Want a cryptocurrency that can trounce the market for years to come? Look no further than The Sandbox (SAND -5.31%) and Cardano (ADA -5.39%). Both assets look poised for long-term success as they build leadership positions in blockchain-based metaverse and decentralized application development.
1. The Sandbox
Up by a jaw-dropping 110% over the last 30 days, The Sandbox is already on a bull run. And while cryptocurrency valuations are notoriously volatile, this project's metaverse-focused token can maintain a stellar growth rate thanks to its early mover advantage and potential use cases as the cornerstone of a decentralized virtual world.
The metaverse is a potential next-generation iteration of the internet that will support interconnected virtual realities. And it could transform industries such as gaming and social media by making them more immersive. The Sandbox aims to tackle this opportunity by creating a blockchain-based platform where players can "build, own, and monetize" gaming experiences -- similar to the publicly traded video game company Roblox.
The Sandbox also allows users to buy virtual real estate known as "LAND" in its metaverse. Ownership is recorded through non-fungible tokens (NFTs), which are digital records stored on the blockchain.
While blockchain projects should be viewed with healthy skepticism, The Sandbox is making impressive progress. On Nov. 29, the platform launched the Alpha version of its virtual world, which features 18 game experiences and will run until December 19th. Its developer Pixowl (a subsidiary of Hong Kong-based game developer Animoca Brands) also has real-world experience developing mobile games (the Sandbox Franchise) for Android and Apple IOS, which adds to its credibility.
With a market cap of $51 billion, Cardano is the sixth-largest cryptocurrency on Earth -- and for good reason. It aims to compete with Ethereum to attract user-created autonomous programs called decentralized applications (dApps) and boasts better speed and scalability than its larger rival.
DApps dramatically increase the potential of blockchain technology outside of just storing and transmitting value. They enable use cases ranging from decentralized cryptocurrency exchanges to finance platforms that allow investors to borrow and lend their cryptocurrency holdings. Cardano's dApps use the network's native token (ADA) to interact and pay fees on its network, so they will have a direct impact on demand for the asset and its valuation.
Cardano enabled smart contracts (self-executing programs used to create dApps) through its Alonzo upgrade in September. And it may take several years for the platform to boast a well-developed dApp ecosystem like its larger rival, Ethereum, which is home to over 3,000 projects. But Cardano aims to close the gap by offering superior functionality.
Unlike Ethereum, which uses a cumbersome proof-of-work (POW) protocol in which miners solve puzzles to validate transactions, Cardano uses a proof-of-stake system called Ouroboros. Here, the authority to validate transactions comes from ownership of Cardano's tokens.
Cardano's miners update the blockchain using existing coins, which is faster (Cardano can process 257 transactions per second compared to Ethereum's 15 to 20) and less environmentally harmful than POW systems. Ethereum plans to eventually switch to PoS, but it is unclear when that will happen, making Cardano a compelling platform for dApp developers who prioritize speed and scalability.
Betting on fundamentals
It can be tempting to hop on flashy cryptocurrencies that soar based on speculation instead of fundamentals. But over the long term, those coins tend to meet a bad end as the hype fades. The Sandbox and Cardano stand a better chance of sustaining their healthy growth rates because of their innovative use cases and technical advantages.