What are the differences between Ethereum and Cardano? Aren't they the same thing? If you had these questions in your mind then you've come to the right place since I will answer them and more in this article.
Both these cryptocurrencies are some of the most popular ones in the world. They have a huge following and are also in the top ten cryptocurrencies globally by market cap which is impressive. Even though Cardano is newer it has made its way into the list coming in at number 8 while Ethereum stands comfortably at number 2.
Even though Cardano is similar to Ethereum there are some major differences between the two cryptocurrencies. I'll talk more about them in depth below so make sure to continue reading the article.
The two cryptocurrencies have a lot of similarities as well but that's not what makes them unique. Let's take a look at what makes them different from one another. However, I'll properly explain what each of these cryptocurrencies is and does before.
Ethereum was created back in 2015 by Vitalik Buterin who is an entrepreneur and programmer. He wanted to create a decentralized platform where anyone can build applications on top of it without having to worry about security issues. This would allow developers to focus on creating innovative ideas rather than spending time trying to secure their code.
This idea caught the attention of many people including big companies like Microsoft and IBM. These companies see Ethereum as a great opportunity for building new products and services. The cryptocurrency has its own programming language that is called Solidity.
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One of the biggest advantages of using Ethereum over other platforms is that it allows users to use smart contracts. Smart contracts are self-executing digital agreements that execute automatically when certain conditions are met. To code these contracts you need to learn Solidity. For example, if someone sends money to someone else through a contract then the funds are released only after the condition is met.
Ethereum runs on the Proof of Work (PoW) consensus algorithm. PoW works by miners solving complex mathematical problems to validate transactions. Once validated, the transaction gets added to a block and becomes part of the blockchain.
1) As the second-largest cryptocurrency in the world Ethereum offers longevity and trust to its users. Also has to offer smart contracts and other dApps which makes it a great choice for investors.
2) The issues people have with the Proof of Work consensus algorithm are going to get addressed in Ethereum 2.0. The developers assured us that they will reduce the energy requirements by 99%.
3) Changing the model in the Ethereum 2.0 to a Proof of Stake is a big change that's going to allow you to passively earn money by just staking or holding the coins you already have. It's more complicated than that but that's the main idea. The future for Ethereum is bright!
So far we have talked about how Ethereum works and why it is important. Now let's talk about Cardano.
Cardano was launched in 2017 by Charles Hoskinson who is a co-founder of Ethereum. The goal of Cardano is to provide a better alternative to Bitcoin and Ethereum. The main reason behind this is that both Bitcoin and Ethereum were developed with the intention of being used as currencies.
However, Cardano believes that the future belongs to blockchains that are built for something else. So instead of focusing on becoming a currency, Cardano focuses on developing blockchain technology.
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Cardano uses the Ouroboros Proof of Stake consensus algorithm. In order to validate transactions on the network, nodes must stake coins. If they don't stake enough coins then they won't get rewarded for validating transactions.
In addition to staking, every node needs to keep track of the history of the blockchain. This way they know which blocks should be considered invalid. Staking and keeping track of the history of a blockchain takes up a lot of resources. That's why Cardano uses proof of stake. By doing so, it reduces the number of resources needed while still maintaining high levels of decentralization.
1) Having one of the most secure consensus protocols in the world it's going to make your mind at ease. You're going to have the credibility and the influence of the Ouroboros Proof of Stake protocol when you choose to invest in Ada, Cardano.
2) Cardano’s roadmap incorporates scholarly academic research into its design, creating a strong foundation for the continued success of both the blockchain network as well as the ADA token. Each part of the development for the token is backed by research from academics.
3) The ADA token is still in its early phases and you can greatly benefit by joining in at this price. At the time of writing this article, the price is $0.8137 and we've seen all-time highs of nearly $3.
Now let's continue talking about the differences between these two cryptocurrencies.
Even though Cardano is labeled as an 'Ethereum Killer' because it aims to improve on the inefficiencies that Ethereum has there's still a long road ahead. What it aims to achieve is lower fees for every transaction, faster transaction speed, better scalability, and more.
Let's look at some of the main differences between the two starting with the blockchain. Ethereum and Cardano both use different algorithm blockchains to create the transactional blocks and to validate the transactions on the network.
Ethereum uses the Proof of Work (PoW) consensus algorithm whereas Cardano uses the Ouroboros Proof of Stake (PoS) algorithm. There are other differences such as the size of the blocks, the number of transactions per second, and the total amount of data stored in each block.
Even though Ethereum 2.0 intends to change from Proof of Work to Proof of Stake there's still some time until that becomes a reality. Cardano has the upper hand on this one. The Proof of Work consensus consumes a large amount of energy to make the network run. It's crucial that the mining devices keep on working so that the cryptocurrency works as intended.
That's why the change to Proof of Stake is an evolution and needs to be implemented in mass. It's going to lower the energy consumption of running a network by a huge margin since miners aren't needed anymore.
Scalability is another major difference that these two cryptocurrencies have. Cardano which uses the PoS consensus is way more scalable and sustainable than Ethereum. You'd think that the cryptocurrency which is older should have an upper hand in this department but it doesn't work like that.
In order for the Ethereum network to scale it needs to enlarge its infrastructure in the form of crypto miners. With that growth, there are also added costs of energy use, huge costs of production and it's going to slow down the transaction speed.
Cardano is not affected by any of these problems. Cardano is able to handle thousands of transactions per second without slowing down. This means that the Cardano blockchain will always remain efficient and fast.
Another main difference is that Cardano unlike most blockchain products, which often lack sufficient oversight, uses a scientific peer-reviewed approach to develop its features. This provides a greater level of confidence and assurance than most cryptocurrencies currently offer.
First, academic papers describe new proposals and their underlying technology. Those papers can then be reviewed by computer scientists and others who aren't directly involved in the project. There are more than 128 papers published by the Cardano research team and new ones being worked on as we speak.
There are many other differences between these two cryptocurrencies but I believe that those were enough to give you a good idea of what they're offering and where they differentiate.
It's clear that Cardano is one the best cryptocurrency out there right now. It offers all the things that we need in a cryptocurrency. It's cheap, secure, and efficient. The only problem is that it's still relatively new compared to Ethereum. But if you can wait, then the rewards will be worth it.
I hope you enjoyed reading this article and that it helped you better understand the differences between the two cryptocurrencies. If you have any suggestions or questions then don't hesitate to leave a reply in the comment section.