Cardano vs Ethereum : Which Crypto is Better to Buy?

Cardano (ADA) vs. Ethereum (ETH)

Ethereum is the most popular platform for developing decentralized applications (DApps) and executing smart contracts. Its cryptocurrency, Ether (ETH), is the second most valuable one by market capitalization after Bitcoin (BTC). However, Ethereum has often been compared to Cardano, another blockchain offering similar features in recent years. The Cardano cryptocurrency, ADA, ranks #7 among the most valuable cryptocurrencies by market cap.

Despite this recurrent comparison, Ethereum and Cardano have different approaches to the design of their blockchains and corresponding features. What are the differences and similarities between these two blockchains? How do ETH and ADA compare? In which of these cryptocurrencies should you invest? Let us answer these and other questions in the following Cardano vs Ethereum comparison.

What Is Cardano?

Cardano is a decentralized open-source blockchain launched in September 2017. It runs on an Ouroboros proof-of-stake (PoS) consensus protocol. This consensus mechanism is designed to minimize energy consumption for block validation. Cardano aims to be a platform for DApp development with a multi-asset ledger and verifiable smart contracts.

Although Ethereum pioneered smart contract technology, Cardano is working to make smart contracts faster and more interoperable. Because of these improvements, Cardano is often referred to as an “Ethereum killer.” As said, ADA is the cryptocurrency of the Cardano platform. As of August 11, 2022, ADA traded at $0.53. The maximum supply of this cryptocurrency is 45 billion ADA coins.

Coin Name

Cardano

Coin Symbol

ADA

USD Price

$ 0.53

Market Cap

$18,216,366,610.92

24h Volume

$824,382,646.23

Maximum Supply

45,000,000,000 ADA

How Does Cardano (ADA) Blockchain Work?

Cardano is a platform that allows developers to program smart contracts and create DApps. In this regard, Cardano is quite similar to Ethereum. However, Cardano emphasizes a research-driven approach to design that enables the planning for contingencies in the case of problems arising with the development of its network. Cardano users can perform financial transactions using ADA on this platform.

What Is Ethereum?

Ethereum is another decentralized open-source blockchain launched in July 2015. It functions as a development platform for DApps and hosts other cryptocurrencies (tokens) through the compatibility standard ERC-20. It also supports the execution of decentralized smart contracts, a technology this platform pioneered.

Ethereum has continuously updated its network, with the most recent update occurring on August 5, 2021, during the so-called “London” hard fork. As a result, this platform features top-notch technology, making it the number one platform for smart contracts. The Ethereum 2.0 update is scheduled to happen in 2022, which will switch the blockchain consensus mechanism from proof-of-work (PoW) to proof-of-stake (PoS). It will also introduce sharding as a scaling solution.

Ethereum plans to become a global platform for decentralized applications (DApps), where developers can write and execute code resistant to censorship, fraud, and downtime. The native cryptocurrency of this network, ETH, is the most valuable altcoin by market cap. As of August 11, 2022, ETH trades at $1,882.24. There is an uncapped supply of ETH, with a current circulating supply of 121,925,476 ETH coins.

Coin Name

Ethereum

Coin Symbol

ETH

USD Price

$ 1,873.98

Market Cap

$229,404,133,550.92

24h Volume

$23,891,927,530.19

Circulating Supply

121,925,476 ETH

How Does Ethereum (ETH) Blockchain Work?

The Ethereum blockchain has practically the same characteristics as other blockchains. It initially utilized a proof-of-work (PoW) consensus mechanism; however, it soon will shift to PoS.  But what makes Ethereum unique is its pioneering smart contract technology. The primary innovation of Ethereum was creating a platform to execute smart contracts using the blockchain. The Ethereum blockchain charges a fee referred to as Gas, which is the cost necessary to perform a transaction on the network.

