Robert Steinadler, 4 months ago

Cardano vs. Ethereum – What is the difference between the two blockchains?

Cardano and Ethereum are two very different blockchains, but they still get compared to each other. One reason for this is the fact that Cardano’s founder, Charles Hoskinson, also played a vital role in the birth of Ethereum. Another reason is that both blockchains are thriving because of their smart contract capabilities and a dApp ecosystem that is creating an enormous digital market of financial products and services that are built on blockchain technology.

While we most likely won’t judge which blockchain is better, we like to introduce you with this article to both technologies and compare them to each other. What is the difference between Cardano and Ethereum? And in what way are they both competing with each other?

Who founded Ethereum, and who founded Cardano?

The Ethereum whitepaper dates back to the year 2013, and Ethereum officially went live in July 2015. Many people perceive Vitalik Buterin as the founder and the “face” of Ethereum. It is true that Buterin played a vital role and is still one of the leading voices within the Ethereum community and its development.

Buterin wrote the whitepaper, but Ethereum was co-founded between him and seven other people. Mihai Alisie, Anthony Di Iorio, Amir Chetrit, Jeffrey Wilcke, Joseph Lubin, Gavin Wood, and Charles Hoskinson. Wood wrote the so-called yellow paper and founded Polkadot a few years later. Vitalik Buterin stayed with Ethereum taking good care of his brainchild.

Charles Hoskinson, on the other hand, left Ethereum and founded Input Output Hongkong (IOHK), which was later rebranded into Input Output Global (IOG). The Cardano blockchain came to life in 2017 and is still going through several stages of development.

Both projects were funded through an ICO. Ethereum’s ICO was held in 2014, and Cardano’s ICO was ending in December 2016.

Ethereum and Cardano – What is the difference between both technologies?

Ethereum is using an account-based model and is trying to switch its consensus model from proof of work to proof of stake. The current Ethereum blockchain offers:

  • 15 transactions per second
  • Transaction latency of 5 minutes
  • Proof of work consensus
  • Its native cryptocurrency is called Ether and the ticker is ETH
  • An unlimited supply of Ether with a 4,5% inflation rate per year

It is expected that once Ethereum 2.0 has been finished that Ethereum could handle up to 100.000 transactions per second. One of the most noteworthy differences between Ethereum and most other cryptocurrencies is the fact that it has no supply cap. The reason for this is the vision behind Ethereum. In order to become a blockchain that is the home to thousands of decentralized applications, it is believed that a limited supply would be detrimental to that goal since this could create a bottleneck in the tokenized economy that is demanding an expansive monetary supply.

With EIP-1559, a burn mechanism was introduced that destroys a certain amount of Ether per transaction. In theory this could create a situation where the yearly inflation is eaten by the burn mechanism if Ethereum is heavily used and sees a lot of transactions more.

Cardano on the other hand is based on an UTXO model which is also used by Bitcoin. The Cardano blockchain is faster than the current Ethereum blockchain and offers the following features:

  • 270 transactions per second
  • Transaction latency of 10 minutes
  • Proof of stake consensus
  • The native cryptocurrency is called ADA which is also its ticker
  • A limited supply of 45 billion ADA

Cardanos seems to be stronger at the moment when it comes down to transaction times and already has implemented proof of stake. Still, the Cardano blockchain is considered to be a work in progress that has to develop certain features that are already part of Ethereum. One example is the introduction of smart contracts which happened in late 2021 for Cardano.

Are Cardano and Ethereum sharing the same vision?

When it comes down to the fact that both technologies have been built to create a vast ecosystem of decentralized apps, then the answer is yes. Aside from different specs of the technology, there are notable differences in the approach to achieving that aforementioned goal.

Cardano emphasizes its scientific approach and the idea that every step of its development is peer-reviewed. It is believed that this research-based approach is strengthening the robustness of the blockchain and is also playing a role in Cardano’s adoption. IOG as the leading organization behind Cardano is trying to foster relations with companies and governments offering use-cases beyond decentralized finance and NFTs.

Ethereum’s vision is driven by the belief that blockchains should be public and open to everyone. Offering the opportunity to developers worldwide to program limitless decentralized applications. The fact that Ethereum was built as an open-source network and the head start of almost 7 years is making it the biggest platform in the crypto market according to the total value locked. Ether is the second biggest cryptocurrency behind Bitcoin according to its market capitalization.

Which one is better - Cardano or Ethereum?

There is a competition between both blockchains since Cardano is trying to challenge things and achieve them with different means than Ethereum. Many beginners pay attention to the question of which blockchain is better. But the idea of one winner taking it all seems to be outdated.

There are two kinds of ways of taking things into perspective when trying to figure out which blockchain will play an important role in the future and which one could possibly vanish:

  • The winner takes it all: Some researchers and analysts believe that only the best blockchains will play an important role due to their specifications.
  • Interoperability leads the way: The other stance is that many different blockchains will coexist and that each will serve a purpose. Some might be bigger according to market cap or user base, but that is not eradicating the need for other blockchains. Proponents of interoperability believe that at some point all blockchains will be connected with each other.

So, before you decide for yourself which blockchain might be better, you should try to figure out if that is the question you should ask. You will find very different opinions in the crypto community about this question. Some Bitcoiners will argue that only Bitcoin will survive and eventually, all other blockchains will be obsolete in the future.

Both projects, Ethereum and Cardano, have their own merits and their rightful place in the crypto ecosystem. Only time will tell if they exclude each other or will coexist.

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What is MEV?

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Maximal Extractable Value (MEV) is the (potential) profits for miners or validators producing blocks on a blockchain. They do this by picking and re-ordering transactions within blocks. You can view MEV as a tax on users of the blockchain.

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