The great thing about writing on investments is you’re always learning something new. For example, until a few days ago, I thought Cardano (CCC:ADA-USD) was an Italian restaurant in New York City or some other large metropolis.
Little did I know that it’s one of the best kept secrets in the evolving world of cryptocurrencies. As my InvestorPlace colleague, Alex Sirois, recently stated, its utility and differentiation make it worth owning.
There’s that word utility again. I suspect we’re going to hear it a lot in 2021. With so many cryptocurrencies available today, it’s getting harder and harder to tell the winners from the losers.
Luckily, Cardano has an ace up its sleeve. One that could carry it past Ethereum (CCC:ETH-USD).
Cardano and Ethereum Share a Common Bond
I’ve become intrigued by DeFi (decentralized finance). It’s a huge reason why I believe Ethereum is a far more interesting investment than Bitcoin (CCC:BTC-USD) despite the fact BTC is clearly the better buy if you’re looking for store-of-value.
But as I said in the intro, my knowledge of cryptocurrencies is a work in progress. As such, I had no idea that the founder of Cardano, Charles Hoskinson, was one of the eight co-founders of Ethereum. He apparently left over a dispute about the loose governing structure and for accepting venture capital. In 2015 he became the CEO of IOHK and founded Cardano.
It’s taken six years for Cardano to get to the point where it can deliver utility through the use of smart contracts. Better late than never.
The fact that Hoskinson learned many things from his time working on Ethereum suggests those who use Cardano will be treated to an excellent customer experience.
Developer Tech contributor Ryan Daws pointed out in his aforementioned February article that Cardano is only just getting started. More than 22 million developers exist worldwide, yet only 10,000 active dApp (decentralized app) developers.
The good people at Cardano worked to make it more user-friendly. Daws quotes Hoskinson:
“[Developers] are writing .NET applications, Java applications, and these types of things. So, the first thing we said is: ‘Is it possible to create a framework that over time can bring all of these mainstream programming languages into our space for both the off-chain infrastructure and the on-chain infrastructure and do that in a safe, sustainable way with predictable costs?’”
Daws points out that the slow speed and high fees charged by Ethereum have spurred people to look for alternatives like Cardano. Hoskinson is quick to point out that Ethereum has improved in recent months, and that Cardano is not out to replace the project but rather to offer an alternative in what’s turning out to be a vast marketplace.
The Bottom Line
Hoskinson suggests that businesses and developers don’t need to opt for one over the other to figure out the problems that need solving.
“Dapp developers are businesses, they’re building a dApp because they want to accomplish something, they want to solve a particular problem,” Hoskinson says. “You should look at Ethereum and Cardano like you look at Rackspace and Amazon and Digital Ocean. It’s kind of silly if you say, well, you can only build on Amazon.”
I recommend you read Daws’s article if you’re at all curious about the future of the blockchain platform, or want to learn more about this fascinating use of technology.
In my April 1 article about Ripple (CCC:XRP-USD), I concluded that the cryptocurrency had to figure out how to be both a store-of-value and utilitarian in nature. I think Cardano is also in that situation, but it’s done a better job on the utilitarian front, which puts it ahead of Ripple in my books.
I’m going to continue to learn about Cardano and Ethereum and what makes them similar and different. In the meantime, as cryptocurrencies go, I’d stick to Bitcoin if your only need is a store-of-value.
However, if you want to be a part of something bigger, I couldn’t think of a better choice than Cardano.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.