Want an asset class capable of generating explosive returns? Look no further than cryptocurrency. While the market has had some weakness recently, it has a record of bouncing back from similar declines in the past. Let's explore why Cardano (ADA -1.27%) and Ripple (XRP 1.23%) could help lead the sector's resurgence over the long term.
Blockchain technology is evolving rapidly. And cryptocurrencies that stand the test of time must consistently improve to keep up with the competition -- this is where Cardano shines. The platform's track record of successful updates and its ambitious long-term goals makes it an excellent pick for investors.
Cardano's developers use a phased strategy instead of trying to do everything at once. In the initial two milestones (dubbed Byron and Shelley), the team launched Cardano and implemented its transaction verification mechanism Ouroboros -- a proof-of-stake system where miners update the ledger using coins they own. In the third phase, Goguen, Cardano enabled smart contracts, which are self-executing programs stored on the blockchain.
Smart contracts are the foundation of decentralized applications, which expand the blockchain's use cases into things like decentralized exchanges and digital art markets. But Cardano is just getting started.
According to its development roadmap, Cardano's next phase of development, Basho, will focus on scalability. It is unclear when this will go live, but it may introduce technologies like Hydra, designed to break the blockchain into multiple parts to prevent bottlenecks. These changes could send Cardano'sprocessing capacity from its current 250 transactions per second to one million. But the developers stress that one million is an "aspirational" target, and they plan to scale Cardano based on demand.
Many cryptocurrencies claim to have real-world benefits. But Ripple has made significant progress toward making that goal a reality through its international payments solution, RippleNet. The asset's mainstream adoption and the vast addressable market could create massive value for investors.
According to Research and Markets, the global digital remittance industry could grow at a compound annual growth rate (CAGR) of 13.3% to $42.5 billion by 2028 as globalization increases the need to move money across borders. The opportunity is massive, and Ripple can capture a slice of it because of its low transaction fees and super-fast processing times.
The platform can process a transaction in just three to five seconds for a fee of 0.0001 XRP tokens (each XRP is worth $0.81, so this is just a fraction of a cent).
Ripple sets itself apart from other cryptocurrencies through its real-world partnerships. Ripple operates an enterprise blockchain network called RippleNet designed to help companies transfer money. RippleNet has partnered with over 100 mainstream financial institutions, including multinational credit card company American Express. Its mainstream adoption is an impressive vote of confidence in the developers' technology.
The Ripple Foundation is currently fighting a legal battle to get back into the U.S. market. Investors need to keep an eye on this high-level tussle, but RippleNet is still doing plenty of business in overseas markets.
Betting on the cryptocurrency rebound
No one knows for sure when the crypto bear market will end. But it is beginning to show some signs of life -- up 17% to $2.1 trillion in the last 30 days. Cardano and Ripple could help power a longer-term resurgence because of their active development teams and potential for real-world usefulness.