Dogecoin (DOGE +4.64%) and Cardano (ADA +4.55%) are both smaller cryptocurrencies that reached their all-time highs in 2021. Yet over the past four years, Dogecoin and Cardano have declined by approximately 30% and 70%, respectively, while Bitcoin (BTC +2.57%) has rallied by more than 80%.
Dogecoin and Cardano both attracted a significant number of buyers during the buying frenzy in smaller altcoins. Still, they lost their luster as rising interest rates drove investors toward more conservative investments. Bitcoin and Ether (ETH +3.48%), which had clearer long-term catalysts, also pulled investors away from the smaller and more speculative tokens.
Should contrarian investors buy Dogecoin and Cardano as turnaround plays? Let's review their key differences, challenges, and potential catalysts to make an informed decision.
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Dogecoin is still tough to value
Dogecoin was launched as a parody of Bitcoin in 2013. It was named after the popular meme featuring a Shiba Inu dog and was created from the open-source code for Litecoin (LTC +1.45%) -- which itself was forked (split off) from Bitcoin's blockchain in 2011.
Like Bitcoin and Litecoin, Dogecoin is mined with the energy-intensive (PoW) consensus mechanism. But unlike those two tokens, which both have maximum supply limits, Dogecoin's supply is unlimited and currently has a circulating supply of 168 billion tokens. Dogecoin's supporters believe that the design will encourage more people to spend it instead of hoarding it as an investment, but it also makes it impossible to value by its scarcity.
CRYPTO: DOGE
Key Data Points
As a PoW blockchain, Dogecoin doesn't natively support smart contracts -- which support the development of decentralized apps (dApps), non-fungible tokens (NFTs), and other crypto assets. Unlike proof-of-stake (PoS) blockchains like Ethereum, which natively support smart contracts, Dogecoin cannot be valued solely by the growth of its developer ecosystem.
Nevertheless, Dogecoin attracted significant attention from celebrity investors, including Elon Musk, Mark Cuban, and Snoop Dogg. Musk's unpredictable tweets about Dogecoin often drove its price higher, and the recent approval of its first spot price exchange-traded fund (ETF) might draw in more retail and institutional investors. It could also attract more developers with Dogechain, a new Layer 2 (L2) solution built on Polygon's PoS blockchain, which provides support for Ethereum Virtual Machine (EVM) apps.
Dogecoin is challenging to value, but more companies could consider accumulating it as a hedge against inflation. For example, CleanCore Solutions, a producer of ozone cleaning products, recently announced its plans to acquire 5% of Dogecoin's entire supply for its own "Dogecoin Treasury". That vote of confidence could stabilize its volatile price.
Cardano has clearer near-term catalysts
Cardano was created by Ethereum's co-founder Charles Hoskinson in 2015. It's a PoS blockchain like Ethereum, which means its tokens can only be staked (locked up for interest-like rewards) instead of actively mined. It also natively supports smart contracts.
Unlike other smaller PoS tokens, many of which were minted on Ethereum, Cardano minted its tokens on its own Ouroboros PoS blockchain. There are currently 36 billion Cardano tokens in circulation, with a fixed maximum supply of 45 billion tokens.
CRYPTO: ADA
Key Data Points
More than 70% of Cardano's circulating supply has already been staked, so less than 30% of its tokens are actually available for trading. That tight supply could set the stage for a fierce rally if it attracts more attention from large investors.
Therefore, Cardano is valued by both the growth of its developer ecosystem and its scarcity. However, it differentiates itself from other PoS blockchains in two key ways. First, all of the projects launched on its blockchain require formal peer reviews to ensure their security and scalability.
Second, it's much faster than Ethereum. Cardano's Layer 1 (L1) blockchain can achieve speeds of approximately 250 transactions per second (TPS), compared to Ethereum's average L1 speed of just 15-30 TPS. Its L2 Hydra heads, which bundle transactions together so they can be processed off-chain, can achieve even higher speeds of 1,000 TPS. Those higher speeds should widen its moat against even faster PoS blockchains, such as Solana.
The Securities and Exchange Commission (SEC) has not yet approved any spot price ETFs for Cardano. However, its recent approvals of the first spot price ETFs for XRP (XRP +2.97%) and Dogecoin suggest it's only a matter of time before the first Cardano ETFs arrive.
The better buy: Cardano
Cardano doesn't generate as much buzz as Dogecoin, but it should have more upside potential. Cardano has clear long-term catalysts, but Dogecoin still seems like a meme coin instead of a future blue chip cryptocurrency like Bitcoin and Ether.
