Over the past five years, perhaps the best investment you could've owned was Ethereum (CRYPTO: ETH). The world's first programmable blockchain has seen the price of ETH, its native token, skyrocket more than 13,000% (as of March 7, 2022) since March of 2017. The S&P 500's 94% total return during the same time period doesn't even come close.
While the future might not exactly resemble the past, there are some promising digital assets out there that could produce monster returns in the years ahead. If you're looking for the next Ethereum, Cardano (ADA -5.88%) and Solana (SOL -7.37%) both make compelling arguments for your investment dollars.
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Cardano
Founded in 2017 by Ethereum co-founder Charles Hoskinson, Cardano is currently the eighth most valuable cryptocurrency, with a market cap of $26.9 billion (as of March 7). Like Ethereum, Cardano enables the use of smart contracts, or self-executed computer programs that run when certain conditions between two parties are met. This structure allows for the proliferation of decentralized applications, like decentralized-finance (DeFi) protocols and non-fungible tokens, which so far have been the most promising use case for cryptocurrencies, in general.
While Ethereum is still in the process of launching a proof-of-stake (PoS) consensus mechanism, Cardano already has one in place. This is why Cardano's blockchain can process 250 transactions per second (TPS), much more than the 14 that Ethereum can today.
This gives Cardano a huge advantage to attract developers, particularly because speed and scalability are such a hot topic when it comes to cryptocurrencies. Looking ahead, the addition of Hydra, an upgrade that adds off-chain ledgers, could theoretically bump Cardano's throughput to 1 million TPS.
The use of academic research, as well as a five-stage development process, is what makes Cardano a unique project. Currently, it's in the last two phases, which include scaling with the implementation of side chains and governance features that will make the network self-sustainable. Once these are complete, it will unquestionably cement Cardano as the most thorough and well-thought-out blockchain out there.
As cryptocurrencies tumbled to start 2022, ADA, Cardano's native token, has shed 39% (as of March 7) of its value this year. This provides a nice entry point for long-term investors who believe in this crypto.
Solana
Solana was released to the public in 2020 by ex-Qualcomm engineers Anatoly Yakovenko and Greg Fitzgerald. It employs a PoS system, but also operates something called proof-of-history, a mechanism that adds a timestamp to each block to speed up processing times. As of March 7, Solana was the ninth-largest cryptocurrency, with a market value of $26.4 billion.
Like Ethereum and Cardano, Solana is a blockchain that enables smart contracts. But what makes Solana truly special is its fast transaction speeds and ultra-low costs.
Right now, the network can process 50,000 TPS at fractions of a penny each, making Solana a potential disruptor to the traditional finance industry. An analyst at Bank of America went so far as to call Solana the "Visa of the digital-asset ecosystem."
In fact, with the recent launch of Solana Pay, the project is taking direct aim at the lucrative electronic-payments space. Merchants can accept cryptocurrency payments with virtually no costs, while at the same time building a direct connection with customers that hasn't been possible before. This will be an exciting and interesting feature to pay attention to going forward.
Solana has also had a rough start to the year, as its native token SOL has fallen a jaw-dropping 51% (as of March 7). Geopolitical turmoil, plus inflation and pending interest-rate hikes, led investors to adopt a risk-off approach. But again, if you have a long-term mindset, which is absolutely necessary if you invest in digital assets, then Solana looks like a promising bet.
As the world of cryptocurrencies moves from one dominated by financial speculation to one characterized by increasing utility, I think both Cardano and Solana should benefit.
