Ethereum (ETH) and Cardano (ADA) rank among the top digital assets by market capitalization, gaining worldwide acceptance, with investors flooding in to empower leading exchanges. While they still have a long way to go before becoming go-to investments and technical instruments, 2023 has been promising for cryptocurrency. Confidence in blockchain technology is only growing, and an ever-increasing number of organizations are piloting or fully deploying it. More individuals use Ethereum than Cardano, but Cardano has a chance to reach the 10 million account mark by 2025. Cardano is 13% down at the start of 2024 but this comes after rallying a record-high in December 2023 seeing it spike ~.0.67USD/0.90CAD, much like Ethereum who’s also rallying at the start of 2024, you can see updated Ethereum price CAD here.
If you want to add a small number of coins to your portfolio (or trade regularly), buy Ethereum with a credit card. Link your credit card, fill in the purchase order, and wait for the transaction to be finalized. Maybe you want to buy Cardano and its ADA token. In that case, you can use cryptocurrencies or cash. A decentralized exchange, where cryptocurrency is traded peer-to-peer, requires technical expertise, so it’s harder to navigate. Cardano users will soon be able to access Ethereum Virtual Machine contracts via any ADA wallet, owing to an integration on Milkomeda.
More often than not, Cardano is compared with Ethereum, as its network has similar features. Indeed, Cardano offers a platform much like Ethereum’s, but it’s different in some respects. Please continue reading if you want to find out more.
There Are Some Striking Similarities Between Ethereum and Cardano
Even if Ethereum and Cardano are competing technologies, they share a common heritage. More precisely, the Cardano project co-founder is Charles Hoskinson, a Colorado-based technology entrepreneur and mathematician, who was involved in the initial launch of Ethereum. Hoskinson left Ethereum following a row with the other co-founders. Ethereum and Cardano can be used for peer-to-peer transactions and as payment for goods and services. Cardano has grown in value considerably since its launch, but Ethereum has a higher market cap.
Ethereum and Cardano are Layer 1 blockchains, meaning they execute all on-chain transactions that pass through a consensus mechanism. A transaction can’t be changed or undone, so it’s recorded in an irrevocable state on the chain. Moreover, Layer 1 blockchains have their native tokens. Ether is the native token used for the Ethereum blockchain, the lifeblood of its protocol. ADA fuels the Cardano platform, named after Augusta Ada King, the first programmer.
Cardano uses a Proof of Stake protocol, Ouroboros, which prevents cryptocurrency holders from using their coins twice or more in any blockchain transaction. Participants who want to verify transactions stake crypto, meaning they use their coins as collateral. Ethereum recently switched to a Proof of Stake consensus mechanism in 2022, but Cardano’s Proof of Stake system is unique. Staking and validation by honest actors are rewarded, so participants don’t lose rights over their ADA tokens to the network. Participation is effortless.
Ethereum and Cardano were created to function as decentralized application platforms. In other words, anyone can use blockchain technology to launch their own apps, websites, etc. Projects on Ethereum and Cardano run without the involvement of a central authority. Developers behind Cardano are still working hard to improve its functionality. Cardano evolves through eras, and the software platform has entered the third stage of its roadmap, namely the Basho era. It’s an era of optimization which enhances the scalability and interoperability of the network.
The Major Differences Between Ethereum and Cardano
Ethereum is a second-hand generation of blockchain technology. Its core innovation was to enable developers to write smart contracts deployed to the network to run independently of their creators. Smart contracts are triggered by the passing of an expiration date or the achievement of a specific goal. At present, we’re in the midst of leveraging the untapped potential of smart contracts. By contrast, Cardano is a third-generation of blockchain technology. It can process 257 transactions per second, allowing users to move assets freely across multiple chains.
Ethereum currently has a transaction speed of around 15 transactions per second. Not only that but Ethereum goes hand-in-hand with higher costs. All transactions on the blockchain require users to pay for gas, and gas space is limited per block. Ethereum gas fees have increased in the past two weeks. It doesn’t matter if you’re planning to keep your coins for at least a year, but if you want to use Ethereum for decentralized finance, it’s a completely different story. As far as Cardano is concerned, transaction fees haven’t changed since the summer of 2021, even if the price of the ADA token has continually changed.
Ethereum has an indefinite supply, yet the issuance of coins is capped at 18 million ETH annually. There are approximately 121,826,163.06 Ethereum tokens in circulation. Cardano has a circulating supply of 35.05 billion coins and a maximum supply of 45 billion ADA. By decreasing the number of coins, Cardano keeps the assets liquid but not inflationary over the long term. The Cardano blockchain has more potential to scale, growing to any size needed to meet the needs of the rising number of users and transactions.
Ethereum isn’t substantially better than Cardano or the other way around, so it comes down to personal preference. Cardano seems to be a good buy in the short- to medium-term. It ensures a profitable entry into decentralized finance and NFTs, and the much-anticipated upgrade will allow developers to build apps that solve pressing real-world problems. In the long term, Ethereum seems to be a promising cryptocurrency to hold. Its first-mover advantage has helped it emerge as one of the most widely used blockchains. Most dApps are built on Ethereum because projects can be launched faster, regardless of the underlying code, and community participants can share updates and write extension documentation.
At the end of the day, both Ethereum and Cardano have their pros and cons; it’s just that the shortcomings of one might turn out to be a highlight in the eyes of others. They’re not the only digital assets you can buy and trade. Noteworthy mentions include but aren’t limited to Tether, XRP, Solana, and Polkadot, to name a few.