Ethereum (ETH) and Cardano (ADA) are heavyweights of the industry and rank among the top 10 cryptocurrencies according to market capitalization.
They share a lot of similarities in their usage and design. Charles Hoskinson, the founder of Cardano, is also one of the main developers of Ethereum. But of course, there are some small differences between these two. So, here is a comparison between these crypto behemoths.
Cardano vs Ethereum: Similarities
People can buy Ethereum and Cardano transactional coins as investments. ETF for Ethereum and ADA for Cardano. Both of these are layer 1 blockchain technologies that allow the developers to build dApps or decentralized applications on their self-executing and blockchain smart contracts.
There is another similarity between Cardano and Ethereum. Both these coins employ proof-of-stake consensus mechanisms for these blockchains. Under this proof-of-stake model, people who want to verify their transactions put their crypto as collateral on their blockchain.
Staking is an environmentally friendly consensus mechanism and is better than the proof-of-work mechanism that Bitcoin uses. Under proof-of-work, the computers use large amounts of electricity to solve complex problems, which completes and verifies the transactions on the blockchain.
You should note that Ethereum started as a proof-of-work system and then changed itself in September 2022 to a proof-of-stake model.
Cardano vs Ethereum: Difference
But when we are comparing Cardano vs Ethereum, along with the similarities, there are a few differences as well.
Ethereum Is More Established
Ethereum started off early and is more established and valuable among these two cryptocurrencies. The leading altcoin also needs a lot of development, mostly when smart coins are considered. The transaction protocols that execute the terms automatically put forward the agreements or the contracts.
According to Martin Leinweber, a digital asset product specialist at MarketVector, “Cardano’s developers are still working on key features, and services like smart contracts have just been added. This feature was first introduced by Ethereum several years ago.”
Ethereum is a more popular choice than Cardano. ETH approximately handles more than one million transactions daily. Cardano handles less than 100,000 transactions in one day.
Along with being a popular choice, Ethereum is also costly. Both of these cryptocurrencies charge a fee for using these as transactions, but the charge for Ethereum is comparatively higher.
These details do not matter so much when you are only buying ETH for a long-term investment. But it is important to know and consider these differences if you have plans of using the cryptocurrency for De-Fi or decentralized finances, smart contracts or some other transactions.
The supply of ADA is never going to go beyond 45 billion coins. It is not unusual if a hard cap is set like this. The 21 million coins hard cap of Bitcoin is a well-loved and well-known feature. Ethereum does not have any hard cap on the ETH’s total supply. However, the mechanisms they use are both different for controlling the supply beyond the hard cap. The ETH supplied every year is capped, and they also have a mechanism to take the coins out of circulation.
Part of a good Layer 2 crypto is that the infrastructure of the blockchain enables scalability. The Cardano system is a lot more scalable than Ethereum and has the capability to handle more transactions. Ethereum struggles with its transaction volume. When things are mostly calm, the networks work fine. But as soon as the bull market starts, a lot of new investors get into the cryptocurrency market. That is when Ethereum cannot keep up.
Advantages Of Carnado
Strong backing – Cardano has academic support and is researching to build their community to impact the world’s less fortunate parts. Cardano has money for development as well as a strong team for guiding the project.
Lower costs and energy usage – The cost of completing a transaction is significantly less than Bitcoin or Ethereum. They run an energy-efficient blockchain.
Better potential for scaling – Cardan has a lot of potential to scale. By using a compurgatorial layer or a layer of settlement, Cardano makes sure that it grows to any size and makes transactions quick. It also allows adjustments without affecting the transactions and payments.
Disadvantages Of Karnado
Many competitors – Cardano is not just competing with Ethereum, but there are other competitors as well. Moreover, it does not have the brand name recognition that Ethereum and Bitcoin have.
Unfinished product – According to experts, “Cardano still has limited uses compared to other smart contract blockchains and has been losing ground to Ethereum for a while.”
Less demand – Few people use Cardano and use it for making any transactions. If this continues, the lack of demand can cause a loss in value for this investment as well as reduce the liquidity.
Advantages of Ethereum
First mover advantage – This was the first blockchain network that handles smart contracts. This boosted the market share among other reputed cryptos and then Cardano as well.
Large ecosystem – Ethereum is popular among the decentralized apps and has an ecosystem that supports these exchanges.
High liquidity – Ethereum has high demand, and it is easy to sell it as an investment without a very high slippage rate.
Disadvantages Of Ethereum
Limited capacity – Ethereum has to work a lot on how to deal with high transaction volume. It is something that the developers are still working on.
High transaction fees – The transaction time is long, and the fee is high. Both these points are like a nightmare for anyone who is just stepping into the world of banking and finance.
No supply limit – Ethereum does not have a limit to creating coins, and because of that, it has the possibility to create deflationary pressure on the value. But it is a good thing for those who want to make the transaction with it, but bad for people who are making long-term investments with that.
So, Which One Should You Go For?
Cardano vs Ethereum: which is a better buy is debatable and depends on your preference for investment. But Ethereum is believed to be a safe investment option among the two. According to experts, Ethereum is going to survive long because of the large ecosystem and community.
On the other hand, Cardano is the best long-term acquisition and has a full potential user base in frontier and emerging markets. You might have to wait a little longer to see the network’s large utility.