Why do people hold ADA? Most people see cryptocurrencies as an investment, which is why they buy them. Changing perceptions can be difficult as it requires a change in thinking and seeing things in a broader context. If cryptocurrencies are to succeed, it is imperative that people's perceptions change. We dare say that this is one of the biggest obstacles to adoption. It must be very difficult for newcomers to get to grips with the different views of what exactly cryptocurrencies are. Moreover, it varies considerably from project to project. We certainly won't tell you precisely what ADA is, as opinions can be subjective. We believe we can convince you that it is not just an empty investment. TLDR For newcomers, cryptocurrencies are not money because they follow charts and perceive the value of things in fiat currencies just like the majority of the population. Cardano, together with algorithmic stablecoins, can be an independent monetary system with its own payment networks and financial services. ADA might not necessarily become a medium of exchange, but as a reserve currency or medium of decentralization, it can play a much more important role. People should see the ADA as the key to freedom and the ability to control the technology they will use to connect financially with the outside world. Why do people see cryptocurrencies as an investment? No one will give you ADA just for free when you ask for it. You have to buy the coins yourself on the exchange. Once you do that, you start wondering the very next day if you made a profit or a loss. You'll probably start watching a chart of the value against the USD. This behaviour is logical. At the same time, it is one of the main reasons why it is hard for people to perceive cryptocurrencies as a new form of money. This is because they treat them exactly the same as other investments. As you watch the chart, you wonder about the change in purchasing power. You'll immediately be inclined to buy more profitably during a drop in value and sell at the peak. Because the vast majority of holders do this, and that includes institutions, we can observe volatility in the tens of percentages over short periods of time. This has an impact on perception. Indeed, newcomers must question many of the narratives and memes they may see around them. While most people earn money through their work, they have to buy cryptocurrencies. The buying process is not seen as an entry into a new financial world. It is not easy to leave the current financial world as the ties to it remain very strong. One false narrative tries to get people to think that they should not see the value of the ADA in the context of the USD. They say that 1 ADA is still just 1 ADA. This must seem very silly, as most people on the planet perceive the value of things around them in fiat currencies. Is a newcomer to be included in a small group of people who start to perceive the world quite differently from the rest of the population? That may not seem like attractive behaviour. Let's illustrate this with an example. NFT image has a value of 1000 ADA. Is it a lot or a little? If you bought ADA for $0.3, you perceive the value of the NFT as 300 USD. The problem is that for long-term holders it may only be 50 USD. If the value of the NFT were to remain unchanged, its value to a newcomer in six months could easily be 3,000 USD. For one group, the NFT may be cheap. For newcomers, on the other hand, very expensive. Now, instead of the NFT, imagine that the holder of the cryptocurrency is interested in buying a new phone worth 1000 USD. At the time of writing, that would be equivalent to about 3000 ADA. The problem is that someone could have purchased this amount for $150 in the past. A newcomer who bought a cryptocurrency recently had to pay 1000 USD for 3000 ADA. However, if the value of ADA has dropped by 5%, he will find that he doesn't have the money for the phone because he is at a loss. While early adopters like to spend ADA, newcomers will behave quite differently. Moreover, both groups might speculate that they'll only pay, say, 500 ADA for a phone next year. They will postpone the purchase. The described phenomenon is associated with fair coin distribution. Early adopters have a significant economic advantage over those yet to come. While one group celebrates a significant portfolio appreciation and posts photos on Twitter with a new race car or yacht, newcomers expect to be equally lucky. It may take 5 to 10 years, or they may not be so lucky. Moreover, early adopters may spend a significant portion of their portfolio by the time cryptocurrencies reach a new ATH, causing market declines of tens of per cent. Cryptocurrencies may never get rid of volatility and, as a result, will be seen mainly as financial speculation for the next few decades. Newcomers may feel that they are merely providing exit liquidity to early adopters. High volatility will only reinforce this uncomfortable feeling. Anyone who feels their investments may change will feel the need to sell part of their portfolio and buy other more stable assets or properties. This is logical behaviour and advising newbies to hold forever is foolish. ADA coins as the native currency of the Cardano ecosystem Although the phenomenon described above will always be present, smart contract platforms' native coins are commonly becoming the native currency of the ecosystem. ADA naturally becomes the native currency of the Cardano ecosystem. NFTs are bought with ADA. Anyone selling their goods for cryptocurrencies must expect that the pool of potential buyers will be relatively small and may change depending on the state of the market. The value of goods should always be meaningful in the context of fiat currencies. It's definitely a good thing that the ADA in the Cardano ecosystem is used as a payment medium. While we don't think cryptocurrency volatility will fundamentally decrease in the coming years, there is some possibility. It's good that people have the ability to pay with ADA coins. It reinforces one of the narratives that some of the community sees as important. It is very difficult to predict the development of cryptocurrencies. But one thing is clear, we will have to deal with volatility somehow. One way may be stablecoins. In the context of the algorithmic stablecoin DJED, I can imagine that people will use ADA to buy the reserve currency SHEN and that they will spend DJED. ADA can become the reserve currency and stablecoins will be used for payments. Is this the way to go for all cryptocurrencies? No one knows. With the advent of the CBDC, the financial world may change fundamentally. What matters is not only the purchasing power of coins or digital tokens but also the networks