I am very excited about the future for Cardano, the project has a clear vision, a large and loyal community along with huge partnerships, competent experts and a lot of monetary weight to keep it funded.
However, even if a project looks amazing one should always be mindful of potential downsides and risks, therefore this article is dedicated to all moon boys out there for whom it might be healthy to take a step back and evaluate the situation in a more chill way.
Bugs
On paper Cardano sounds awesome, they have utilized the cryptography academia to very diligently assess the security and functionality of the network. Through their Plutus Pioneers Program they are educating a large number of people to master coding on the Cardano network.
Getting smart contracts ready for deployment on Cardano is a vital event and even though I have great faith in the people working on it the implementation hasn't been done yet.
In their recent Cardano360 video for May it was mentioned that during the programming course for Plutus students discovered bugs. The testnet for smart contracts is currently running and while I am certain they will be extremely thorough in assessing the code, humans make mistakes.
As of now I am very confident that smart contracts will launch without major issues, but the risk is nonetheless there. There could be unexpected bugs or exploits that harm Cardano.
Scammers
The Cardano Foundation is handing out generous funding left and right, gathering the community together under a very compassionate vision: digital identity and excellent financial services for all! There is also efforts to include people into Cardano that never even have had access to the internet! As described in the Africa Special that came out late April.
I like all of these things, bringing in a lot of new people into crypto that aren't tech savvy is admirable, but it's just that this industry is packed to the brim with scammers!
A problem Cardano founder Charles Hoskinson has talked about multiple times, as in this video:
Giveaway scams might be particularly effective against the Cardano community, after each AMA Charles gives out a loan to a poor person, there is a lot of charity done through staking on the network and a lot more altruistic stuff going on. So I don't blame people that have been brought into the crypto space through Cardano if they are a little too trusting of strangers.
This situation means the Cardano ecosystem will surely be very tempting for scammers to congregate to. There are measures meant to combat this of course, but who knows how effective they will be?
**Bad publicity **
A lot of scammers in a ecosystem is hurtful for the project in and of itself but such a scenario would also cause bad publicity. Cryptocurrencies are extremely dependent on public perception. This young industry is in a race to establish the best trustless financial system possible, but to make that happen people need to make the first initial leap of faith to the project.
It is very obvious in a proof of stake blockchain, the less value people place in the project the less it costs to do a 51% attack on the network. So there is certainly a good reason why people still trust BTC even though it is in many ways one of the worst projects technically. Enough people have already made the leap of faith in order for Bitcoin to be a trustless financial system.
Getting bad publicity can happen in many ways and it does happen all the time, but at some point it becomes damaging for the project and potential users chooses a different project.
This is a very chaotic aspect and I have the general feeling that Cardano is well regarded by many. But things can change, for example, when Charles did a video about a deceased radio host I saw many attacks in the comments. Since Rush Limbaugh did political commentary it rubbed some people the wrong way. Politics is a sensitive subject after all. If Charles continues doing such videos he may very well draw the attention of angry influencers eager to assault political opponents. I hope Charles continue to speak about whatever he likes, he comes across as very genuine and likable to me, but it could end up triggering some to attack Cardano. How effective such attacks would be is anyone's guess.
Regulations
The white paper for Cardano speaks about ways to use metadata for compliance with regulations. The Cardano network is meant to be integrated into any traditional institution that cares about KYC and thereby allow for fully legal and non-suspect transactions to occur on it.
I certainly trust Input Output Global when it comes to creating this financial network, I just don't have that high trust in governments. If harsh regulations start appearing in the years to come I am certain that Cardano has the best chance to adhere to them, but it might not be enough. Perhaps cryptocurrencies are so despised by the establishment that new laws are passed to make all of them completely criminal.
This is certainly something to take into account for any cryptocurrency. Perhaps very few countries will try to ban Cardano but it could mean you have to settle down somewhere else if you want to stay in the ecosystem.
Whale Manipulations
Whales can make any cryptocurrency very stress-inducing. And while the current price isn't important if you have a time horizon of several years it can still make you anxious. However, abusive manipulations of price can definitely hurt the project long term. Ada is supposed to be a store of value but as with all cryptocurrencies it is a potential plaything for whales. Any good or bad fundamental aspect of Cardano can and will be exaggerated by corrupted journalists in order for whales to do massive buy or sell -orders and thus create disruptive price movements.
Conclusion
And those are my top 5 risks about investing in ADA. It is my favorite cryptocurrency and therefore I hope very few people get disappointed by it. But there is nothing safe in the crypto space, even stablecoins may collapse as fiat collapses.
The future is ultimately uncertain, for all we know it could be a much better investment buying gold, or the latest MTG collectible cards. Who knows?
Hope you all make fruitful decisions and enjoy the spectacle of these remarkable times!