Why Cardano Should Be a Part of Your Investment Portfolio
This is not financial advice. Cryptocurrency is unregulated in the UK; profits may be subject to tax; and the value of any investment could fall.
In times gone by, an investment portfolio would have been made up of things like stocks, bonds, and commodities like gold and silver. While these are certainly still viable options, we’re seeing an increasing number of investors choose to include cryptocurrencies as well.
One of the most exciting cryptocurrencies on the market today is Cardano, and we believe that this asset is an excellent option to include in your investment portfolio. To demonstrate why, we’re going to look beyond the Cardano price and dive into the technology and ethos behind the asset. Read on to learn more.
What is Cardano?
When choosing any kind of asset, be it stocks or crypto, to include in your investment portfolio, it’s absolutely that you have a solid grasp of what the asset is.
Cardano is a blockchain platform that uses the ADA cryptocurrency. It was launched in 2017 by a team of former Ethereum developers, who used their experience to design an asset that addressed some of the flaws in the Ethereum system.
While Ethereum is considered a second-generation cryptocurrency, Cardano is regarded as a third-generation asset. It is highly advanced and uses cutting-edge technology and concepts to provide a seamless service for users of the platform and the currency.
Proof-of-Stake Consensus Mechanism
A consensus mechanism is the way through which transactions are verified on blockchain networks. Bitcoin, the first blockchain platform, used a consensus mechanism called proof-of-work. While revolutionary at the time, this system has been met with criticism due to the amount of energy it requires and has been identified as a major contributor to carbon emissions.
Cardano was the first to use a proof-of-stake consensus mechanism. With this system, users who have staked a certain volume of ADA into the blockchain are selected as transaction verifiers, rather than allowing everyone to participate as in a proof-of-work system. In doing this, the proof-of-stake mechanism significantly reduces energy consumption, making Cardano a far more environmentally friendly blockchain.
The Cardano Roadmap
The majority of cryptocurrencies publish a whitepaper in which the technology and plans for the asset are laid out. Cardano approached things in a different way. Instead of a whitepaper, Cardano instead published a roadmap, which continues to be updated to this day.
Each new stage of the roadmap is called an era, and each brings with it new updates to the asset. The newest era, Voltaire, will give users the chance to vote on all upcoming changes. It will also implement a system through which transaction fees are collected and then used to fund further changes to the system, making the asset fully self-sufficient and completely decentralised.
Not Just a Payments System
Cryptocurrencies were originally conceived as an alternative payment system, with blockchains merely the network through which payments with these new currencies could be conducted.
However, newer assets like Cardano are looking to maximise the potential of blockchain technology, and now offer far more than just a means of conducting financial transactions. The Cardano blockchain can be used to develop sophisticated apps and digital tools. It can also support smart contracts, which are self-executing contracts powered by code that are being increasingly adopted across a wide range of different industries.
Why Should You Invest in Cardano?
The above points demonstrate some of Cardano’s primary selling points. However, the asset has further advantages over rival coins, and many of these are important to consider when thinking about adding Cardano to your investment portfolio.
Unlike its main rival Ethereum, Cardano has a finite limit of the number of ADA coins it can produce. This is capped at 45 billion, after which ADA production will cease and no more will be created and released into the market. This is a crucial point for the Cardano investor. Once this limit is reached, supply will be cut off completely while demand will remain the same, or even increase. What this means is that any Cardano you own will skyrocket in value, leaving you free to make a tidy profit.
Cardano is also relatively affordable. Ethereum and Bitcoin are currently at prices of $1,832.26 and $29,033.70 respectively, while Cardano is at a price of just $0.29. While this means it may be harder to profit from Cardano at first, buying at this low price now could see you make larger returns when the asset’s value increases in the future.
What’s more, Cardano is fully scalable and is capable of expanding to meet rising demand and traffic increases. If crypto wants to see true mainstream acceptance, the assets must be able to meet the needs of an increasing user base, something Cardano is more than capable of.
Conclusion
When it comes to putting together your very own investment portfolio, it can be difficult to decide what to include and what to discount. There are so many options out there, and the rise of cryptocurrencies means there are even more potential investments to choose from. If you’re intending to add a cryptocurrency to your investment portfolio, Cardano is a fantastic choice. The asset has a number of significant advantages over rival cryptocurrencies, and its hard limit means your investment could appreciate in value over time.