A Side-By-Side Comparison – Forbes Advisor

Cardano (ADA) and Ethereum (ETH) are industry heavyweights that rank among the top 10 cryptocurrencies by market capitalization.

They share similarities in design and use, with Cardano founder Charles Hoskinson being one of the original developers of Ethereum. However, there are some subtle differences between the two.that’s whyHere’s how to compare these crypto giants.

Cardano vs. Ethereum: Key Similarities

Cardano and Ethereum Offers Transaction coins that people can buy as investments: ADA on Cardano and ETH on Ethereum. Both are “Layer 1” blockchain technologies that allow developers to build decentralized applications (dApps) on the blockchain and self-executing smart contracts.

Another similarity is that Ethereum and Cardano employ proof-of-stake consensus mechanisms on their blockchains. In a proof-of-stake model, participants who want to help validate transactions submit cryptocurrencies to the blockchain as collateral. It is said to “stake” virtual currency.

Staking is a greener consensus mechanism than the proof-of-work mechanism used by Bitcoin (BTC). Under Proof of Work, computers use massive amounts of power to solve complex problems and validate and complete transactions on the blockchain.

Note that Ethereum started as a proof-of-work system and changed to a proof-of-stake model in September 2022.

Cardano vs. Ethereum: Key Differences

Ethereum is more established

Ethereum is the older, more established, and more valuable of the two cryptocurrencies. Major altcoins are further developed, especially when it comes to smart contracts (transaction protocols that automatically execute the terms set forth in a contract or agreement).

“Cardano developers are still working on key features and services like smart contracts. This feature was first introduced by Ethereum a few years ago,” says index provider MarketVector’s digital asset product. Strategist Martin Leinweber said.

trading volume

More people use Ethereum than Cardano. ETH processes around 1 million daily transactions compared to less than 100,000 daily transactions on Cardano.

Ethereum’s popularity goes hand in hand with its higher cost. Both cryptocurrencies charge fees for using them in transactions, but ETH is believed to be higher.

This detail is less important if you buy ETH only as a long-term investment. But if you’re planning to use cryptocurrencies for decentralized finance (DeFi), smart contracts, or other transactions, it’s worth considering.

whole supply

The total ADA supply will never exceed 45 billion coins. Setting hard caps like this is not uncommon. His 21 million coin hard cap for Bitcoin is a well-known and loved feature.

Conversely, Ethereum does not have a hard cap on the total ETH supply. However, it uses a different mechanism to control supply beyond the hard cap. There is a cap on the total amount of ETH that can be issued in a year, and there is also a mechanism to remove ETH from circulation in order to “burn” ETH paid for with gas fees.

Scalability

Part of being a good “Layer 1” crypto is that the blockchain infrastructure allows for scalability. The Cardano system is more scalable than Ethereum and can handle more transactions.

Ethereum is struggling with trading volume. The network works fine when things are calm. But as the bull market begins and millions of new investors enter the cryptocurrency, Ethereum will be unable to keep up.

Advantages of Cardano

• strong backingCardano has an academic following and is building a community around research that will have a major impact on disadvantaged parts of the world. Cardano is heavily funded in development and has a strong team leading the project. This system gives Cardano a lot of credibility that no other coin has.
• Reduce costs and energy usageCompleting transactions using Cardano is significantly less costly than Ethereum or Bitcoin. Cardano also runs an energy efficient blockchain. Ethereum has improved in this area, but energy efficiency and low costs were one of Cardano’s original focus and areas of expertise.
• Better scaling possibilitiesThe Cardano blockchain has scaling potential. With settlement and computation layers, Cardano can grow to any size and ensures that transactions happen quickly. You can also make adjustments without affecting payments or other transactions.

Disadvantages of Cardano

• many competitorsCardano competes not only with Ethereum, but many other 3rd generation cryptocurrencies such as Avalanche (AVAX), Cosmos (ATOM), Polkadot (DOT), Solana (SOL), Tezos (XTZ), etc. . Also, there is no brand name recognition of being one of the original cryptos like Bitcoin or Ethereum.
• unfinished product. Another cons to add to the list. According to experts, Cardano still has limited uses compared to other smart contracts on his blockchain and has been cornered by Ethereum for some time.
• low demandFewer people are investing in Cardano or using it for trading. If the crypto winter continues, the lack of demand could make this investment worthless and less liquid, making it harder to sell and get your money back.

Why is Cardano cheaper than Ethereum?

Despite having similar uses, Cardano is worth a fraction of Ethereum. One reason is due to supply and demand.

Just because Cardano has a low price, it doesn’t mean it’s a good deal. If you choose to include Ethereum or Cardano in your investment portfolio, a good rule of thumb is to make sure it is an amount you can afford to lose.

Advantages of Ethereum

• first mover advantageEthereum is the first blockchain network capable of processing smart contracts. This has allowed them to increase their market share among altcoins and reputation compared to late entrants like Cardano.
• large ecosystemEthereum is very popular among decentralized applications with an ecosystem supporting decentralized exchanges (DEXs), lending protocols, yield farming platforms, insurance protocols, yield aggregators and NFT marketplaces. “Ethereum has more dApps than any other cryptocurrency platform,” says Lineweber.
• high liquidityEthereum is in such high demand that it would be easier to sell it as an investment if it didn’t have a high slippage rate that would cause the price to sell to drop significantly from the time it was ordered.

Cons of Ethereum

• limited capacityEthereum needs to handle a high volume of transactions. This is something the Ethereum developers are working on and an upcoming release called Sharding should help. But that upgrade won’t be released until next year.
• high transaction feesTransactions are slow and have high fees, both of which are a nightmare for anyone looking to escape the old world of finance and banking. These issues are especially painful for Ethereum, the second largest cryptocurrency to solve the need for increased scalability.
• No supply limitSince Ethereum has no limit on the number of coins that can be created, it can put deflationary pressure on its value. While that may be good for those who want to use it for trading, it is a concern for long-term investors who want their coin to be highly valued.

Which crypto is the better buy?

Whether it is better to buy Ethereum or Cardano is a matter of debate and may depend on your investment preferences.

Ethereum is considered to be the safer investment for both. Experts say Ethereum is likely to survive in the long term due to its large developer community and ecosystem.

Cardano, on the other hand, could be the best long-term acquisition given its potential user base in emerging and frontier markets. But that means a big upside from the current price.