ADA coins have a certain market value which is determined by market supply and demand. Where does this value come from? A significant part of the ADA value is determined by the utility of the Cardano protocol. ADA value is a reflection of decentralization, security, scalability, network effect, adoption, DeFi, trust, and other things. What attracts users can be described in one word as utilities. Some utilities are generally overrated, others underrated. User preferences can change over time.
Note that, for example, security and decentralization are not directly utilities, but rather desirable features (users expect them but do not use them directly); let’s refer to them as utilities in this article.
Although the value of cryptocurrencies can be influenced by speculation which is currently a significant factor, in the long run, it will be primarily utilities that will have a decisive impact on the market capitalization of blockchain projects. Moreover, the utility generates profit. Profit is extremely important for the long-term economic sustainability of blockchain projects. There is a link between utilities and sustainability. Let’s explore this phenomenon from different aspects.
TLDR
Cardano has more utilities than Bitcoin, so it has a better chance of having a large network effect and generating higher profits. ADA is not just a HODL coin. ADA can be a reserve currency thanks to protocol utilities like token minting and smart contracts. Additionally, through staking ADA generates passive income.
This article was prepared by Cardanians with support from Cexplorer.
Read the article: https://cexplorer.io/article/where-does-ada-value-come-from