Cardano (CCC:ADA-USD) has officially entered the big leagues. After more than doubling this summer, the price of ADA recently hit $3. Indeed it topped that mark in trading two weeks ago to reach a new all-time high. It’s been a historic run for the market’s biggest proof-of-stake token.
Cardano’s market capitalization is now closing in on the $100 billion level. No two ways around, Cardano demands attention. That said, the price of ADA has cooled back off over the past week amid a broader cryptocurrency sell-off.
There seems to have been a general “sell the news” reaction to El Salvador legalizing Bitcoin (CCC:BTC-USD), along with some unwelcome regulatory developments in other markets.
But, this could be an opportunity for traders that had missed out on ADA but didn’t want to chase the price up above $3. With a correction now under way, here’s why some folks are looking to buy the dip.
Proof Of Stake Makes the Difference
The key differentiator for Cardano is that it was one of the first big proof of stake tokens. Proof of stake is a method of ensuring a cryptocurrency’s security. It is different from the well-known proof of work system, which involves the solving of cryptographic puzzles.
By removing the heavy computing usage from the equation, it greatly reduces the electricity consumption and environmental harm of cryptocurrency. If proof of stake can remain secure and stable at a high transaction volume, it could solve many of cryptocurrency’s bigger technical and environmental issues.
Proof of Stake Isn’t a Cure-all
Now, to be fair, Cardano proponents may get ahead of themselves with some of the rhetoric at times. As our Josh Enomoto recently pointed out, there’s good reason to own ADA, but don’t let idealism be the only justification.
A proof of stake protocol make fix numerous problems with cryptocurrency, but it won’t single-handedly fix income inequality or other structural concerns.
Cardano’s benefits in terms of electricity usage are clear, however some of the other proposed benefits seem a bit more farfetched. Cardano could represent a major forward evolution in the cryptocurrency arena, but it’d make sense to maintain realistic expectations for now.
Cardano’s Smart Contracts Are on the Way
Earlier this summer, I highlighted the controversy around Cardano’s smart contracts. Numerous folks had started to get fed up with the slow development timeline there. One site, the decentralized betting platform Polymarket, even launched a contract on whether or not Cardano would launch smart contracts by the beginning of October. Many people bet against Cardano being able to meet that deadline.
Since then, however, Cardano’s leadership team called the skeptics’ bluff. It appears that Cardano will get its smart contracts live in coming days, potentially setting the stage for Cardano to take a run at Ethereum’s (CCC:ETH-USD) decentralized finance “DeFi” platform.
Cardano could have the winning cards here. Combining an innovative DeFi platform with the environmental benefits of a proof of stake protocol may just be the game-changer. Bitcoin (CCC:BTC-USD) and Ethereum have been the top two crypto assets for awhile, but Cardano is making a serious run at the crown.
Now, to be fair, there’s still a lot to prove in terms of getting a major competitive platform up against Ethereum. However, many people didn’t even think Cardano would get the smart contracts launched on time. And yet, Cardano overcame that hurdle. Right now, momentum is on its side.
Now, getting the smart contracts online on schedule doesn’t necessarily guarantee that the price of ADA needs to rally from here. Cardano is already up a lot in recent weeks, even taking the recent sell-off into account. Profit-takers stopped ADA’s momentum around the $3 mark, and the crypto could be in for a period of consolidation before another move.
That said, there was good reason to be skeptical of Cardano. It’s understandable why folks were taking some shots at Cardano’s founder Charles Hoskinson and his team on social media.
But, for now, Cardano appears ready to deliver on its promises. In a cryptocurrency world full of big talk, it’s worth lauding the developers that can back it up with tangible fundamental progress. Overall, Cardano is one of the most interesting crypto projects out there right now
Be First to Comment