Pay Attention to Cardano #100
Market Meditations | February 17, 2021
A beginner’s guide for trading Cardano ?
With so many altcoin choices, it can be difficult to know where to start making money.
In today’s newsletter, we provide a beginner’s guide for trading Cardano ?
Technicals, fundamentals, we’ve got it all ✅
Read, enjoy and share with your network. Let’s all grow richer together.
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Coinbase Gets $77 Billion Valuation ?
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MicroStrategy $900M to Buy More Bitcoin ?
Following a Tuesday announcement that MicroStrategy would be planning to buy $600 million in Bitcoin through a sale of convertible notes, the business intelligence firm has upped the ante by another $300 million. MicroStrategy said today it would be selling $900 million in convertible senior notes due in 2027 in a private offering to qualified institutional buyers. According to the firm’s estimates, the proceeds of the sale will be roughly $879 million. It added, however, that it could be as high as $1 billion “if the initial purchasers exercise in full their option to purchase additional notes.” Read more.
North Korean Hackers Steal $100 million+ From Crypto Firms ?
The U.S. government has charged North Korean three hackers in connection with an array of cybercrime, including thefts from hundreds of businesses including several in the cryptocurrency sector. For more on protecting your capital, check out our ? Essential Crypto Security Guide ? Much of the $1.3 billion figure cited by the Department of Justice on Wednesday appears linked to illicit money transfers from bank accounts. But DOJ statements cite several unnamed crypto firms, including a mining company in Slovenia that appears to service provider NiceHash, as targets of the hackers. NiceHash was attacked in December 2017, the same period referenced by the DOJ. Read more.
India to Levy Taxes on Crypto Trading and Gains ?
The Indian government is reportedly set to levy taxes on cryptocurrency trading and gains. Business Standard reported the news on Wednesday, citing an anonymous senior finance ministry official “privy to the development.” The official said both goods and services tax (GST) on the trading of cryptocurrencies and income tax (I-T) on crypto gains would be charged for the current financial year, April 2020 to March 2021. Read more.
Pay Attention to Cardano
Today we’re going to review and help you interpret the fundamental and technical analysis of Cardano, an altcoin that has recently been generating a noticeable amount of buzz.
The Cardano token (ADA) currently sits behind Polkadot (DOT) with a $26.8 Billion market cap. You may ask, however: “is Cardano important for the crypto ecosystem? What problem is it solving that Bitcoin or Ethereum don’t? Is it something I should look more into?” Let’s look at the answers.
Founded by Charles Hoskinson in 2017, Cardano is a decentralized public blockchain. You can think of Cardano as version 3.0 of the blockchain if you compared it to Bitcoin (version 1.0) and Ethereum (version 2.0).
It’s worth mentioning here that this does NOT imply Cardano’s token (ADA) is a better investment than Bitcoin or Ethereum—right now, we’re strictly speaking about the features of the Cardano project (to draw a more accessible comparison, we’re speaking about Tesla the manufacturer of cars and the problems it’s solving in the electric vehicle space, not TSLA stock).
Cardano is said to improve upon the work of Bitcoin and Ethereum in three core ways:
All cryptocurrencies process transactions differently:
Bitcoin relies on a Proof-of-Work model where everybody competes with one another to verify transactions using massive amounts of computing power. This wastes a lot of energy and is slow.
Ethereum is moving from Proof-of-Work to Proof-of-Stake where power to mine is proportional to percentage of coins staked, which reduces energy cost, but network congestion is still an issue.
Cardano solves the energy concern by using Ouroboros protocol which provides “up to four million times the energy efficiency of bitcoin.”
Cardano solves the network congestion concern by using RINA (Recursive Internetwork Architecture). RINA allows Cardano to process thousands of transactions per second whilst mitigating network congestion. Cardano can process 1,000 transactions per second (TPS) as opposed to Bitcoin which processes 3-7 TPS and Ethereum which processes 10-20 TPS.
