Cardano vs Ethereum: What New Crypto Investors Should Know
Cardano and Ethereum are both proof-of-stake blockchain platforms that have gained popularity over the past few years. Cardano focuses on an academic-driven approach to innovation, relying on peer-reviewed research and selecting different leaders for mining over specific periods. Ethereum also finds leaders who can mine coins, although it ensures that mining power is distributed between all participants.
Both currencies offer similar staking processes, plus they don’t use as much energy as Bitcoin and other proof-of-work currencies. The two currencies are useful, use smart contracts and support for the production of decentralized applications or dApps. But they both use different design features that deserve your attention.
Here’s a closer look at what you will get out of these two currencies.
Cardano or Ethererum? Which is the Better?
Cardano or ADA is a currency founded by Charles Hoskinson and Jeremy Wood, two people originally on Ethereum’s development team. Cardano is a proof-of-stake blockchain platform that runs on the Ouroboros consensus system. Ouroboros is a proof-of-stake platform where time is divided into epochs and slots. Similar to the hour and minutes hand on a clock, an epoch refers to a general period, while a slot is a twenty-second time-frame within each epoch.
The platform determines a slot leader for each slot. The leader is chosen at random and will select whatever blocks will go on the chain. The leader will hold that position during the entire epoch, after which prior slot leaders will randomly determine the leaders of the slots in the next epoch.
The design makes it easy for Cardano to be issued. Only a few stakeholders have to be online to keep the network operational, making it highly energy-efficient. The blockchain also evolves based on peer reviewed academic research surrounding currency development and the latest thinking when it comes to necessary solutions for ensuring a functional currency.
Ethereum has grown to become the second-largest cryptocurrency in the world since it was created in 2015 by Vitalik Buterin. Ethereum or ETH is a blockchain that focuses on the production of decentralized apps or dApps. Users can produce new dApps on the blockchain, with each app using Ether tokens produced by the chain. Its programs are designed to fulfill a wide-range of purposes, including trading and transferring anything of value.
While Ether tokens can be used as a cryptocurrency, they are often used to promote the development and use of dApps. Ether is produced through each block on the chain, with coins going to miners as a mining reward. Each dApp operates on “gas,” a cryptographic calculation that dictates the amount of Ether necessary for each transaction or activity. More “gas” is required for the most complex or detailed instructions on the platform.
What Makes Cardano and Ethereum Different?
Value
You’ll notice when trading Cardano and Ethereum that their values are dramatically different from one another. Cardano has a value of about $2.35 as of September 2021. It has a market cap of about $75 billion, making it the third-largest (non-stablecoin) cryptocurrency on the market. The currency has stayed above the $1 range since February 2021, and it has been above $2 since August 2021.
Ethereum is the second-largest currency with a market cap of about $400 billion as of September 2021. One Ether token is worth about $3,400. The value has approached the $4,000 mark a few times in 2021. The currency saw a dip in value midway through the year, but it recovered to over $2,000 since July 2021.
Evolution
Both currencies use different evolutionary procedures to keep them operational. Cardano focuses on peer-reviewed academic research to identify opportunities to change and improve the network. Evidence is reviewed to confirm how well Cardano can change and move forward on the market.
Ethereum’s evolution has mainly been derived from ecosystem expansion, in addition to identifying and fixing flaws in its system. For example, Ethereum plans to move from a proof-of-work to proof-of-stake platform to better handle blockchain traffic.
Coin Limits
Cardano is limited to producing 45 billion tokens within its lifetime. About 32 billion tokens have been minted as of September 2021.
Ethereum has no limits to how many coins it can use on its network. But the network limits the annual increase to about 4.5 percent per year, ensuring the network can keep up with these changes.
What Makes Cardano and Ethereum Similar?
Mining Process
The proof-of-stake mining process will work for both currencies after Ethereum finishes switching to the proof-of-stake model in 2021. The process ensures that people who have more tokens will hold extra power over the mining process.
Less Energy
The two currencies focus on positive energy usage. Their blockchains do not require massive amounts of effort for mining, as leaders who will run the mining process will vary. These blockchains are more energy efficient and cost effective to run, compared to Bitcoin over the past few years.
Staking
The staking process is the same for both currencies. A user will put one’s tokens for staking into a pool. The users that have the most power will receive priority when it comes to operating mining efforts. But the design also ensures the mining process is shared among many, thus preventing individual users from monopolizing the pool.
Side-by-Side Comparison of Cardano and Ethereum
Feature | Cardano | Ethereum |
|---|---|---|
Formation | 2017 | 2015 |
General Purpose | To allow transactions and dApp development | To transfer assets and activities through dApps |
Transaction Function | Smart contract operations | Smart contract operations |
How Is the Currency Used? | To manage dApps and smart contracts | To manage dApps and smart contracts |
What Influences the Value? | Demand, regulations, and academically reviewed changes | Demand and regulations |
Maximum Available Supply | 45 billion | None, although its annual increase is limited to 4.5% |
Mining Standard | Proof of stake | Proof of work, but will move to proof of stake in 2021 |