Want to earn potentially big returns? Look no further than crypto. While the market is in a slump right now, it has a track record of bouncing back from its declines as the technology improves and its use-cases increase.
Let's explore why Cardano (CRYPTO: ADA) and Terra (CRYPTO: LUNA) could help power the crypto rebound and boost your portfolio.
1. Cardano
Launched in 2017, Cardano is a blockchain network designed to host decentralized applications (dApps) -- autonomous programs that use self-executing smart contracts to provide services. Cardano boasts impressive technical specs, and its active development team could help it maintain a long-term edge over its rivals.
Image source: Getty Images.
According to data from coinmarketcap.com, Cardano can process up to 257 transactions per second, compared to Bitcoin's 4.6 and Ethereum's 15 to 20. This speed can be credited to its consensus mechanism, Ouroboros -- a proof-of-stake system where miners verify transactions using existing tokens instead of solving complex math puzzles like older proof-of-work blockchains.
That said, Cardano is still significantly slower than other proof-of-stake blockchains like Solana, which can process 50,000 transactions per second. But Cardano's developer, Input Output Hong Kong, isn't resting on its laurels.
The developers plan to boost scalability through an update called Hydra, which could go live by late 2022. Hydra is designed to increase Cardano's processing efficiency and could take its capacity to 1 million transactions per second -- although Input Output Hong Kong stresses that this is an aspirational target, and the main goal is to scale the platform with demand.
2. Terra
Founded in 2018, Terra is a blockchain platform designed to enable the use of stablecoins -- cryptocurrencies with values that are tied to those of traditional currencies like the U.S. dollar or the euro. The asset looks poised for success because of its potential for real-world utility.
Although cryptocurrencies are already widely used to store value and make payments, their volatility can be a big challenge. For example, many merchants would be hesitant to accept crypto as payment because of the possibility that its value could have fallen a lot by the time they need to convert it back into a national currency. Likewise, many savers don't want to see their net worth rapidly fluctuate compared to their everyday expenses. Terra aims to solve these problems by creating stable digital assets.
The Terra protocol consists of two types of tokens: Terra, and LUNA. Terra refers to a suite of stable coins that track the price of real-world currencies such as the U.S. dollar (TerraUSD) or the Korean won (TerraKRW). LUNA is the blockchain's native token, which absorbs the volatility of the Terra stablecoins and grows based on user uptake of the platform.
With a market cap of $27 billion, Terra's native token, LUNA is already the eighth-largest cryptocurrency, indicating healthy demand for the service it provides. The platform is poised for continued growth as people become more comfortable saving and spending digital assets.
Betting on a crypto rebound
Cryptocurrency has been in a slump recently -- the total market value of all tokens has fallen by 23% to $1.7 trillion thus far in 2022. But the industry has a track record of bouncing back from its declines. Cardano and the Terra are great ways to bet on this opportunity because of their technical capabilities and potential for real-world usefulness.
10 stocks we like better than Cardano
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Cardano wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of January 20, 2022
Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool owns and recommends Bitcoin, Ethereum, and Terra. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
