Digital Cash

Is Cardano a good investment?

Ahhhh, you want to know the future and what will make you rich?!

If you’re here because you’re wondering if Cardano is something you should buy into, well that’s just fine. The answer, like anything that involves risk, will need you to do a bit of research though, to answer the question for yourself based on your own beliefs and attitudes to risk.

My “Why choose Cardano” page is a really good primer to this page, if you’ve not read it consider heading over there first.

Should I invest in Cardano?

Cardano is a blockchain that has been created to change the world, for the better. To help the poorest people in the world and also to bring fairness and transparency and tools never before available to the entire world. It has been a top 10 blockchain for several years now and ultimately it is aiming to become number 1.

Whether it will or not, time will tell. This is a highly competitive industry and of course many of the other good blockchains are also aiming to be the winners too. In truth, there won’t be one winning blockchain, there will be several, maybe many. The good blockchains being built are not all the same and there is plenty of room for multiple winners who will each bring great new things to society.

What many of these blockchains offer is a set of tools and functionality never before seen. It’s hard to imagine what might be when you’ve not yet got killer applications released that are in the hands of the general public. Those applications are coming though, there are many thousands of people and companies working today to build them. If you believe the neigh-sayers who claim the industry has nothing useful to offer, well that’s your call, but maybe take a look around first before you leave, just in case they are wrong hey!

Investors don’t fund startups they don’t believe have a good chance of making a lot of money. Developers don’t dedicate years of their professional careers to projects they don’t believe will become successful. In just the same way as the internet moved from tech geeks to the mainstream, the same is happening today in blockchain. The developers can see it. Professional investors see it. Many normal people from all walks of life have taken the time to look and can see it too.

Can Cardano make me rich?

We are still early. Large gains have already been made by early investors in blockchain. But the industry is still in its infancy, there are not yet the applications released that will attract large numbers of the general public. All of the investors to date have been speculators, people speculating that the blockchains and companies they’ve invested in will one day be worth a great deal of money. That phase isn’t over. We are still waiting for the good blockchains to be fully completed. Only very recently have the tools and functionality appeared that allow developers to start creating what will become the killer applications. Thinking up what those applications will be and building them will take time, years. So you may have missed out on some incredible early gains, but if you believe that the blockchain space in general has something to offer people, to offer society, then there are still plenty of upsides to come once those things start to appear and evolve into the things we all use and take for granted.

Take a look again at my “Why choose Cardano” page, remind yourself of some of the important things about Cardano compared to the other blockchains out there, when you consider if Cardano is something that might be worth investing some of your own money in and taking a bet on the future. Or use it to compare with other blockchains you are considering investing in, to weigh up which offer the things that will become valuable once widespread adoption occurs.

OK, first things first, nothing on this page should be considered financial advice.

This page contains my personal thoughts and experiences on investing in blockchain and Cardano. Nothing here should be taken as a recommendation for you to invest in Cardano, blockchain, or anything else.

The basic rules of investing in crypto (blockchain and cryptocurrency):

  • Do your own research.
  • Only invest what you can afford to lose.
  • Beware of scams.
  • Remember people lie. In the blockchain space, a lot. Both organisations trying to get you to invest with them and also generally people trying to influence you to help make their own preferred blockchains succeed.

So, is Cardano a good investment?

So, I have no idea of what the current price of Cardano’s ADA coin will be as you read this page. It might be in the doldrums having fallen massively, or it might be pushing to new all-time highs, or it might be somewhere in between. If you go to CoinMarketCap and look at the all-time price graph of Cardano’s native cryptocurrency, ADA, you’ll see there have been incredible swings in its price. Where its price is today will likely affect your decision of whether it’s a good time to invest, for you and your approach to investing.

Being its native cryptocurrency, ADA is the coin you would choose to invest in if you want to invest in the future of the Cardano blockchain itself. And by invest, I mean you’d simply buy some ADA.

That’s not the only way to invest in all of the companies involved in the Cardano blockchain. There are lots of companies utilising Carano that offer different and sometimes complex ways to invest in these other companies. This page isn’t going to delve into any of those though as it quickly becomes an advanced topic that is outside of the scope of what we are trying to achieve here. Anyway, for now at least, I’d argue there’s no need for an amateur investor, investing in ADA is a great way to take a bet on the future success of the Cardano blockchain (it’s what I do).

Short term or long term?

Are you looking to make money quickly, or are you OK to wait a few years?

Quick money please

The former is much riskier because the cryptocurrency industry is still highly volatile and wild swings of price can occur without warning and which sometimes take multiple years to correct.

Those wild swings go both ways of course, and as well as wild drops in price there can be wild gains in price that also occur very quickly.

Remember, hindsight is always 20:20. When you look back on events in cryptocurrency it can be easy to say “oh yes, of course it did that, that makes perfect sense, I could have spotted that if I’d been in it then”. Chances are you couldn’t have though. Without the knowledge of what happened in the future the decisions you make can only be based on the past and your expertise. Guessing what the price will do in 1 day, 1 week or 1 month is just that – a guess.

Oh, and while we’re at it, be very wary of YouTubers making claims about price. Anyone making predictions will get it right some of the time. They all tend to quietly forget all the times they got it wrong and proudly boast about all the times they got it right. That’s just basic odds, nothing more.