over which value will be transmitted. There is a possibility that with the advent of the CBDC, systems similar to those that exist in China will emerge. States can influence the movement of money based on the social credit of their citizens. One can assume that if states wanted to enforce something like this, they would need to get rid of all alternative networks that would be considered competitors. From a certain level of adoption, however, this might not be such an easy task for governments. It is in the interest of all blockchain networks to start establishing themselves as alternative financial systems. It is necessary to see the importance of ADA in the context of Cardano as a technology that can become an alternative financial system independent of states. Control of the system will be maintained by users through ADA coins. Cardano, together with algorithmic coins, can be an independent monetary system with its own payment networks and financial services. ADA might not necessarily become a medium of exchange, but as a reserve currency or medium of decentralization, it can play a much more important role. The role of ADA in the Cardano ecosystem People sometimes forget that the whole point of the blockchain industry is decentralisation on a technological and social level. For people, the development of the graph was more interesting than the technology itself. Yet it is technology that is far more important for our future. If governments want to have more control over people, and this should apply to payments, the networks over which value will be transferred are important. Immutable monetary policy is only interesting when combined with technology that allows users to use a decentralised financial system. Second layers like Hydra, decentralized digital ID solutions like Atala PRISM, or privacy-providing networks like Midnight, are technologies that must be connected to a currency with stable purchasing power. ADA is an entrance ticket into the Cardano ecosystem. It is a precious resource on which the decentralization of Cardano is built. If people hold ADA coins, they will have control over the entire ecosystem, including the ability to decide its future development. ADA is part of the incentive model and serves as a reward for those who care about the decentralization and security of the Cardano network. Staking is an economic incentive that ensures decentralization in addition to a stable profit in ADA coins. People should see the ADA as the key to freedom and the ability to control the technology they will use to connect financially with the outside world. Imagine you are one of the billion people who have a tiny bit of control over the bank you have an account with or the PayPal company through which you make most of your payments. Together with other people, you get regular rewards for looking after the ecosystem and deciding what new things to create. Cardano will have no CEO, but a collective of responsible people from all over the world, whose interests and goals may be very similar and fundamentally different from what governments want. Never in the past have people had a greater opportunity to maintain control over the system on which their lives depend. The client-server architecture doesn't even allow it. Banks and commercial firms generate profit for their management. Users have no say in decision-making. ADA coins will remain a mere investment unless you start to see the possibilities Cardano offers. To some extent, this is fine, as even simply holding ADA ensures decentralization of the network. However, each ADA holder will own a piece of Cardano and will increasingly have the ability to make decisions about it. In terms of future adoption and creating an alternative that can prevent states from creating social credit systems, it is more important to use Cardano than to hold ADA. Staking is a very good start. Understanding the algorithmic stablecoins and starting to use them at least in part may be a good idea. It will be years before stablecoins are widely accepted, but according to a survey by Deloitte, merchants plan to do so. Use stablecoins and put pressure on merchants to accept them. Use decentralised technologies for payments, not third parties. This is the only way to create an alternative financial world around us that we can control. Almost everything in today's financial world is centralized and abused by middlemen. The purpose of decentralisation is to change the existing system or to create an alternative to it. Centralised systems will forever leave control to a small group of people. The point of decentralisation is to get rid of those who control the systems centrally because we cannot trust them. We need to replace these groups with collective decision-making by all users. We cannot predict the future of cryptocurrencies. However, let us not be under the illusion that the whole world will switch to cryptocurrencies in the next 10 years. Cryptocurrencies may forever remain just an alternative for those who want to use them. But even that makes a lot of sense. If CBDC could be sold for DJED, users would switch from centralized networks to decentralized ones without the risk of volatility. This easy step will allow them to exist in a free financial world where no one will monitor and restrict them based on economic decisions. Conclusion Decentralised money must be a good medium of exchange. Cryptocurrencies are not currently a good medium of exchange and therefore are not considered good money by most people on the planet. They see it more as a good investment. If they can make at least 10X, they will be willing to use them for payments. However, the greater chance is that they will sell the cryptocurrencies for fiat currencies to maintain a stable purchasing power over a longer period of time. Decentralized money must not be synonymous with high volatility. Cardano is a smart contract platform and because of this, we have the opportunity to deal with volatility. Algorithmic stablecoins may be the way to go. Although people are afraid of them due to the Terra Luna (USD) crash, we need to continue this effort. DJED is a completely different project than Terra and hopefully, in 5 years no one will doubt that. ADA can be the reserve currency of the Cardano ecosystem on which we will be able to create a stable economic environment. We absolutely need this for adoption. Let's not expect the volatility of cryptocurrencies to decrease on its own, because we can wait a really long time for that. It is better to do something than to wait for an uncertain outcome. DJED is definitely a step in the right direction. Try to see ADA as more than just an empty investment. ADA is a ticket into the Cardano ecosystem.
