The cryptocurrency is currently facing a rough patch, with the total market valuation down 20% year-to-date to $1.77 trillion at the time of this writing. But blockchain’s long-term prospects look intact as the technology improves and investors seek to preserve wealth in an era of spiraling global inflation. Ethereum (CRYPTO:ETH) and gimbal (CRYPTO:ADA) are great ways to bet on these long-term trends.
Never underestimate the power of a strong brand. With a market capitalization of $326 billion, Ethereum accounts for 19% of the cryptocurrency market capitalization. Although the network has lagged behind newer blockchains in terms of speed, it can maintain its market dominance due to its first-mover advantage and active developer community.
Founded in 2015, Ethereum has expanded the possibilities of blockchain technology by allowing users to program self-executing smart contracts to create decentralized applications (dApps). These standalone programs range from digital art marketplaces to decentralized exchanges where users can buy and sell cryptocurrencies. They made Ethereum a household name among cryptocurrency investors.
With a transaction capacity of only 15 per second, the Ethereum network suffers from congestion and high transaction costs. But its notoriety still allows it to attract high-impact projects such as shiba inus – a $14 billion token that chose to rely on the Ethereum network because, as Shiba Inu’s whitepaper claims, “it’s already secure and well-established.”
Ethereum is also working to improve its technical capabilities through an update called Ethereum 2.0, which is designed to make the blockchain more scalable and environmentally friendly. Changes will include moving from a proof-of-work (PoW) consensus mechanism (where miners use massive computing power to solve puzzles and verify transactions) to a proof-of-stake (PoS) system where miners solve puzzles using existing pieces. PoS is faster and consumes less electricity.
With a market capitalization of $40 billion, Cardano is the sixth largest cryptocurrency on the planet. While it still lacks the name recognition of Ethereum, it makes up for that with superior speed and technical capabilities. The platform is also constantly improving to keep up with the competition.
Unlike Ethereum, Cardano already has a PoS validation system that can handle around 250 transactions per second. The platform developer, Input Output Hong Kong (IOHK), also plans to implement an update called Hydra that will increase Cardano’s scalability by adding another layer to its blockchain. IOHK hasn’t provided much information on when Hydra will go live or how much the platform will increase in speed. But Cardano is already attracting its fair share of dApp development.
In January, the platform got its first decentralized finance (DiFi) exchange SundaeSwap, which allows users to trade cryptocurrencies and earn interest on their holdings without the need for a centralized intermediary. This project is an impressive vote of confidence in the Cardano network.
Hold for the long haul
The cryptocurrency market is notoriously volatile, with several high-profile crashes since its inception in 2009. But over the long term, diamond-handed investors have achieved life-changing returns. While it’s impossible to know when this latest dip will reverse, Ethereum and Cardano look poised to rebound due to their strong branding and active developer communities.
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Will Ebiefung has no position in the stocks mentioned. The Motley Fool owns and recommends Ethereum. The Motley Fool has a disclosure policy.
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