Almost exactly a year ago today, I made a video describing the basics of Cardano (ADA) , and it was one of my first YouTube videos that got a decent number of views. Despite the popularity of that video and the acknowledgement of Cardano's enthusiastic community and compelling fundamentals, I simply didn't invest as I felt more comfortable with ETH. Almost a year later, I had a sudden shift in mindset and decided to spend a bit and pick up some ADA - this post describes why.
Looking Back at Cardano
The first thing that I want to point out is that although I didn't purchase ADA after I covered it a year ago, that wasn't due to any objections about the coin. Rather, I simply didn't purchase ADA because was more familiar with ETH and felt that ETH had stronger long term potential. Despite my recent purchase of ADA, I still believe ETH has better long run potential, so why in the world did I invest in ADA?
The key reason that I invested in ADA was that I really came to embrace the notion that there will be multiple successful blockchains and ecosystems moving forward. Yes, I do think ETH is going to play a huge role in that future and could perhaps even be the dominant chain, but I also think that there will be a number of other chains that will be successful.
Diversification Benefits
If we assume that more than one chain can succeed, than it makes sense to diversify a bit among chains with good prospects for success. NOTE: I'm not encouraging meme coin speculation as a form of diversification. I'm specifically referring to well-researched, established projects with solid fundamentals and a reasonable (though not guaranteed) chance at long term adoption. With that in mind, I do think Cardano (ADA) checks all of those boxes.
Cardano Benefits
The coin has high TPS (with up to 2 Million TPS with full Hydra implementation), considerably lower fees than the current version of Ethereum, and recently rolled out the long-awaited smart contract functionality.
Although I had known about the lower fees and higher TPS for quite a while, one simple quote made me decided to pick up some ADA. In a recent video that I watched, the producer said that Ethereum is focused on gaining adoption in the developed nations whereas Cardano is focused on developing nations. Personally, I believe that crypto adoption has the most potential in countries that currently are disadvantaged due to US dollar hegemony and believe that those countries are fertile ground for blockchain/crypto adoption as a way of circumventing that hegemony.
As I investigated this claim, I did find that Cardano recently formed a partnership with Ethiopia's ministry of education for digital identify management and also formed a partnership with the United Nations to support voting proposals.
Just based on my research, it appears that Cardano markets itself more to government clients and intra-governmental organizations whereas Ethereum seems (in my opinion) to be less concerned with government adoption and more focused on business adoption. I think both avenues are important, and I wanted to cover all my bases by investing a bit in ADA.
Summary
At the end of the day, I do still believe that ETH will be the dominant chain moving forward. It is highly decentralized which will help it evade SEC prosecution, it has the most DApps, the longest track record, and a lot of the scaling issues will be resolved with ETH 2.0. That being said, I still think that there is a lot of room for other chains to focus on niche markets and carve out their share of the crypto market. I like that Cardano has a similar goal to Ethereum but with a slightly different focus and wanted to get a bit of exposure to the Cardano ecosystem as a way of diversifying as well as hedging against ETH 2.0 uncertainty.
Was it a smart decision? Are you invested in ADA, Cardano, both, or neither? Leave you comments below and let me know.
As always, I'd like to give a sincere thank you for reading the article and remind you that everything is my personal opinion and not financial advice of any kind.
References
https://cardanofeed.com/hydra-layer-scales-cardano-ada-to-reach-2-million-tps-5053.html
https://solberginvest.com/blog/cardano-fees/
https://cointelegraph.com/news/cardano-launches-smart-contracts-after-successful-hard-fork