Ethereum vs Cardano
Technological Differences
Consensus Mechanism
Ethereum - Ethereum uses Proof of work consensus mechanism. In proof of work mechanism, anyone who wants to add blocks to the blockchain network has to solve a mathematical problem that requires high computing power, whoever solves the problem first gets the chance to add a block. If other miners find their proof of work and block information valid, then their block is added to the network and that validator receives some ETH as a reward and transaction fees included in the block. After Ethereum 2.0 update, Ethereum will shift to Proof of stake.
Transaction per second (TPS)
Ethereum - Ethereum currently can handle 20 TPS on the network. After the Ethereum 2.0 update by the use of sharding, 100,000 thousand transactions per second will be possible.
Cardano - Currently Cardano can do 250 TPS. After Cardano's layer 2 solution "Hydra", 1 million TPS will be possible.
Finality
Ethereum - In Ethereum after your transaction has been done, you have to wait one minute more on an average, so that you can be sure that now your transaction cannot be rolled back and it was successful.
Cardano - In Cardano, finality time is around 2 minutes after your transaction is completed.
Transaction fees
Total value locked
Ethereum - According to defillama, currently 141 billion dollars of total value is locked on Ethereum ecosytem.
Cardano - Total value locked in Cardano is 0 as currently there are no Dapps on Cardano right now.
Market cap
Ethereum - Ethereum's market cap is currently around 421 billion dollars.
Cardano - Cardano's market cap is currently around 72 billion dollars. So, Ethereum's market cap is 6 times more than Cardano's market cap.
Similarities between Ethereum & Cardano
Ethereum and Cardano both are public blockchains that facilitate peer-to-peer transactions. They both also provide a platform for smart contracts and decentralized applications development. Ethereum and Cardano are both fully open-source. They both have their native token which is used for transaction fees on their respective platform.
Use cases of Cryptocurrencies
1. Defi
Decentralized finance is one of the fastest-growing sectors in the cryptocurrency ecosystem. Defi allows users various services like lending your crypto asset to earn interest on them which is much more than what banks pay to customers, borrowing cryptocurrency quickly without any lengthy paperwork, users have to just put collateral and have to pay interest at a low rate, buying and selling of cryptocurrency from a decentralized exchange where you don't have to do any KYC for becoming a user and no country can stop you from using these exchange and many more services defi provides to users. Defi provides full transparency and the whole process is quite smooth and fast.
2. Digital Identity
With blockchain technology, identity information is traceable and verifiable, in just seconds. Individuals can also create their profiles and can manage who can see and use their data. Users have control over their data sharing. User's data is more secure on blockchain networks as they use cryptographic technology while using and sharing data. Also user's data is also not stored on a centralized server which is more vulnerable to hacking
3. Gaming
In blockchain gaming, gaming projects follow the play to earn model and also allow their community to vote on governance proposals for shaping the future of games. Play to earn model allow players by participating in-game economy, players are creating value for other players and the developers. In turn, they are rewarded with in-game assets after each victory. These digital assets can be anything ranging from cryptocurrencies to in-game resources that are tokenized on the blockchain and these assets can be sold in the market to earn money.
4. NFT's
NFTs stands for Nonfungible tokens. They are certified to be a unique and non-interchangeable unit of data stored on blockchain. According to Rafferty, NFTs are revolutionizing the digital art and collectibles world. "We are using decentralization and the blockchain to create a music live stream network where artists and streamers can connect with fans directly, sell their NFTs, receive contributions from fans, and trade in their rewards and contributions for crypto tokens,". NFT provides creators and artists to earn money by selling NFT'S.
Ethereum or Cardano which cryptocurrency is better for which purpose and why?
Cardano is better for fast and low fees transactions as it follows the proof of stake consensus mechanism while Ethereum follows Proof of work which is one of the reasons why there are scalability issues. Ethereum is better for Dapp development as its platform already has a bigger ecosystem and many dapp are already on the platform for many years and are working perfectly fine. It is tried and tested platform while on the other side Cardano has recently introduced smart contracts and currently there is no working Dapp on its platform. Cardano platform Dapp ecosystem is yet to be developed and until now there is no record of how good Dapps are working on the platform and how much suitable it is for dapps. So, for any new project, Ethereum is the best choice for development right now.
Conclusion
Ethereum has yet to deal with its scalability problems. Future updates to the ethereum network i.e ETH 2.0 will bring proof of stake consensus mechanism to the network and also plans to solve its scaling capacity by sharding method.ETh 2.0 update promises to solve the scalability issues but after the update only it will be clear whether ethereum has solved its scalability problem or not. Cardano has introduced smart contracts but how smart contracts and dapps are performing on the network is still to be seen and it will take time before there can be any judgment on the performance of smart contracts on Cardano. Cardano promises to bring more solutions i.e Hydra to make Cardano more highly scalable and will also bring a governance system to the platform so that users can decide the future of the system through the voting process on proposals. Solutions that will scale up the network and bring governance to the network are yet to be practically implemented. So, Ethereum and Cardano both yet to solve many problems in their network after then only can they provide blockchain infrastructure to large number of people. It is still early to tell which blockchain network will rule the market as every other blockchain network has its share of problems right now. One thing is for sure the future will be multichain and many blockchain networks will find their own space to work on and provide value to users.
- https://ethereum.org/en/developers/docs/
- https://docs.cardano.org/new-to-cardano
- https://ycharts.com/indicators/ethereum_transactions_per_day
- https://www.statista.com/statistics/1202328/average-number-cardano-transactions/
- https://messari.io/asset/ethereum/chart/txn-fee-avg
- https://messari.io/asset/cardano/chart/txn-fee-avg
- https://searchcio.techtarget.com/feature/Todays-blockchain-use-cases-and-industry-applications
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