Over the past decade, cryptocurrency has effectively conjured a new economy out of thin air. Understandably, it has become a rather controversial asset class, with intelligent people arguing for and against it. Even so, no one can deny the wealth created by this emerging asset class. In the past year alone, the cryptocurrency market has skyrocketed 109% to $ 2.1 trillion.
However, enthusiasm for more speculative activity has declined in recent months as high inflation and the prospect of rising interest rates have prompted investors to seek safer alternatives. To that end, despite huge gains over the past year, the cryptocurrency market is currently 29% below its all-time high.
Here’s the bright side: Every past dip has proved to be a buying opportunity, and there are dozens of cryptocurrencies worth owning. Eg, Cardano (CRYPTO: ADA) And Ghost (CRYPTO: FTM) they look like smart long-term investments. Here because.
Cardano is a programmable blockchain powered by the ADA token, which is currently the seventh most valuable cryptocurrency. In 2015, the project was started by Charles Hoskinson shortly after his departure Ethereum (CRYPTO: ETH). Cardano aims to be a better version of Ethereum and differs in three ways.
First, the developer team took an academic approach to building the blockchain. Rather than rushing to complete the platform, the Cardano project was split into five phases, centered around foundation, decentralization, smart contracts, scalability, and governance. In addition, the team often submits research papers for academic peer review, taking an evidence-based approach to development.
Second, Cardano is protected by a consensus protocol for ecological participation proof known as Ouroboros. In that system, validators point the tokens to ensure their honesty, as that bet will be canceled in the event of a fraud or attempted attack. Unlike the consensus at work test, where miners compete on computing power, Ouroboros randomly selects validators to add new blocks to the chain, thus protecting the network with reduced power consumption.
Third, the next fourth phase of development, which is expected to begin in late 2022 or 2023, will include Ouroboros Hydra, a scaling solution that will add more side chains to the main blockchain. In other words, Hydra will add additional blockchains to the platform, dividing network traffic more efficiently. In turn, Hydra will increase throughput from its current 250 transactions per second (TPS) to a theoretical 1 million TPS. That would make Cardano one of the fastest and most scalable blockchain platforms, and possibly even the top performer.
So what’s the investment thesis? Cardano has roots in peer-reviewed academic research. Its Ouroboros consensus protocol is energy efficient and highly scalable. As of September 12, 2021, smart contracts are active on the blockchain, which means an ecosystem of decentralized finance (DeFi) dApps and services is expected to blossom in the near future. However, these products are not free. Users pay transaction fees using the blockchain’s native cryptocurrency. In other words, as dApps and DeFi products on Cardano become more popular, the demand for ADA is expected to increase, pushing its price higher.
Fantom bills itself as a high-yield smart contract platform for digital assets and dApps. The project aims to address two key limitations frequently found in other blockchains: a lack of scalability and a lack of interoperability. To do this, Fantom relies on a unique proof consensus mechanism known as Lachesis, a protocol that allows validators on the network to calculate the temporal order of events independently. This means that any node (computer) can obtain consent without waiting for confirmation from any other node. In turn, this makes Fantom very fast.
In fact, Fantom can handle thousands of transactions per second (TPS) and those transactions are finalized in about a second. For perspective, Ethereum – the largest ecosystem of dApps and DeFi by a large margin – can handle around 14 TPS and it takes six minutes for those transactions to reach the goal (i.e. are embedded in the blockchain). This means that Fantom is much more scalable than Ethereum, which could help it gain market share.
Furthermore, Fantom is also compatible with Solidity, the programming language used to build smart contracts on Ethereum. This means that developers can easily transfer their Ethereum-based dApps to the Fantom blockchain, where performance is better and fees are lower. Unsurprisingly, developers and investors have taken notice and Fantom actually ranks as the sixth largest DeFi ecosystem, with over $ 7.1 billion invested on the platform.
Moving forward, as Fantom-based dApps and DeFi products become more popular, the growing demand for FTM tokens should drive its price up. That’s why this cryptocurrency looks like a smart long-term investment.
This article represents the author’s opinion, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.