Cryptocurrency is facing a rough patch right now, with the market's total 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 a time of spiraling global inflation. Ethereum (ETH 2.15%) and Cardano (ADA 1.69%) are excellent ways to bet on these long-term trends.
1. Ethereum
Never underestimate the power of a strong brand. With a market cap of $326 billion, Ethereum represents a whopping 19% of the cryptocurrency market's capitalization. Although the network has fallen behind newer blockchains in speed, it can maintain market dominance because of its first-mover advantage and active development community.
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Founded in 2015, Ethereum expanded the possibilities of blockchain technology by allowing users to program self-executing smart contracts to create decentralized applications (dApps). These autonomous programs range from digital art markets to decentralized exchanges where users can buy and sell cryptocurrencies. They have made Ethereum a household name among cryptocurrency investors.
With a transaction capacity of just 15 per second, the Ethereum network suffers from congestion and high transaction costs. But its name recognition still allows it to attract high-impact projects like Shiba Inu -- a $14 billion token that chose to build on the Ethereum network because, as the Shiba Inu white paper 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. The changes will include switching from a proof-of-work (PoW) consensus mechanism (where miners use enormous computing power to solve puzzles and verify transactions) to a proof-of-stake system (PoS) where miners solve puzzles using existing coins. PoS is faster and doesn't consume as much electricity.
2. Cardano
With a market cap of $40 billion, Cardano is the sixth-largest cryptocurrency on the planet. Although it still lacks Ethereum's name recognition, it makes up for that with superior speed and technical capabilities. The platform is also constantly improving itself to keep up with the competition.
Unlike Ethereum, Cardano already has a PoS validation system that can handle about 250 transactions per second. The platform's developer, Input Output Hong Kong (IOHK), also plans to implement an update called Hydra which 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 it will boost the platform's speed. But Cardano is already attracting its fair share of dApp development.
In January, the platform got its first decentralized finance (DeFi) exchange SundaeSwap, which allows users to trade cryptocurrencies and earn interest on their holdings without requiring a centralized intermediary. This project is an impressive vote of confidence in the Cardano network.
Holding for the long haul
The cryptocurrency market is notoriously volatile, with several high-profile crashes since its inception in 2009. But over the long haul, investors with diamond hands have made some pretty life-changing returns. While it is impossible to know when this latest dip will turn around, Ethereum and Cardano look poised to ride the rebound because of their strong branding and active development communities.