It’s OK I can wait

If you can wait for a return on your investment then things get much better in terms of risk. By wait, I mean in terms of a few years possibly. A 2 to 5 year timescale is a good timeline to think about currently. Maybe sooner, but you may need to wait it out if world events cause large shocks that take time to subside (both to the financial markets generally and also to cryptocurrency directly).

If you have time on your side then you can look at the blockchain industry more generally, look at its long-term trends, and make more informed decisions on what is likely to occur.

Fortunes, scams and criminals

Over its early years, there have been incredible financial gains for some from investing in blockchains, including Cardano. Most people missed out on making early money in blockchain and clever manipulative people have jumped on that and targetted technologically or financially un-skilled investors, who just want their own chance to get rich quick.

Blockchain is a clever emerging technology which offers something new and very powerful. Its fundamental components combine money, financial freedom and financial services in an as yet largely unregulated space.

Well guess what, large sums of money and little regulation tends to attract some pretty undesirable people!

The end result is that today the blockchain space is viewed by some as a cesspit of scam artists and criminals.

But that isn’t the full truth. To claim all blockchains are pointless, worthless, scams is a lie. Some are. Actually, lots are. But there are plenty that are not.

The reality is this is one of the greatest races to create winning new technologies the tech sector has ever seen. But the catch is, that what’s trying to be created is very, very hard.

For every get-rich-quick con artist trying to steal your money, there’s also another real tech team, building a real company and trying to create what they believe will be one of the great solutions blockchain will offer society. 

The catch? How do you know? Just like trying to work out if you should invest in Myspace or Facebook all those years ago, you as a punter have to try and work out which ones of these impressive-sounding companies might succeed. But this time with the added complexity of there being con artists and downright criminals in the space too, trying to literally con you out of your hard-earned money!

It’s not fair, but that’s what speculative markets are. They explode before the regulators have time to work out what’s happening and act. Add to that, even of the good projects, only a few will go on to become greats.

Not for you? No problem, higher risk investing isn’t for some people. So don’t invest, it is that simple.

Fancy a flutter? Well only invest what you can afford to lose, and if you’re going to invest anything sizeable, do your own research first.

In just the same way you shouldn’t believe some self-professed crypto “expert” on YouTube (OMG there are so many…), you also shouldn’t just believe a website like this is telling you the “truth” either.

But what I can do is give you a few facts about the blockchain I favour. Facts like those on my “Why choose Cardano” page, facts you can go away and verify if you wish. Facts you can ponder for yourself, compare, and make your own decisions with, along with all the other tantalising choices out there!

What price will ADA reach?

Ahhhh, the future, who can tell me….

Firstly, when comparing blockchains and their value, ignore the price of their cryptocurrency coin. It’s irrelevant when comparing blockchains. Bitcoin has far fewer Bitcoin that will ever be in existence, so the value of each Bitcoin is much more than say Cardano because Cardano has a much greater number of ADA in existence. A lot of people get confused by this, they go “hold on if one ADA is worth $2 say, and one ETH is worth $2000 say, does that mean ADA might one day be worth $2000 an ADA too?” No, it won’t.

The price you want to compare is the “Market Cap” (MCap). This is the total value of all the cryptocurrency coins currently in existence on the blockchain if they were all sold at the price the last trade occurred at. That number is how you compare one blockchain to another.

That doesn’t mean the price per coin isn’t important to you, if you buy a load of coins then the change in the price the coin is how you know how much the value of your holding has changed. It’s just that the price per coin is not useful for comparing different blockchains.

The next rookie mistake is to compare to stablecoins. These are coins that are deliberately tied to the price of something else, say the American dollar for instance. The market cap of those coins will change based on how many people are using them, they are always worth the same per coin, its the total number of coins that fluctuates in their special case. Tether (USDT) and USD Coin (USDC) are stable coins for instance.

So, how to judge what might happen to a cryptocurrencies price if I invest? 

The first way is to look at the blockchain space as a whole. What is the total value of all the blockchains, or of the top blockchains? I.e. the total value of all their market caps added together? If it’s currently, say $1T, that’s $1,000,000,000, then that sounds like a lot of money. But is it? Compared to say the whole banking sector? Or the whole technology sector?

The blockchain space is bringing incredible tools never seen before to the whole world. What do you think that might be worth one day? We can’t tell you, it’s the future, we’ll only find out for sure when it happens, but you can research it yourself and make your own educated guess based on what you believe will happen.

For Q3 2022 Apple reported revenue of $83.0 billion and a profit of $19.4 billion.

What is that total value right now? If it’s something you think has a lot of room to grow, that probably means you think blockchain in general is a smart investment. What is the total market cap of the individual blockchain you are considering investing in? Do you think there’s a lot of room for it individually to become more valuable? 

On which blockchain to invest in, here you have two main considerations:

  1. Is it useful? Is it just there to try and make its investors rich, or does it offer real services people will actually want? Does it have competitors, is it likely to be better at it than them. If so, probably means you think that blockchain in particular is a smart investment.
  2. How does its total market cap currently compare to its competitor’s total market cap? How does it compare to the other top blockchains that offer similar services and tools? If it’s a lot less then you might think there is a lot of room for it to grow, for it to become more valuable, compared to them. Again, another indicator that you think that blockchain is a smart investment.

How do I buy ADA

Fancy a bet on the Cardano blockchain? Take a look at our page on how to buy ADA here