Could Cardano Hit $500 Billion By 2025?

Cryptocurrency continues to fascinate investors, and developers keep coming up with new forms of cryptocurrency as well as new uses for tokens and their platforms. As investors pour money into what they hope will be a profitable investment, the total value of cryptocurrencies has skyrocketed, with Bitcoin alone having a market cap of more than $1 trillion. Consider that only five publicly trade U.S. companies have attained that status: Apple, Tesla, Amazon, Microsoft, and Alphabet.

Ethereum, the second-most popular cryptocurrency, has reached a market cap of more than $500 billion. As more money flows into these markets, other cryptocurrencies are likely to hit these milestones. Cardano (CRYPTO:ADA) is a popular cryptocurrency that has many uses and is attracting investors. It has a market cap of $56 billion at today's price of $1.68. Can it reach $500 billion by 2025?

What is Cardano and why is it useful?

Cardano is one of a new model of cryptocurrency that delivers more value than a simple token. Bitcoin, the original cryptocurrency, stores value in its token. Cardano, on the other hand, has value in its applications, and its token services transactions in its applications.

The real-world implication of this is that the Cardano network can support all sorts of transactions in many industries. The most obvious is finance -- users can conduct financial transactions over the Cardano network easily, quickly, and cheaply while bypassing intermediaries such as banks. That's why it's called decentralized finance (DeFi). The developers say that they're striving for a more democratic process that serves all parts of the population, and allowing people to transact peer-to-peer is a step in that direction.

Cardano also has uses for the educational and health industries in addition to others. Users store data in linked blocks, hence the name blockchain. This data can be used to simply and quickly verify data such as drug types, which can lead to quicker and more accurate checks for patients, or certifications and training for people in the job market.

Building up its network

Cardano has been around since 2017. Its creators have developed the platform in stages, scaling and adding features with new upgrades, with the first stage introducing the token and exchange. Cardano uses a proof-of-stake network, which simply means that users need to "stake" their ADA tokens to be able to participate in the network. That makes it cheaper to run that Bitcoin, which uses a proof-of-work network, compelling users to solve puzzles that cost a lot in energy.

The second stage added the DeFi. Cardano is currently in what it calls the Goguen, or third stage, where it begins to support decentralized apps (dApps), which is a fancy name for projects using the platform's technology. Some examples are Atall PRISM, a dApp for sharing educational credentials, and Atala SCAN, which verifies that retail products are authentic. It's also the stage of smart contracts, or digital contracts that automatically execute when certain conditions are met.

In Cardano's fourth stage, the creators expect to improve and scale the model, and they envision a fifth and final stage where it moves into a community-centered model that's self-sustainable.

Can it justify its value?

Cardano has gained more than 1,200% over the past year, but it's recently started to sink. It's not clear why, although the market cap is already bloated. Most recently, it was delisted from the eToro trading platform, which sparked a further decline. Many cryptocurrencies have started to decline over the past few weeks, likely due to general market movements.

Cardano offers more utility than Shiba Inu, for example, but it's hard to say what the intrinsic worth of the token is when its assets are limited and it operates on a completely digital platform. With cryptocurrency, the value of the token is generally whatever the market assigns it, whether based on hype or real-world import. That's in contrast to stocks, which typically have value based on assets, revenue, earnings, or other more quantifiable factors.

However, Cardano does offer more value than other tokens due to its platform's potential to have real-world impact. And as it scales and improves, more users are likely to join or increase their usage. So back to the original question: Can Cardano hit a $500 billion market cap by 2025? I don't have a crystal ball, but I think it certainly can.

This article first appeared in The Motley Fool.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Bitcoin, Ethereum, Microsoft, and Tesla. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon, long March 2023 $120 calls on Apple, short January 2022 $1,940 calls on Amazon, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.