Intro
The battle of the smart-contract capable blockchains continues. There is a lot of debate about which platform is best for building decentralized applications. Ethereum is considered the market leader, but the Cardano team is doing everything possible to become neck-and-neck with a competitor. To better understand the history, advantages, and disadvantages, we offer you a deep dive into the ecosystem of the projects under consideration.
Cardano & Ethereum: How Did It All Start?
Perhaps you didn’t know, but Cardano is not just a rival of Ethereum but a platform designed by two people who played a significant role in Ethereum’s development. The fact is that two developers who were once co-founders of Ethereum decided to create their crypto platform because they had other ideas and goals for the project. Recall that the technical documentation of Ethereum was published by Vitalik Buterin nine years ago. Nevertheless, it is a mistake to assume that Buterin is the sole creator of Ethereum since other developers have also contributed to the development of the leading smart contract platform: Gavin Wood, Mihai Alisie, Jeffrey Wilcke, Charles Hoskinson, and Jeremy Wood. Charles Hoskinson and Jeremy Wood combined their knowledge and efforts to create Cardano.
The Ethereum software was launched in 2015; a year earlier, one of the developers participating in the project decided to leave Ethereum because he did not receive proper recognition for his ideas. In particular, Hoskinson wanted to turn Ethereum into a commercial organization, and the founder of Ethereum, Vitalik Buterin, was against it.
In 2015, Charles Hoskinson started developing a blockchain based on an academic approach — Cardano. A little later, another Ethereum developer Jeremy Wood also left Ethereum and joined the development of Cardano. As a result of joint efforts, the Cardano blockchain was launched in 2017.
Programming Languages
The most apparent difference between Cardano and Ethereum is using different programming languages. While Ethereum uses a Solidity programming language, Cardano is built on Haskell. Solidity is a JavaScript-like object-oriented language for developing smart contracts. The similarity of the syntax to JavaScript was made for the rapid adaptation of developers who have previously developed similar protocols on it. As a result, developers can build decentralized applications on Ethereum using C++, Java, JavaScript, Python, Ruby, and many other popular languages.
Cardano opted for the Haskell programming language since it is more secure and allows untraceable transactions. Haskell is a standardized pure functional general-purpose programming language that integrates seamlessly with other languages. The Ouroboros protocol underlying the Cardano network is written on it. Haskell developers have also created the Plutus smart contract language. Thanks to Haskell, developers can build secure and enterprise-grade smart contracts.
Consensus Mechanisms
Until recently, Ethereum used a Proof of Work consensus algorithm, which is why it could not get the necessary scalability and suffered from long transactions and high gas fees. With the transition to Proof of Stake, Ethereum has become a more scalable platform, and with the addition of sharding, the team claims that Ethereum will be able to support more than 100,000 transactions per second. The Ethereum Foundation claims that PoS increases “immunity to centralization”. Although from the description of this system, we can conclude the opposite since miners will become validators depending on the number of cryptocurrencies they hold. With PoS on Ethereum, only those users with at least 32 ETH will have the right to add new blocks to the chain.
Cardano, in turn, has been a Proof of Stake cryptocurrency since the very first day. Cardano’s creators have released their Ouroboros consensus mechanism that provides lightning-fast transactions, low fees, and decentralization. As indicated on the official website via Ouroboros, ADA holders can delegate their share to a particular staking pool, increasing their chance to be selected as a slot leader and participate in the reward of the staking pool. Cardano can support about 257 transactions per second. However, with the Hydra update, significant changes are waiting. Hydra operates on the principle of segmentation, splitting all processes into separate registries. According to the developers, linear scaling will allow Cardano to process more than one million transactions per second.
ETH VS ADA
Ethereum’s native cryptocurrency, Ether (ETH), does not have a maximum supply limit. Moreover, its supply has increased by 4.5% every year. However, the London update introduced a new system that tends to be more deflationary. In addition, Ethereum has also become a more deflationary coin due to the transition to Proof of Stake. Firstly, due to the Merge (switching from PoW to PoS), Ethereum reduced its supply by 90%. Secondly, network validators lock a certain number of coins (remove them from circulation) to get the right to verify transactions, mint new coins, and receive rewards.  Â
Unlike Ethereum, Cardano has a maximum supply limit of 45 billion ADA, of which 35 billion are already in circulation. The distribution of new ADA coins is carried out by staking. Every year, the number of new ADA coins decreases. In the future, ADA will become a deflationary coin. This will happen by about 2031 since, by that time, the inflation rate will be only 0.9%, which in theory, should lead to an increase in the price of the coin.
Get your Ethereum/ADA Wallets right here.
Closing Thoughts
Both platforms are currently popular smart contract blockchains. In addition, with the transition of Ethereum to the PoS, competition is intensifying since both projects now function based on the Proof of Stake consensus mechanism. Ethereum and Cardano developers strive to create a decentralized, robust platform that provides fast transactions and low fees. Even though Ethereum and Cardano’s development is still ongoing, Ethereum is the industry leader at the moment.
Ethereum has a total market capitalization of over $154 billion, and it is the undisputed leader in the DeFi sector. According to DeFi Prime, more than 90% of DeFi platforms are based on Ethereum. Meanwhile, Cardano is just beginning its journey because support for smart contracts has been added relatively recently. The Cardano team focuses on academic development. Each blockchain update goes through many verification stages, thanks to which Cardano can be called a safer and more stable platform. Today, Cardano has more than $12 billion in market capitalization. It is the eighth cryptocurrency in the rating, significantly lower than Ethereum.Â
So which project should you prefer? It all depends on your preferences. Ethereum is a more centralized cryptocurrency. With the transition to Proof of Stake, validators with a larger number of staked ETH have gained power over the network. In turn, Cardano is based on Ouroboros, a more democratic and decentralized version of Proof of Stake. Ethereum is the most popular platform for launching decentralized applications and tokens. Thus, launching your projects on Ethereum will help you attract a large audience if you are a blockchain developer.
However, it is not true that Cardano is worse since the project has just begun its journey in terms of decentralized applications. As for the scalability issue, Cardano, after the Hydra update, will be able to support more than a million transactions per second, while Ethereum bandwidth can support a hundred thousand.Â
Only time will tell how further updates will be implemented and how successful they will be. If you are a crypto investor, then the choice at the moment is in favor of Ethereum. Despite the unlimited supply, the ETH coin is highly deflationary due to the burning mechanism and staking.
Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.