status

Cardano will be here for at least another 5 years

Published 3.5.2023

People could first buy ADA in 2017 when the bull market was just peaking. Cardano is actually a few years older than that, and the project's roots go back to 2014/2015. However, what is particularly important is the year when the blockchain was launched, which is 2017. Cardano survived the crypto-winter and is now in its second bear market. We are in 2023, so Cardano has been around for more than 5 full years. If you look at the projects in the top 10 between 2017 and 2023, you will see that only 4 projects have remained in the top 10. Bitcoin, Ethereum, Ripple, and Cardano. It is very likely that Cardano will be around for at least another 5 years if the Lindy Effect theory is to be believed.

TLDR

Cardano has a strong community, which is a necessary prerequisite for success alongside technology. The Cardano brand is very popular, even more so than Bitcoin. The Lindy effect of Bitcoin and Cardano is very similar and both projects have almost the same chance of survival. The real rivals are gold, fiat currencies, and the financial system, whose Lindy effect is in the thousands of years.

Being in the top 10 since the beginning is an achievement

The blockchain industry is fiercely competitive and new projects are literally being created every day. Staying in the top 10 throughout its existence is certainly no coincidence and there are valid reasons why this is the case. Cardano may have made its way into people's consciousness, and anyone who knows the older projects, i.e. Bitcoin, Ethereum, and Ripple, will probably know Cardano as well. The project needs more time to gain people's trust. Trust cannot be gained in a single year. Bitcoin had no chance to succeed in its first year because so few people trusted it. In the first 5 years, its fate was still very uncertain. In fact, we do not know how long it will be before the oldest project is trusted by, say, 30% of the population.

Newer projects will have it easier in terms of adoption because people believe that if one blockchain works, the others will very likely work as well. No relevant project in the top 20 has ever ended overnight due to a technical bug or hack. Most blockchain networks and smart contract platforms work very reliably. Blockchains mainly have problems with low scalability, which is reflected in slow and expensive transactions. However, these issues are being addressed and will very likely determine the top 10 ranking in the coming decades.

Staying in the top 10 is important because adoption is also about people knowing the brand and having an emotion associated with it. Recall that Cardano received the highest-ranked crypto brand in the Top Brand Intimacy 2022 report. This is extremely important for the future fate of the project, as people have positive emotions associated with Cardano, and the brand is perceived better than Bitcoin and Ethereum, which finished lower in the ranking.

This is very likely a credit to the very strong Cardano community, and from our perspective, the community is as important as the technology. A blockchain that nobody uses has no chance to take off, and vice versa, a large community cannot sustain a project in the long term that does not have a solid technological foundation. The combination of technology and community is essential for success.

Now let's take a look at what the Lindy effect is and why Cardano will be around for at least another 5 years.

What is the Lindy effect?

The Lindy effect is a theory that was developed by Nassim Nicholas Taleb in his book "Antifragile: Things That Gain From Disorder". The theory proposes that the life expectancy of a non-perishable item, idea, or technology increases with its age. In other words, the longer something has been around, the more likely it is to continue to exist and be useful in the future.

The Lindy effect theory has relevance in various fields such as technology, economics, and culture. For instance, in technology, the longer a technology has been around, the more stable and reliable it is likely to be. This is why older technologies like landline phones, radio, and paper books still exist despite the emergence of newer technologies.

Similarly, in economics, companies that have been around for a long time, such as General Electric and Ford, are more likely to survive economic downturns and disruptions compared to newer companies. This is because they have a history of navigating difficult times and have established customer bases.

In culture, the Lindy effect theory suggests that the classics, such as Shakespeare's plays and Beethoven's symphonies, will continue to be relevant and appreciated in the future, simply because they have been around for so long.

When the Lindy effect of one project collides with the Lindy effect of another project, it is a case of competition between the two. Cryptocurrencies, and now it doesn't matter if we are talking about Cardano, Bitcoin, or Ethereum, will compete with the strong Lindy effect of fiat currencies.

Money, as we know it, has been around for thousands of years and has a strong Lindy effect. It is widely accepted, used as a store of value, and is backed by governments. Cryptocurrencies therefore also partly compete with the Lindy effect of governments.

Blockchain is a relatively new technology that has been around for just over a decade and has a smaller user base and acceptance. Therefore, it is unlikely that Bitcoin (or another blockchain project) will be able to completely replace money in the near future due to the stronger Lindy effect of money. However, blockchain technology can still have a significant impact on the financial industry by offering unique advantages over traditional forms of money, such as its decentralized nature, security, and low transaction fees.

To be successful, the blockchain industry must continue to build trust and adoption through innovation, education, and user-friendly interfaces. Crypto communities should realize that we should work with, rather than against, existing financial systems to create interoperability and widespread acceptance.

From our perspective, Cardano (and other smart contract platforms) has the advantage that the mission of the project is not to replace fiat currencies or governments but to create an alternative financial system. Moreover, Cardano can find applications in many industries and its use is not limited to finance. Of course, the current big players in the market also have a strong Lindy effect. It is a bit easier to fight on multiple fronts to succeed than to attempt the near impossible, i.e. to beat fiat currencies. Whatever you think of Web3, it's certainly much easier to use NFTs in games, for example, or to tokenize existing financial assets than to replace fiat currencies.

Communities often don't realize that blockchain projects have one opponent and that is the strong Lindy effect of fiat currencies and states. DeFi has a chance to rival commercial banks. Cardano's success in this area will certainly be important for Bitcoin adoption as well.

The lindy effect of individual blockchain projects is very similar and it is not even a matter of decades. The existence of gold, fiat currencies, governments, and states is in the order of thousands of years. Does it make sense for the Bitcoin community to consider Cardano a competitor and vice versa? In reality, both projects have a very similar chance of survival, and the true rival is significantly stronger.

Conclusion

Bitcoin is likely to be around for another decade. If Cardano stays in the top 10 for another 5 years, its lifespan will also be counted in decades. No one knows exactly when the half-life of a project will be. It can be assumed that every project in the top 10 is considered relevant by people. Existence will be mainly determined by the long-term economic sustainability of blockchain networks (security budget) and adoption rates. We should not underestimate the technological progress that is absolutely necessary for the next wave of adoption. The question remains what people will actually use blockchain for? Replacing fiat currencies with volatile cryptocurrencies seems almost impossible. Creating an alternative financial system, or finding uses in other industries, is much easier. Cardano is definitely on a good path to success, but it's certainly not going to be easy and everyone can help. The first thing you can do is realize who the real rival for blockchain is and how it could replace inefficient and expensive middlemen.

Featured:

Related articles

Did you enjoy this article? Other great articles by the same author