5 Reasons Why Cardano Prices Will Move Higher In 2021

The cryptocurrency market has taken investors on a volatile ride in the last 18 months. Most cryptocurrencies gained momentum in the first half of 2020 after a prolonged bear run in the three prior years kept the prices of these digital assets rangebound.

Bitcoin and its peers touched record highs at the start of May 2021 after which the cryptocurrency market experienced a massive sell-off. However, this also provides crypto bulls to purchase these alternate assets at a lower price.

One of the most popular cryptocurrencies is Cardano which is valued at a market cap of $66.7 billion, making it the fourth-largest player in this highly disruptive space. The price of each Cardano token known as ADA rose from $0.03 in April 2020 to $2.46 in May 2021, indicating a growth of 7,200% in just over a year. It then fell to $1.22 last month, before recovering to currently trade at $2.08, at the time of writing.

Similar to most other projects, Cardano is also an open-source decentralized blockchain platform that was created to facilitate trustless peer-to-peer transactions. Let’s see why the prices of Cardano might gain momentum and end 2021 at all-time highs. While it’s difficult to predict the price of Cardano due to the volatility associated with cryptos, it is forecast to trade between $5 and $7 in the next year and range between $20 and $25 in the next three years.

An overview of Cardano

Cardano was designed by the team behind the Ethereum network, including a Bitcoin visionary known as Charles Hoskinson. The eight-person crew initially consisted of two computer science professors, three developers, and three designers.

Unlike some blockchain projects that keep their cards and roadmap close to their chest, Cardano likes to publish its research, which means that some of the projects underway are quite well known. Here, we analyze a few factors that might act as a tailwind for the Cardano cryptocurrency.

Widespread adoption

Cardano is a POS or proof-of-stake blockchain platform that aims to empower changemakers and visionaries by redistributing power from “unaccountable structures to the margins to individuals”, thereby creating a more balanced society.

At first glance, Cardano might sound like the most ambitious blockchain project, but its creators have deep convictions about the potential for this blockchain technology to solve problems.

Hoskinson, who founded the Cardano platform, also serves as the CEO of the blockchain research company IOHK. The latter is collaborating with Ethiopia’s Education Ministry to develop a blockchain-focused student credential system. Cardano is backed by IOHK which is determined to build solutions that accelerate financial inclusion.

Cardano also recently partnered with a blockchain start-up called Revuto to deliver subscription payments on the former’s network.

Also Read: Cardano (ADA) Can Become Second Altcoin After Solana to hit ATH, Here’s Why

Focus on empowerment

Specifically, Cardano wants to use decentralized ledgers and protect whistleblowers who speak up. The blockchain also has broader ambitions to improve elections and make governments more transparent.

According to CoinMarketCap, “Cardano is used by agricultural companies to track fresh produce from field to fork, while other products built on the platform allow educational credentials to be stored in a tamper-proof way, and retailers to clamp down on counterfeit goods.”

Last year, Cardano underwent a “Shelley” upgrade which aimed to make the platform more decentralized compared to larger peers, enabling multiple assets to run on its network.

Energy efficient

Cardano has successfully leveraged an innovative POS consensus mechanism that is more energy-efficient than existing blockchains including Bitcoin. This cryptocurrency consumes 0.5470 kwh (kilowatt hour) per transaction. Comparatively, Bitcoin uses 707 kwh per transaction and this figure for Ethereum is also steep at 62.56.

We can see that Cardano uses a fraction of the mining power compared to PoW of proof-of-work blockchains including Bitcoin.

DeFi potential

A smart contract is a set of programming code running on a blockchain that describes the conversations, conditions, and outcomes between parties using it in order to execute an agreement, transaction, or function.

While Ethereum’s platform is widely used for smart contracts and DeFi projects, Cardano can also be leveraged to create these contracts. Cardano in fact has smart contract support that allows it to generate agreements that require no specialized supervision. Basically, any two entities or individuals can create a contract based on certain conditions on which the underlying contract will be executed easily.

The ability to effortlessly create and build smart contracts enables the accelerated transition towards DeFi (decentralized finance) and DApps (decentralized applications).

Higher transaction speed

The speed of the Cardano blockchain was tested back in 2017 and it could process 257 transactions per second. This is significantly higher than the transaction speeds of Bitcoin and Ethereum that stand at 4.6 and 20 per second.

The verdict

We can see there are multiple benefits to buying Cardano given its advantages that include scalability, low mining fees and the potential to gain traction in the rapidly growing DeFi  space.