It’s a bright and sunny day here in Crypto Winter. Bitcoin is (BTC) now trading above $17,300, Ether (ETH) is above $1,300, and one of my favorite altcoins, Cardano (ADA), is up more than 20% over the past week.
Now, an important part of being a good crypto investor is being patient, calm, and clear-headed. That’s why I’m not telling you that this is it, the bear market is over. Maybe it is, and maybe it isn’t – either way, the long-term outlook is still bullish.
It’s a solid reminder of how much money crypto can make us – if they pass the 5 Ts test. Cardano’s performance has been particularly good recently, so it’s a good time to jump in and see how perfectly it fits my tough criteria and look ahead at what it can do for our bottom line…
ADA Has a Development Team Second to None
The first “T” in the 5 Ts system is “team,” – the folks who plan, invent, execute and innovate a cryptocurrency and its technology. One of the first things to ask when looking at a crypto to determine its fundamental value is “who made it, and do they know what they’re doing?”
In the case of Cardano, this coin is lucky enough to be developed by a team led by Charles Hoskinson. This pillar of crypto history was one of the original developers of Ethereum alongside Vitalik Buterin, giving him an unshakable background in cryptocurrency technology, and blockchain technology especially.
But there is another aspect to judging a crypto team: can they be trusted not to take the money and run?
In Hoskinson’s case, he also turned down 293,000 Ether tokens, which would be worth hundreds of millions of dollars today, showing that more money is not his goal. Why bother scamming and stealing from average investors if he’s not even interested in other money he’s entitled to?
Look at the Technology Running the Project
The next point to keep in mind when judging a crypto is, what does it offer? What’s new? What does it actually do that makes it worth people’s time – and money? I’m especially talking about new innovations, features, or functions, that make it a better option than any alternatives.
A crypto doesn’t get to gain adoption just by existing, it needs to offer something.
Cardano is doing exactly that. In fact, technology is the whole reason that Cardano exists. After his role in the Ethereum project, Charles Hoskinson thought he could do better… so that’s just what he did.
For starters, Cardano was designed with an innovative validation system right from the start. It uses the proof-of-stake (PoS) system, which replaces the need for tons of energy and computer hardware with a more efficient system based on investing existing tokens.
It was also designed with scalability in mind, letting it function more quickly than Bitcoin, and it forced Ethereum, which had to pivot to PoS validation a few months back, to scramble to keep up.
A Good Crypto Needs Good Timing
Is now the correct moment for Cardano? Yes! The potential for blockchain and smart contract technology is just being discovered. Ethereum is the only protocol that really stands out at anything even resembling scale, and it’s already starting to show its age.
A lean and efficient crypto like ADA also has the potential to open the door to modern financial and administrative services to a massive population of people who so far haven’t had access to them.
In 2017, 1.7 billion people were reported as un-banked. That’s almost a quarter of the global population. Or, maybe it’s better to say that it’s more than five times the population of the entire United States.
Not only that, but after the collapse of FTX and TerraLuna, and the crypto winter of 2022, a crypto platform needs to be technologically solid, and it needs to deliver substance, not just hype. People are done with empty marketing.
The “Tokenomics” Have to Be Solid
The Cardano developers have made it clear from the very beginning that they’re interested in creating an effective protocol that works, not just running off with the money. That’s not just words, that’s actions.
The way that the ADA tokens have been distributed since the very beginning shows the whole project is geared toward creating a strong network.
To start with, the maximum is 45 million ADA tokens. There is therefore a limit to the potential inflation that can affect Cardano investors’ holdings. Most of that, more than 30 million ADA tokens, are already in circulation, so there isn’t much more room for inflation, relative to the current supply.
Only slightly more than 5 million ADA tokens were taken by the project’s founders and their various organizations, or around 16%. It’s a reasonable amount that left the vast majority for users and investors.
Every Token Needs a “Why”
The ultimate question for any crypto is: Why even bother? Why should this exist? Why is everybody here not just wasting their time?
I think the Cardano team says it best themselves. They emphasize the potential that Cardano has in establishing digital identity, certification, and verification. It can be used in an academic context to back up and protect degree credentials.
They also see use for it in retail, using the blockchain technology behind Cardano to substantiate the authenticity of goods, to prevent counterfeits from sneaking into the supply chain.
The ability to create this kind of strong authenticity has further applications in healthcare, hinance, and government. For obvious reasons, these are all areas where people need to have their records in order, and where authenticity and security are both critical.
All of these factors together are telling us that Cardano is the real deal. That’s the kind of deal we need to be looking for and focusing on, weather the crypto winter is ending or not.
As long as we focus on that, we’ll have strong prospects no matter what happens tomorrow, or the day after that.