There are thousands of cryptocurrencies out there, but a select few have offered enough promise to make their way up the market-value charts. And one of these popular players is Cardano (ADA 1.06%). This cryptocurrency is now the sixth biggest by market value, according to CoinMarketCap, and it's climbed more than 700% so far this year.
But Cardano's gains may just be beginning, and right now looks like a good time to get in on this exciting young player. Here are three reasons why.
1. The story has just started
Cardano launched in 2017, but the blockchain still is in its early days. It recently completed a key step in its development. This fall, it launched smart contract functionality, which allows for the building of decentralized applications (dApps) on the blockchain. This is a major event because dApps offer real-world utility in areas from finance to gaming.
Right now, more than 900 scripts for dApps exist on Cardano, the Vercel app shows. But it may take time to deploy dApps on a grand scale. Cardano has been methodical about its development (more on that later), and that's OK. It means that if we get in on the Cardano story today, which is early on, there likely will be plenty of catalysts for gains ahead.
2. It's getting even faster
One problem with cryptocurrency transactions has been speed. Market-giant Ethereum currently processes about 30 transactions per second -- an upgrade in 2022 should increase that to 100,000. Right now, Cardano beats Ethereum and many others. It processes about 250 transactions per second.
But wait a minute... won't the Ethereum upgrade crush Cardano? Not so fast.
Cardano, too, is working on getting even faster. Through its Hydra layer-2 system, Cardano eventually should be able to handle 1 million transactions per second. Hydra works by using off-chain "heads" for certain transactions.
The Hydra launch is expected at some point next year and could push Cardano higher. But more importantly, it gives Cardano a reason to gain over the long term. For people to consistently turn to a blockchain for financial operations or anything else, speed of transactions will be key.
3. Well-thought-out development
Cardano has a plan. Developers know what's coming next, and so can you. That's important when you're investing in an up-and-coming player.
Cardano has set out a five-stage roadmap with details of how it will get to its final goal of becoming a self-sustaining, completely decentralized network. It's currently working on the last two stages.
The cryptocurrency also relies on peer review before launching changes or updates. This may slow things down, but it reduces the chances of glitches down the road. So it's worth taking more time today if it means smooth sailing into the future.
It's important to remember that cryptocurrency investments are risky. Never invest more than what you can afford to lose. If you're comfortable with this, you may want to add Cardano to your portfolio. Its development efforts today could translate into leadership tomorrow.