comparable to a monetary standard, and in the coming years, it’s hard to imagine there being a shortage of interest in bitcoin price news or speculation. One plausible and often-hyped outcome is that Bitcoin will be extremely valuable digital gold, rather than the daily use, transactional currency that maximalists call for.
Then there is crypto’s number two by market cap, Ethereum. While it can and does act as a store of value and a means of exchange, it’s positioned primarily as a blockchain-based computing network. It utilizes smart contracts, and enables the development of decentralized applications (dapps). Furthermore, today’s heady, eccentric, and often lucrative NFT market (Non-Fungible Tokens) is running primarily on Ethereum.
But Ethereum has its limitations, not least of which are the prohibitive costs (known as gas fees) that can be incurred when running transactions. And these really are, for the average user foraying into crypto, bafflingly expensive.
It’s said that Ethereum can’t scale, but that might be overstating the case. Either way, although dominant when it comes to de-fi and anything smart contract related, and attractive as a speculative asset, Eth will undoubtedly be challenged in the coming months and years.
Not as well known as Bitcoin and Ether, Cardano (ADA), recently became the third largest cryptocurrency by market cap, as its price surged to a new all time high, close to $3, and it remains energetically buoyant.
The crypto ecosystem is a very inter-linked field, and Cardano was actually set up by one of Ethereum’s co-founders, Charles Hoskinson, in 2017.
So what can Cardano do? Well, in order to avoid getting technical, let’s just say this: everything that Ethereum can, but without the scaling problems and, critically, minus the exorbitant gas fees.
Already, there is a Cardano-native NFT community bootstrapping itself into existence and expanding rapidly. Is a community like this a little ragged at the edges? Sure it is. For all the slickness of Cardano itself, crypto is the wild west, and ADA-based NFTs are its frontier, so that makes them the ragged frontier of the crypto wild west.
But such places are where the fun happens, with all the corresponding risks and returns, and artists and creators are attracted by being able to mint new projects far more cheaply than they would ever be able to do using Eth.
ADA is smart too
On September 12th, Cardano is scheduled to undergo a major upgrade, as it completes what’s known as the Alonzo hard fork. What this means is full smart contract capability, enabling it, conceivably, to out-compete Etherium.
Should this all go through smoothly, then it could open up worlds of potential, and enable, in the longer-term, further substantial gains.
It’s still the case that the entire crypto market reacts closely to Bitcoin’s ups and downs, but, should Bitcoin now do as many observers have suggested, and continue either sideways or upwards, then there’s a case to be made that ADA will pass the $3 mark and make new all time highs.
Offering an off-the-shelf alternative to Eth’s gas fees, Cardano could rapidly pull in anyone developing on smart contracts, and offer a substantial boost to the de-fi market, thereby also bolstering its own value and staying power.
Green Credentials and Japan
There are a couple more reasons to be bullish. A criticism of Bitcoin is that its Proof-of-Work consensus algorithm is energy inefficient, and contributes to ecological problems. Bitcoin’s proponents make a convincing case that this is not true, but nonetheless, there’s no harm in using a different, more energy-efficient protocol, and Cardano does just that with Proof-of-Stake, which consumes less power.
Finally, let’s keep in mind Cardano launching successfully on Japan’s most popular crypto exchange, Bitpoint.
As Japan is notorious (or famous, depending on your point of view) for its ultra-stringent financial controls, this is a very promising development that will boost confidence in ADA and its team.
There is much to be optimistic about when it comes to Cardano.
While Bitcoin sets the pace, and never fails to make headlines when it climbs, don’t forget that Cardano has been developed to serve distinct purposes to Bitcoin, and increased price divergence is a growing possibility.
Cardano is a different animal, more akin to Ethereum, but—some might say—sleeker, cheaper, and moving faster.