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Jan 07, 2022 09:29
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Cardano (ADA) is a public open-source and decentralised blockchain with a proof of stake consensus (PoS) system. It was developed by Charles Hoskinson who is the co-founder of Ethereum, as a blockchain with an edge over Ethereum’s proof of work (PoW) system.
What is Cardano?
Hoskinson launched Cardano as a public, open-source, decentralised blockchain with a proof of stake consensus (PoS) system.
Apart from providing an edge over Ethereum’s proof of work (PoW) in terms of energy use and hardware requirement, It also allows for Ethereum-like smart contracts and peer-to-peer transactions.
A brief history of Cardano
Cardano was launched in September 2017 by Ethereum co-founder Charles Hoskinson, and Cardano aims to be a third-generation blockchain (or blockchain 3.0) project — building on top of the technology pioneered by Bitcoin (first gen) and Ethereum (second gen). Cardano’s goal is to be a highly scalable and energy-efficient smart contract platform.
Cardano uses a unique proof-of-stake consensus mechanism called Ouroboros, which is based on peer-reviewed research by a team of computer scientists and cryptographers from the University of Edinburgh, Tokyo University, and other institutions. Their goal was to build a decentralized network that can help to validate transactions in a scalable, secure way also to ensure that the Cardano platform would be as energy-efficient as possible.
What is ADA?
ADA is the native cryptocurrency of the Cardano platform which is named after Ada Lovelace, the 19th-century mathematician who is often referred to as the “world’s first computer programmer”.
ADA tokens fuel the Cardano platform same like ETH tokens fuel the Ethereum platform. They’re used to pay transaction fees and are staked by validators (and delegators) who want to help maintain security and stability of the network in exchange for earning rewards.
In the future, ADA will also be used as a governance token, which will allow holders to vote on changes and upgrades to the Cardano platform.
ADA is the 4th largest cryptocurrency in terms of market capitalization of $413.22 billion. Meanwhile, ETH continues to hold its position as Bitcoin’s second with a market cap of $477.42 billion as of December 21.
With Ethereum standing first in the market capitalization, can Cardano be the Ethereum killer, We will discuss it further in the article.
Now, let’s see the advantages and disadvantages of both these cryptos.
Ethereum: Advantages and disadvantages
Ethereum is currently one of the famous names in the crypto world right now, and its native token- Ether, is the second most popular cryptocurrency behind Bitcoin.
The Ethereum blockchain is one of the most widely used for decentralized applications (dApps) such as non-fungible tokens (NFTs) and decentralized finance (DeFi).Hosting of smart contracts, which allow individuals to execute safe and secure agreements without help from a third party such as a lawyer is also possible with Ethereum network.
Since the Ethereum blockchain is open source, anyone can create new dApps. All applications on the Ethereum blockchain require the use of Ether,thus Ethereum will benefited if any of these dApps succeed.
One major drawback of Ethereum is that it is currently using a proof of work (PoW) mining protocol, which is incredibly energy-intensive. Cryptocurrency miners need to use high-powered computers to solve puzzles and verify transactions for this protocol. As time goes on, these puzzles become increasingly difficult, requiring more and more energy.
Ethereum 2.0 is currently under development in which developers are working on transitioning to a proof of stake (PoS) protocol, which is much more environmentally friendly. By using PoS protocol, miners need to put some of their own crypto holdings at stake to get their transactions verified for a chance at earning rewards.
Finally, the PoS protocol also has its downsides. Miners with the most cryptocurrency tokens have the most power when it comes to verifying transactions, so it’s possible that a small number of wealthy individuals could have majority control over the blockchain.
Cardano: advantages and disavantages
As already said, Cardano was created by one of the co-founders of Ethereum, so it shares many similarities with its older competitor. However, it does have some unique advantages and disadvantages.
Just like Ethereum, Users can create dApps on the Cardano network. Some of the projects currently in development include THEOS, an NFT marketplace, and Indigo Protocol, which will allow users to trade real-world assets (such as stocks) on the Cardano blockchain.
Whereas unlike Ethereum, Cardano already makes use of a PoS mining protocol, thus leads the competitor in this way. While it may take months for Ethereum to fully transition to a PoS model, Cardano is already successfully using this type of system.
However, Cardano is still in its infancy, and it might take ample time for it to catch up to Ethereum in other ways.
Ethereum is the first crypto compared to Cardano, so while the two may share many features, Ethereum has a longer track record and is more popular among users right now.
But this doesn’t necessarily mean Cardano will not catch up to Ethereum in the future, though. Cardano has shown tremendous growth over the past year in terms of transaction volume and market capitalization and it is yet to be seen on whether cardano takes an edge over Ethereum.
Is Cardano Truly an Ethereum Killer?
To be honest, the answer would be no. Cardano cannot be considered an Ethereum killer just yet since ETH is very much alive and still the dominant L1 in crypto. Apart from that, Cardano also falls behind surging competitors like Solana, which is recording rapid adoption in recent months. However, a significant portion of ETH’s market share is captured by ADA. Regardless, both platforms have scope of growth in the coming days.
It is hard to say on whether if ADA can ever surpass ETH’s market cap, let alone “kill” it. ADA’s architecture and development approach appears to be fundamentally strong and sound but it still has a lot to prove in terms of smart contract functionality.
Another factor to be considered is that Cardano upgrades will take ages since each of them is thoroughly processed and reviewed before being rolled out. Ethereum is also the same, which means it is the time that will answer our query.
However it cannot be undermined that Ethereum is also in a bind as many users have grown wary of its slow and expensive network, as they have good alternatives like Cardano and many others that are growing fast and eating up its market share. Although ETH remains the king of the dApps, this title is no longer disturbed.
Which one to choose?
Both the cryptocurrencies are risky. However Cardano may be a higher-risk at the moment because it’s newer and doesn’t have the track record of Ethereum. However, Cardano does have its strengths, so if you’re willing to take on higher amounts of risk and planning to hold for the long term, it could be the right choice for you.
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