The Beginner’s Guide
This article will compare Cardano (ADA) vs Ethereum (ETH), two of the most popular smart contract platforms in the cryptocurrency ecosystem. Before we start the comparison, we will provide a quick overview of what a smart contract platform is and why smart contracts are important.
What is Smart Contract Platform?
A smart contract platform is a protocol that allows users to write smart contracts on it. While smart contracts may sound like something that only lawyers might be interested in, the reality is that they are the backbone of multiple technologies.
- Decentralized apps (Dapps)
- Decentralized exchanges
- digital art markets
- Unchangeable tokens
All kinds of exciting protocols are only possible thanks to smart contracts. Both Ethereum and Cardano are smart contract platforms, but they have distinct advantages and disadvantages, which we will cover in this article.
As one of the top cryptocurrencies by market cap, Ethereum has some real advantages. First of all, it has the largest developer community of any cryptocurrency. More developers are working on Ethereum than Bitcoin!
One of the most reliable ways to value a cryptocurrency is to look at the network effect. That is, the more people use it, the more valuable a crypto becomes. The same goes for social networks and other technologies like phones and email.
Ethereum has a large network effect with multiple infrastructures to support the project. Decentralized derivatives, more than a dozen stablecoins, digital art markets, decentralized lending platforms, decentralized exchanges, the list goes on… Millions of people are already using Ethereum, making it much more likely for new users to come to the platform.
Unlike Ethereum, Cardano is gradually releasing blockchains. The first major release was Cardano’s staking mechanism. After that will come scaling solutions like smart contracts and then sidechains.
This pre-planned deployment is an advantage as it increases the chances of the Cardano network running smoothly. The opposite is true for Ethereum, where there are concerns that protocol upgrades could cause compatibility issues.
One of the most exciting features of Cardano is the Marlowe programming language. Marlowe is a simplified programming language that allows anyone to create smart contracts, even without programming experience. If Marlowe works as advertised, it could attract thousands of new users who would otherwise not be able to create a smart contract.
Another advantage of Cardano is that it has native staking support for smaller balances. For example, you can easily roll over $50 or $100 worth of ADA. This should encourage users to stake directly with Cardano rather than a third party.
Finally, Cardano may have a better staking mechanism than Ethereum. It’s too soon to say, and it may take several years to draw meaningful conclusions, but it’s at least a possibility. Cardano co-founder Charles Hoskinson claimed that Cardano has the best code from any cryptocurrency project. If that’s the case, Cardano’s staking mechanism might be better than Ethereum.
One of the primary disadvantages of Ethereum is that it is difficult to update. We’ve seen this firsthand because Ethereum’s staking upgrade has been repeatedly delayed. Due to the large number of projects currently built on Ethereum, there is a lot of complexity, which increases the chances of something going wrong with an update.
The network may be compromised, funds may be lost, or the new update may not work! All of this is much less likely to happen in Cardano with the planned delivery schedule.
Another disadvantage of Ethereum is that staking requires 32 ETH. If ETH returns to its previous all-time high, it will cost around $40,000 to buy enough ETH to stake.
Of course, there will be fractional staking through services like Rocket Pool and exchanges. However, if enough people use staking services, it can centralize the network. It’s not hard to imagine a scenario where 10% or 20% of all ETH is staked through Coinbase. This could give Coinbase excessive control over Ethereum.
Disadvantages of Cardano
One of the critical disadvantages of Cardano is that it does not have as many developers as Ethereum. A smaller developer community often means slower growth and fewer exciting projects being built. While it’s possible to pay developers to work on a protocol, this can quickly get expensive.
Cardano is also more centralized than Ethereum. However, this may change in the future as more users adopt Cardano and start staking.
The arguably most important disadvantage of Cardano is that it’s the opposite of starting ahead. As of October 2020, Cardano is a smart contract platform without even smart contracts! Compare that to Ethereum, which has been supporting smart contracts since 2015.
While Ethereum is far from perfect, it has been running for five years and an enormous amount of infrastructure has been built on top of it. Cardano will find it difficult to catch up with Ethereum in terms of development, especially if Ethereum’s network impact expands exponentially.
Cardano vs Ethereum
Ethereum and Cardano are two smart contract platforms that take a radically different approach to development.
Ethereum went with the Silicon Valley startup approach. Submit an MVP (Minimum Viable Product), get users as soon as possible, improve the product in iterations over time.
Cardano went with a scientific approach of steady development and only released a product when it was fully polished and highly functional.
As of now, Ethereum has a significant head start that may prove to be insurmountable. However, Ethereum has one vulnerability: something can go wrong with the code. There may be issues or issues with one of the other future upgrades to Ethereum.
If there is a critical vulnerability, the smart contract can direct users to create it on another platform, such as Cardano.
It’s too soon to say whether Ethereum or Cardano will dominate the smart contract game in the future. Right now, Ethereum is king, far from meaningfully challenging Ethereum dominance while Cardano is still in the womb.
We have come to the end of our Cardano vs Ethereum article.
Note: The information, comments and evaluations contained here are NOT in the Scope of Investment Consultancy. Keep following the SinceCoin.