Will the biggest and best-known crypto assets of today, like Bitcoin (BTC +4.42%), continue to hold up against newer players like Cardano (ADA +2.86%), or will they go the way of the dodo?
To address this question, let's examine how and why these two coins might flourish during the coming decade and which is more likely to provide a good return for investors.
CRYPTO: BTC
Key Data Points
Bitcoin is about to get a shot in the arm
You're probably already familiar with the investment thesis for Bitcoin: It's a asset with a firm supply cap that's hard for any given set of actors to control or disrupt. There can only ever be 21 million Bitcoins in circulation (about 19.8 million now circulate), which means that it should, in theory, maintain its purchasing power against fiat currencies. Furthermore, because it gets more and more difficult to mine over time, there's a structural basis for rising prices, as any increase in demand will be chasing less and less supply. Notably, its blockchain doesn't need to be upgraded at all for this process to occur.
That thesis calls for the asset to be continually relevant over the long term, even longer than the decade we're thinking about right now. During the last 10 years, Bitcoin's price has risen by a mind-boggling 41,640%, suggesting that there was indeed some real meat on the bone.
The coin could soon be getting a big catalyst, too. People around the globe already hold it, but now many states and countries are buying it to hold as part of their asset mix. In the U.S., there's even a proposal for it to be the biggest holding in a hypothetical national cryptocurrency repository. That would represent perhaps the final frontier of mainstream acceptance and adoption.
But here's the thing. Bitcoin doesn't need to be included on any government's balance sheet for its thesis to keep playing out. That makes it a very compelling asset.
CRYPTO: ADA
Key Data Points
Keeping pace with a glacier is harder than it sounds
Cardano's appeal is very different from Bitcoin's.
Cardano was created to address many of the problems associated with Ethereum, specifically its technical constraints, which kept Ethereum's gas (user) fees high and its transaction times too long. Cardano's solution is a slow development cycle that relies heavily on collaboration, consensus, and peer review to bypass Ethereum's problems and provide a consistent framework for users and developers on the chain to work within.
So Cardano's investment thesis is essentially that its better technical leadership and more careful planning process will let it unseat Ethereum and other blockchains over time by undercutting them and outperforming their ecosystems. If this turns out to be true, a blossoming set of decentralized finance (DeFi) projects on its chain would be a key sign, along with plenty of trading volume. And as the ninth-largest cryptocurrency by market cap, it isn't a laggard.
But this is a case where the long-term view does not necessarily favor buying the coin.
After all, technical innovation is not necessary for Bitcoin's thesis to continue working and generating value. For Cardano, winning against other chains over time is the only way forward -- and that's a tall order. The longer you look, the more precarious Cardano's position seems, as it will likely need to fend off more and more contenders for its share of the cryptocurrency sector.
So investors should probably go with Bitcoin if they're interested in buying and holding a coin for the next 10 years. Even if Cardano does well for a while, it's hard to see it outpacing Bitcoin over the long run.
