Last Updated on 13 October, 2023 by Samuelsson
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Meta: Putting together a crypto portfolio? Check out this guide and learn why Cardano is the perfect asset to invest in.
What Makes Cardano A Unique Coin to Have in Your Portfolio?
When putting together your crypto portfolio, it can be tough to choose what coins to include. It’s a time-consuming process that involves weighing up the pros and cons of each option before making a final decision.
Cardano is a unique coin that we believe would be a fantastic addition to your crypto portfolio. We discuss why in this guide and look at the Cardano price and the technology behind the asset to help you better understand what it’s all about. Read on to learn more.
Cardano: A Third-Generation Cryptocurrency
Cryptocurrencies began all the way back in 2009 with the launch of the flagship coin, Bitcoin. The technology has come a long way since then and has undergone significant change and incredible development.
After Bitcoin came the first altcoins, including Ethereum and Litecoin. These were named the second generation of cryptocurrency and offered more sophisticated technological frameworks that improved performance and functionality.
Cardano, which was launched in 2017, is part of the cryptocurrency industry’s third generation. The coin was the very first to use a proof-of-stake (POS) consensus mechanism, which immediately set it apart from rival cryptocurrencies.
A New Consensus Mechanism
Transactions made using cryptocurrencies are verified by users and secured on blockchain networks. The method through which these transactions are verified is called a consensus mechanism. The first cryptocurrency, Bitcoin, used a proof-of-work (POW) consensus mechanism. While revolutionary at the time, it is now falling out of favour due to its negative environmental impact.
Cardano introduced POS, a new mechanism with significant advantages. Rather than inviting all users to take part in transaction verification, the POS system asks only users who have staked a certain amount of the Cardano currency, known as ADA. This reduces the number of users verifying transactions and, in turn, scales back the energy required to do so.
What Else Does Cardano Offer?
Like other cryptocurrencies, Cardano can be used as an alternative payment method for a wide range of different goods and services. It provides greater security and anonymity when compared to traditional payment methods and we’re seeing its use increase across industries and sectors.
However, Cardano isn’t just an alternative payment method. The asset is built on innovative technology and can be used for a wide variety of different purposes. Cardano’s blockchain can be used as a platform for developers to create decentralised apps (dApps) and tools. Some of the dApps on Cardano include digital art marketplaces and NFT exchanges.
In addition, Cardano can also support smart contracts. These are code-based self-executing contracts that are being rapidly adopted across the business world, by firms in sectors including finance and logistics. Smart contracts can automate business deals and agreements, reducing the risk of error or contractual infringements. As we move towards a more automated world, Cardano’s smart contract capabilities will be extremely valuable.
Furthermore, Cardano is a highly scalable asset that can adapt to meet increasing user demand and traffic. This will prove vital as cryptocurrencies are further integrated into the mainstream and gives Cardano an edge over its competitors.
How Has Cardano Performed in the Market?
Cardano is an incredibly exciting asset that offers a lot in terms of features and functionality. However, before you decide to add the coin to your portfolio, it’s important that you first analyse its price and how it has performed in the market.
Currently, Cardano is the seventh-largest cryptocurrency in the industry by market cap and is trading at a price of $0.2467. The asset’s price is down by 5.8% over the past month and by 42.38% when compared to this time last year.
Cardano is the third-most affordable coin when compared to other assets in the top tier. It is significantly cheaper than industry heavyweights like Bitcoin and Ethereum, which are currently trading at prices of $26,507 and $1,625 respectively.
Should You Include Cardano in Your Portfolio?
When you’re putting together an investment portfolio of any kind, be it crypto or stocks, one of the most important things to keep in mind is diversification. While investing in more established and stable coins like Bitcoin and Ethereum is a good move and can help secure your portfolio, it’s also worth investing in newer assets like Cardano.
There is another key advantage that Cardano has over other options. Unlike many other cryptocurrencies, like Ethereum, Cardano has a hard limit on the number of coins that can be produced. Once 45 billion ADA coins have entered circulation, no more will be generated. What this means is that supply will immediately end and, in turn, demand will skyrocket. If you’re holding Cardano, you should be able to sell it at a profit after this limit has been reached.
Putting together a crypto portfolio can be a tricky process that involves a great deal of careful thought and consideration. It can be easy to opt for established coins like Bitcoin and Ethereum, and these are still good choices that should hold their value. However, diversification is key in the investment process, so branching out and including more unique coins like Cardano can elevate your portfolio and give it a greater chance of future success.