As more people get involved in blockchain and cryptocurrency, it makes sense that innovative projects leveraging blockchain technology are created. The issue, however, is that each blockchain has its own set of protocols and systems, and one cannot interface with the other because it can’t understand its rules.
Imagine you’re in a room with 300 different people who speak 300 different languages. It’d be next to impossible for anybody to communicate to each other without a middleman like a translator. What if, however, a piece of technology existed where you can speak your language and that information translates automatically to a language the other party understands?
This technology in blockchain is known as an “atomic swap” and is an element of Cardano’s blockchain. An atomic swap enables one blockchain to transfer value to another directly without an intermediary to translate between the two, creating an interoperable ecosystem.
The promise of a truly decentralized ecosystem using blockchain technology, whilst revolutionary, costs money to build and maintain after launch. What happens if the money runs out? Cardano solves this problem with its “treasury” system. How does it work?
The treasury itself is a smart contract that’s computer code instructs it to release funds periodically to developers that want to improve the project. How does it know who to release funds to?
If a developer would like to implement a change, they must submit an investment proposal to the Cardano community that outlines the change and cost to implement. The community (which anyone who stakes ADA can be a part of) votes on which proposals the treasury should fund and after a fixed amount of time, the smart contract releases the funds automatically based on the votes. If you’d like to learn more about this treasury system, you can do so here.
Cardano Potential Challenges
Seems bullish fundamentals so far. Market Meditations takes pride in showing our readers the other side of the coin, always.
Some critics argue that the treasury system we just spoke about actually works against the protocol because the people who are allowed to vote (i.e. people staking ADA) may not be experts in what updates to the protocol are needed and what updates are not needed. If decisions are made by uninformed voters, this could hurt the project.
Another drawback is that many features have been promised, but yet to be implemented (it’s noteworthy that this concern is not exclusive to Cardano). One example is that of the “Goguen” era, which promises to give increased flexibility to developers who want to build on smart contract applications on Cardano’s blockchain. Similarly, news has been circulating that Cardano is in the final stages of securing a huge government contract in Africa, which would trigger quite a bit of excitement if it is finalized. Nothing, however, is confirmed.
Perhaps the biggest concern is that Cardano is not the only PoS blockchain and thus is competing with the likes of Ethereum, Solana, Polkadot, Cosmos, and more. No matter how valuable a project’s blockchain is, without adoption it is difficult to sustain. What can separate Cardano? If you’re interested in learning more about Cardano in detail, you can read the full Cardano whitepaper here.
Now, let’s jump into some technical analysis on Cardano’s token ADA.
ADA has the room to outperform BTC in the short to medium term.
The ADA/BTC pair has been consolidating in a tight range for almost three years (the beginning of this massive range is back in 2018 March).
A pattern we’ve seen play out with many altcoins like ADA this year, a break of resistance at the top of the range should create an explosive move upwards to the 0.000038 level. An ambitious target but more than possible in current market conditions.
And there you have it. A beginner’s guide to Cardano: spanning fundamentals (both bullish and bearish) as well as some technical analysis.
We will conclude with a warning call to our readers.
Whether you’re a seasoned crypto veteran or someone recently introduced to the industry by a friend or family member, online article, or countless ads that plaster your social media, it’s likely that after learning about Bitcoin and Ethereum, you have come across the elusive, shiny allure of altcoins.
Which altcoins should I buy and what type of profit can I expect? Whilst the answer to this question might seem straightforward, the reality is the altcoin market is filled with a variety of different coins. We know one way markets incentivize people to invest is with a narrative—you’ve got to buy coin X because it revolutionizes Y!
Check out my YouTube ? video ? where I discuss the concept of narrative investing in more detail. Because pump and dump schemes create any narrative to encourage unknowing people to buy into their coin before crashing the price, it’s important to differentiate between an authentic, fundamentally sound narrative and manipulation.
How to Protect Your Profits with Trader SZ
Saeed Zaman is a well-known trader and mentor. He holds a degree in mathematics and has been a full-time trader for 8 years, covering a range of markets with a focus on FX.
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Disclaimer: The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision.