Does Cardano (ADA) have a future?

Cardano is a Proof of Stake (PoS) blockchain designed to address the scalability challenges that affect many “second-generation” blockchains like Ethereum, particularly its escalating gas fees. As a “third-generation” blockchain, Cardano aims to offer a more scalable and efficient solution.

What is so special about Cardano?

The development of Cardano is guided by a rigorous scientific approach underpinned by extensive academic research and peer review. The project's roadmap is structured into five key phases, each building on the previous to enhance the network’s capabilities:

Byron: Launched with basic functionality, allowing for the transfer of ADA.
Shelley: Introduced community-run nodes to advance decentralization.
Goguen: Enabled smart contracts, expanding the network’s functionality.
Basho: Implemented sidechains to improve scalability and interoperability.
Voltaire: Completed the transition to full decentralization with self-governance and self-funding mechanisms.

With each phase, Cardano's network evolves, ultimately achieving a fully decentralized system governed by ADA holders and supported by its transaction fees.

The Cardano blockchain development

Cardano is actively hosting 135 launched projects and has 1,264 more in various stages of development. Despite this vibrant activity, not all projects have flourished. Regulatory scrutiny and significant advancements in layer two blockchain technology present ongoing challenges for projects within the Cardano ecosystem.

Initially built to address the limitations of platforms like Ethereum, Cardano has struggled to achieve substantial adoption. The advent of Layer 2 solutions on Ethereum, which have significantly reduced transaction costs and increased confirmation speeds, has diminished Cardano’s once-unique appeal.

Nonetheless, Cardano’s emphasis on development education, infrastructure like stablecoins, programming languages, and wallets, and the growth of multi-chain solutions underscores its ambitious roadmap.

The project's focus on next-generation technology, innovative digital assets, and user-centric solutions continues to drive its vision, though its ability to fulfill these promises remains to be seen.

Cardano’s price history is marked by dramatic fluctuations, much like a theme park roller coaster. When the blockchain and ADA token debuted in 2017, their price was $0.0024. Initially met with skepticism, ADA soon began to gain traction. The Alonzo hard fork in 2021, which introduced smart contract capabilities, catalyzed a significant rise in ADA’s valuation.

The excitement around Cardano’s smart contracts led to ADA’s value surging by 30 times, with its market cap reaching an impressive $94.9 billion. This established ADA as a serious player in the crypto space. During this period, ADA even outpaced major cryptocurrencies like BTC and ETH in growth rates.

However, as with many crypto highs, corrections followed. After the peak from the Alonzo hard fork in September 2021, ADA’s price began to fluctuate, reflecting the varied trends seen throughout 2023.

The final quarter of 2023 saw renewed interest in the crypto markets, driven by anticipation of the SEC’s approval of spot bitcoin ETF applications. With all 11 applications approved in early January 2024, bitcoin’s price reached new all-time highs, now costing approximately $105,000 AUD. While Cardano did not experience a similar surge, the overall market enthusiasm for digital assets has supported ADA’s performance.

Prospects for the future

Cardano envisions itself as a comprehensive financial operating system, with ambitions extending into digital identification and proof-of-ownership for certificates and products. For instance, Cardano has partnered with Ethiopian authorities to provide digital ID cards for 750,000 teachers and 5 million students, demonstrating its practical applications in enhancing administrative processes.

The project also aspires to become the Internet of Blockchains, aiming for interoperability that would allow seamless movement of cryptocurrencies between different blockchains, such as Cardano and Ethereum. However, Cardano faces stiff competition from other blockchains.

Ethereum remains the leading programmable blockchain with the most active developer community, while Solana boasts higher transaction speeds and lower costs. Cardano's future success will depend on its ability to stand out and deliver in this competitive landscape.

Another critical factor influencing Cardano's future price is the growth of its ecosystem, including decentralized applications (dApps), DeFi projects, and NFT platforms. As these new projects come online, they could potentially drive up ADA’s price.

The regulatory environment is also crucial, as the Securities and Exchange Commission's (SEC) ongoing scrutiny and stance on cryptocurrencies could impact Cardano's valuation.

A significant development is the successful implementation of Voltaire, Cardano's upgrade designed to make the network fully decentralized and autonomous. This upgrade introduces a new voting and governance system and a revamped treasury system, shifting management away from IOHK and reducing the influence of key figures like Charles Hoskinson.

With Voltaire in place, Cardano aims to mitigate regulatory risks, particularly those related to the SEC's classification of cryptocurrencies as securities.

Shall one invest in ADA?

Investing in Cardano carries potential rewards, especially with Voltaire's advancements. However, investors should remain cautious of broader regulatory risks, including possible bans on cryptocurrencies by major countries, which could adversely affect the market.