Over the past five years, perhaps the best investment you could have owned was Ethereum (CRYPTO:ETH). The world’s first programmable blockchain has seen the price of ETH, its native token, skyrocket over 13,000% (as of March 7, 2022) since March 2017. S&P500The total return of 94% over the same period is far from close.
While the future may not look exactly like the past, there are promising digital assets that could produce monster returns in the years to come. If you are looking for the next Ethereum, gimbal (ADA -5.06% ) and Solana ( GROUND -5.70% ) both make compelling cases for your investment dollars.
Founded in 2017 by Ethereum co-founder Charles Hoskinson, Cardano is currently the eighth most valuable cryptocurrency, with a market capitalization of $26.9 billion (as of March 7). Like Ethereum, Cardano allows the use of smart contracts, or self-executing 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 launching a proof of stake (PoS) consensus mechanism, Cardano already has one in place. This is why the Cardano blockchain can process 250 transactions per second (TPS), far more than the 14 that Ethereum can today.
This gives Cardano a huge advantage in attracting developers, especially since speed and scalability are such a hot topic when it comes to cryptocurrencies. Going forward, the addition of Hydra, an upgrade that adds off-chain ledgers, could theoretically boost Cardano’s throughput to 1 million TPS.
The use of academic research, along with a five-step development process, is what makes Cardano unique. Currently, it is in the final two phases, which include scaling with the implementation of side chains and governance features that will make the network self-sustaining. Once these are completed, it will undoubtedly cement Cardano as the most comprehensive and thoughtful blockchain out there.
As cryptocurrencies tumbled to start 2022, ADA, Cardano’s native token, has lost 39% (as of March 7) of its value this year. This provides a good entry point for long-term investors who believe in this crypto.
Solana was made public in 2020 by formerQualcomm engineers Anatoly Yakovenko and Greg Fitzgerald. It uses a PoS system, but also leverages 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 really special are its fast transaction speeds and ultra-low costs.
Currently, the network can process 50,000 TPS at fractions of a penny each, making Solana a potential disruptor to the traditional financial industry. An analyst at Bank of America went so far as to call Solana the “Visa of the digital asset ecosystem.”
Indeed, with the recent launch of Solana Pay, the project directly targets the lucrative space of electronic payments. Merchants can accept cryptocurrency payments at virtually no cost, while establishing a direct connection to customers that was not possible before. This will be an exciting and interesting feature to pay attention to in the future.
Solana also had a rocky start to the year, as its native token SOL fell 51% (as of March 7). Geopolitical turmoil, inflation and impending interest rate hikes have led investors to adopt a risk aversion approach. But again, if you have a long-term mindset, which is absolutely necessary if you’re investing in digital assets, then Solana looks like a promising bet.
As the cryptocurrency world shifts from a world dominated by financial speculation to one characterized by increasing utility, I believe Cardano and Solana stand to benefit.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.