How Does Cardano Compare to Ethereum?

The Ethereum price rebounded more than Cardano’s over the past year, but both can be a good investment. While Cardano and Ethereum indeed share certain characteristics, they’re fundamentally different. If you’re keen on understanding how these two blockchain platforms work, please continue reading.

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Cardano In a Nutshell

Cardano (ADA) is a decentralized public blockchain, with consensus achieved using Proof of Stake. The native cryptocurrency of the platform is named after Ada Lovelace, known as the first computer programmer – it can be bought and sold via exchanges. ADA can be used to store value, send and receive payments, and stake or pay for transaction fees on the Cardano network. Cardano was academically peer-reviewed and published in Crypto 2017, the original Ouroboros paper being cited multiple times. Therefore, it’s different from other blockchain projects, as it’s committed to research-driven innovation, which strikes a chord with the growing community of developers, investors, and enthusiasts.

Charles Hoskinson, who led the research, design, and development of Cardano, was also one of the first people to work on the Ethereum project. At present, he’s one of the most influential figures in the cryptocurrency space. Cardano doesn’t promise innovative features, yet users and developers alike find its offer appealing. It can be leveraged to create tokens, decentralized applications, and other use cases. The mainnet was officially launched in 2017, setting in motion a five-phase, multi-year development process. Cardano has witnessed five major upgrades, including Byron, which allowed users to buy and sell ADA, and Voltaire, which made it a fully decentralized, self-sustaining system.

Cardano introduced its highly anticipated Layer 2 scaling solution, Hydra, which helps the blockchain process even more transactions. It’s based on Bitcoin’s emblematic Lightning Network; it’s just that it uses isomorphic state channels that enable multiple heads or off-chain transactions. According to the experts, Hydra can have one million transactions per second, a standard Ethereum has been pledging but failing to deliver. Notwithstanding, Hydra is the result of strenuous effort, entailing years of research by more than two dozen full-time team members. Hydra is compatible with all stages of Cardano because it relies on the Proof of Stake protocol, and it can be combined with Sharding.

Ethereum In a Nutshell

Ethereum (ETH) is a decentralized, open-source, and distributed computing platform that allows developers to create, test, and deploy smart contracts and decentralized applications. It’s one of the most grandiose blockchain projects on account of its applicability in decentralized finance, enabling various financial services, including lending and borrowing, trading, and insurance. To interact with decentralized applications, you need Ether, the Ethereum blockchain’s inherent digital currency. You can buy Ether directly from another individual over the Internet or use an exchange, which makes it easier to compute taxes. Attention must be paid to the fact that the term Ethereum is used instead of Ether, so be consistent with the terminology.

Ethereum 2.0 introduced a new structure. More specifically, it’s made up of a Beacon Chain that communicates with a number of shared blockchains. The upgrade to the Ethereum blockchain supports the parallel execution of transaction verification within blocks, therefore increasing transaction throughput and the capacity of the network. The Merge was finalized on the 15th of September, 2022, marking the transition from an energy-intensive Proof of Work algorithm to a Proof of Stake algorithm. Serenity, or the Serenity upgrade, is the original name used for Ethereum 2.0. After the Merge, an average laptop can be used to secure the network, meaning that hardware requirements are easier to meet.

Ethereum relies on a complex network of Layer 2 solutions to enhance scalability. If you’re familiar with the blockchain trilemma, you know that developers come across three issues when building blockchains, namely decentralization, scalability, and security. It’s necessary to sacrifice one aspect to accommodate the other two. Ethereum is striving to attain scalability, high gas fees, and security, which it can’t do without scaling solutions like rollups, sidechains, state channels, and plasma channels, to name a few. Henceforth, the impact of Layer 2 solutions could be an important factor in corroborating the Ethereum model versus other Layer 1 blockchains like Avalanche or Solana.

Closing Remarks

The chief differences between Cardano and Ethereum lie in their ability to process high-volume transactions, credibility, and other parameters. Nonetheless, taking into account Ethereum’s track record of delivering performance over a long period of time and its status as a market leader, it’s the better buy. If you place emphasis on network effects and a solid ecosystem, Ethereum is the way to go. You can do a lot with Ethereum, from making your first trade to collecting NFTs. Ethereum is listed on several cryptocurrency exchanges, so choose a provider with a minimum investment requirement. You can invest any amount from $10.

When all is said and done, however, the decision between Cardano and Ethereum is contingent upon your needs, wants, and priorities. If you attach importance to security, scalability, or both, Cardano might be the better option for you. It provides a more balanced ecosystem that better accounts for the needs of its users and other systems seeking integration. You can store your cryptocurrency in a desktop wallet, a mobile app, or a hardware wallet. Just so you know, a mobile wallet is easy to download and set up, not to mention that it’s relatively secure. You can buy Cardano with a credit card, debit card, bank transfer, etc.

Cardano and Ethereum have their drawbacks, undergoing tremendous changes since their inception. The universe of cryptocurrency is still small and requires careful evaluation, so if you’re interested in investing, do your homework. Maybe it would help if you talked to a finance professional as far as making sense of your goals is concerned. They’ll help you map out a plan for the future.