Benefits of Cardano

Ethereum and Cardano are similar since they are trying to achieve almost the same thing: a development platform for DApps and smart contracts. As such, both platforms share these features:

  • Support for smart contracts
  • Support for DApps development
  • Support for financial transactions using their corresponding native cryptocurrency
  • PoS consensus mechanism (in the case of Ethereum, it applies after the implementation of Ethereum 2.0).

Additional benefits of the Cardano blockchain are:

  • Ouroboros Consensus Protocol. Cardano created this protocol in its foundation phase. It is the first PoS consensus mechanism that was proven to be secure.
  • Research-Driven Development. The development of the Cardano network is based on rigorous academic research. Each development phase has incorporated peer-reviewed insights with proven methods.
  • Token Price. ADA is significantly more affordable than ETH, making it a better purchase for newcomers to the crypto world.

Benefits of Ethereum

Ethereum also offers several benefits that weigh in its favor:

  • Longevity. Ethereum has been around for several years. It has passed the test of time, and it has been the second most valuable cryptocurrency for a long time.
  • Ethereum 2.0. When this update is fully implemented, Ethereum will eliminate some inconveniences of the PoW consensus mechanism like high energy consumption. This upgrade will increase the ETH value in the long run.
  • Stability. Despite the relatively high price of ETH, this cryptocurrency is broadly considered a safe crypto investment. Despite some price ups and downs, in the long run, the ETH price tends to always increase.

Difference between Cardano and Ethereum

The key differences between Cardano and Ethereum stem from their approaches to building a blockchain network and the initial goals of their creators. For example, Ethereum was created in 2015 as a platform capable of doing things that Bitcoin could not, particularly the execution of smart contracts. In contrast, Cardano was created in 2017 as an improvement over Ethereum.

Regarding building a blockchain network, Ethereum takes a “build first, fix problems later” approach. For its part, Cardano uses academic research to bolster network development beforehand.

Ethereum is the most popular platform for DApps development. The vast majority of blockchain-based games, non-fungible tokens (NFTs), and decentralized finance (DeFi) protocols run on Ethereum or a layer-2 Ethereum network like Polygon. They total over 3,000 DApps on Ethereum. In contrast, over 100 DeFi services run on Cardano.

Another significant difference is between their native tokens, ADA and ETH. Both cryptocurrencies can be used for financial transactions, but the validation times and fees differ. In general, ADA transactions are cheaper. They are also faster since Ethereum can currently process about 100 transactions per second (TPS), whereas Cardano can process about 250 TPS.

Summary

Cardano and Ethereum are two blockchains that support DApps development and smart contracts. They have similar offerings. However, their approaches to building a blockchain network differ. Ethereum has been around for longer, which has contributed to its more considerable popularity and acceptance. As a result, Ethereum has a much larger market cap than Cardano. However, both platforms are promising, and their respective cryptocurrencies can be profitable investments.

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FAQs

Can Cardano Replace Ethereum?

Cardano will not replace Ethereum, at least not soon. Ethereum has a great acceptance that has led to considerable confidence from investors. Although Cardano is gaining adepts, the number of DApps it supports is only a fraction of the DApps supported by Ethereum.

Can Cardano Reach Ethereum?

This scenario is more likely to happen. Cardano belongs to a group of projects known as “Ethereum killers.” Other projects like Solana and Tron also belong to this group. To reach Ethereum, one of these projects must get a similar number of users. Ethereum is facing several problems; among them, the high Gas cost is forcing users to look for alternatives. How Ethereum addresses these problems will also play a role in Cardano reaching (and even surpassing) Ethereum.

Does Cardano or Ethereum Have a Higher Market Cap?

Ethereum has a significantly larger market cap. As of August 11, 2022, Ethereum’s market cap was approximately $229.4 billion, whereas Cardano’s was $18.2 billion.

Disclaimer

Please keep in mind that the above information is based exclusively on our observations and is provided for informational purposes only. It doesn’t constitute any kind of financial advice nor represents an official forecast. Cryptocurrency is a highly volatile asset, and you are investing in it at your own risk.


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