Let’s have a look at a real estimate of ADA price in the near future. It is a difficult topic and there is no methodology on how to evaluate projects in emerging markets. Cryptocurrencies are a new area with low adoption and prices of projects are very volatile. Mostly due to speculations. Nobody is able to tell you what is the fair capitalization of a project and how far the price could get in the future. Despite all that, we will try to come up with some realistic estimates based on comparison with existing tech companies.
What is the capitalization of global tech companies?
Cryptocurrencies can be considered as an innovation that utilizes modern cryptography, distributing networking, global virtual machine, etc. They strive to attract bigger adoption giving people abilities that are not possible in a centralized world. Currently, adoption is low and the main reason is that the infrastructure is not ready. Blockchain networks do not scale. Still, we can presume that the adoption will rise once the infrastructure is ready.
It might be fair to compare blockchain projects with the current technology giants like Microsoft, Apple and, Amazon. Below you can see the top 10 tech leaders and their capitalization in March 2019.
As you can see, the leader Microsoft has capitalization $900B while the last Netflix $160B. You probably know all the mentioned companies and most probably use their technologies. The companies are here for quite a long time (Netflix is an exception) and in comparison with cryptocurrencies, the adoption is very high. For example, 400M of people have installed Windows 10. Approximately 60M of people buy a new iPhone every 3 months. Netflix has 150M users worldwide.
In October 2019 Cardano sits on capitalization of $1B and a single ADA is for $0,04. It is a price after the long bear market and the project is right before launching incentivized test-net. We can say that we are at the very beginning and people will be able to utilize full Cardano potential at the end of 2020/2021.
Cardano aims to become a global financial computer. Is that more than what Netflix can offer? Netflix is a streaming service that allows our members to watch a wide variety of award-winning TV shows, movies, documentaries, and more on thousands of internet-connected devices. We think Cardano can have a bigger impact. Could Cardano be better than Facebook? Facebook is just a social network. Cardano is here for all people who could use decentralized currency and build decentralized services. There is a big potential in tokenization. Really big money could flow through the Cardano network every single minute in the future. What about Amazon or Microsoft? Well, what if such big companies decide to use Cardano and build services on it? It could be huge. So in the long term, Cardano could have similar capitalization as big technological giants.
When does it happen?
The current crypto market is very speculative, volatile, and irrational. We can say that technological maturity does not meet the price or project potential. As we have already said, Cardano has not launched the main-net. However, once it happens then there will be no reason to start to use Cardano. A number of transactions will grow. People will come to try it. Whales and institutional investors will come and utilize new investment opportunities. The price will logically rise with usage and adoption.
It will happen once Cardano offers real utility to people, organization or maybe even states.
The market will be more rational once all scam projects disappear and it will happen when major exchanges delist their coins. On the other hand, the relevant projects will be listed on traditional exchanges and get bigger traction. We speak here about a few projects that are currently somewhere in the top 20.
A big advantage of cryptocurrencies is their global reach. They are global by design and it is easy to buy and use them. The higher adoption is the higher the price might rise. Retail investors, as well as the big one, will search for projects with big potential and will buy their coins or tokens. So the price might rise unexpectedly quickly once it is clear that a project is going to succeed massively. Do not expect that it happens soon. You can wait for it for 3–7 years. Maybe more.
In 2020 Cardano will slowly release new great features. There is some time needed for programmers to learn Plutus and Marlowe. It can take years 2020 and 2021. We can see some killer applications in 2021 or 2022. In 2021 and 2022 we could see a lot of big partnerships. However, partnerships do not mean that some companies will start using the technology immediately. It can take another few years to roll out some services for millions of users.
We believe that IOHK will come up with some great services or protocols, for example like Atala, and the adoption will rise every single day.
We cannot forget to Cardano competitors what is mainly Ethereum. Ethereum is also a smart contract platform and it is here from 2014. Ethereum currently uses PoW, however, it plans to move to PoS at a similar time as Cardano. In our view, it does not matter that there are more competitive projects. However, it can be taken into account that the total capitalization of smart contract platforms will be split to all of them. Ethereum has a significant advantage. The number of developers. The Ethereum ecosystem is huge and Cardano will have to attract the attention of developers to succeed.
We are talking about projects from the crypto world that offers open public ledger. However, there is big competition from the private ledgers that are in some cases more suitable for corporates. There is no token needed to use a private network. We can mention projects Hyperledger and R3 Corda. Moreover, there are a few new projects like Hedera Hashgraph and Algorand. Cardano is not the only player in the space and despites we believe in success the competitors are here to stay and take some market share.
Is also Bitcoin a competitor? We do not think so. Bitcoin is something else. Bitcoin will never scale and there will not be high-quality smart contracts for it. At least not in the near future. Moreover, Bitcoin keeps the narrative to be digital gold and it might be a challenge to persuade the majority of people to believe it.
We think that all crypto projects must grow together. So the success of Bitcoin will support the success of Cardano and others. If some project succeeds with some idea then it can be expected that other projects with a different idea might succeed as well. If decentralization proves to be a valid option for people then not only Bitcoin, as a store of value, remains in existence but also smart contract platforms will benefit. We believe that smart contracts have a big potential that we cannot fully foresee at the moment. Bitcoin aims to become a store of value. Cardano, as a smart contract platform, is to be a platform for building new decentralized banks, companies, and societies. These things cannot be built without smart contracts and resolved scalability.
We do not believe that building decentralized Bitcoin with centralized infrastructure around is a viable option. Building decentralized banks, companies and societies is more interesting and also challenging.
Let’s evaluate the price
What could the price of ADA be in a few years? If you agree with our comparison of Cardano with technological companies then it is quite easy.
If Cardano is as successful as Netflix we can expect capitalization of $160B. It is reachable. If Cardano comes near to Facebook then the capitalization could be $500B.
It could be like that despite the number of competitors. You can claim that the winner takes all but it will probably not be the case. Still, we expect that there will be many losers and just a few winners.
We have Facebook, we have Twitter and we have Amazon. Different services and different purposes. And different capitalization that changes in time as companies get more or less relevant.
ADA can make from 150x to 500x what makes the price of single ADA from $6 to $20.
Take the result easy. We definitely did not consider all aspects like regulations, a success of a single project, some big fault in software that would disqualify the project forever. It also might be the case that decentralization as a concept will ultimately fail. We do not believe in that scenario but again, at the moment nothing is for sure. However, we are confident that if people embrace decentralization, recognize its qualities and advantages, Cardano will be one of the projects that will succeed tremendously.
We did not consider the social aspect of cryptocurrencies and the fact that people could try to transform the building stones of society. We think that it is too early to think about that right now. However, if that happened the price would go much higher. For now, the comparison with technological giants is quite fair. We need only one thing to realize the vision. Adoption.
Disclaimer: The article is not financial advice and it can be used only for information purposes.