Introduction
Let’s face it, cryptocurrencies are complex and not everyone has time to read technical papers all day long. In our Cardano review we are keeping it simple and giving you only the information you need to help you decide if you should invest in Cardano.
Ethereum still dominates the smart contract niche by market capitalization but everyone is aware of its scalability issues with slow transaction speeds and high fees. Cardano’s highly-anticipated smart contract launch may see it finally dethroning the incumbent smart contract king. Welcome to your one-stop destination for all the best reviews in crypto.
- Faster and more energy efficient
- Staking for passive income
- Sustainable funding model
- Supports popular programming languages
- Smart contracts imminent
- High expectations
- Untested technology
Cardano vs Ethereum: What you need to know
There are three generations of blockchain technology. The first was Bitcoin, which is a household name by this point. It is a scarce, decentralized, trustless, secure, borderless form of digital money. Bitcoin’s genius lies in its simplicity, as it's stored and traded and that’s pretty much it. Additional features can be added on top but the base layer is airtight and ultra-secure, making it perfect for accruing long term wealth in the digital age.
Ethereum ushered in second generation blockchains by adding programmability through smart contracts as a feature. Other projects run on the Ethereum blockchain and provide services like lending protocols or decentralized exchanges while benefiting from Ethereum’s security and massive user-base. These projects need to use the Ethereum native token to operate on the blockchain which in turn makes Ethereum more useful and valuable. The complexity of this functionality at scale has made Ethereum slow and expensive to use which is why investors and traders are looking into Cardano.
Cardano promises to be a third generation blockchain that solves the blockchain trilemma. To solve the trilemma a blockchain needs to be decentralized, secure and fast. Projects like Ripple and Binance Coin are fast and secure but not decentralized. Cardano will achieve this by using its proof-of-stake model instead of proof-of-work which is used by Bitcoin and Ethereum. In essence, it is faster and significantly more energy efficient. Next in our Cardano review we discuss the mastermind behind the Cardano project and what it seeks to achieve.
Cardano leadership and mission
Charles Hoskinson is a mathematician and co-founder of Ethereum. He left the project due to irreconcilable differences regarding the funding and sustainability of Ethereum. Hoskinson, aware of the scalability issues that would later come to plague Ethereum, founded Cardano in 2017 with a vastly different approach.
Hoskinson and his IOHK team relies on first-principle reasoning and academic rigor to guide the development of the Cardano blockchain. Over 100 peer-reviewed papers attest to the thoughtful and planned Cardano approach which is in stark contrast to the move-fast and break-things Ethereum approach. Consider which approach investors and developers managing billions of dollars will prefer. Ethereum is planning on moving to the proof-of-stake model similar to Cardano - a clear admission that they may well have got it wrong the first time.
Cardano has a mission to bank the unbanked by giving economic identity to the billions living in developing regions in the world. In April 2021 Cardano announced a partnership with the Ethiopian government that will see five million students receiving education credentials stored on the blockchain. This immutable digital identity solution will enable individuals to apply for jobs and loans which require trusted sources of identification. This identity solution can be repurposed for supply chain tracking, hospital records, property rights etc. Cardano has plans to expand this project to 100 million users over the next 5 years.
Hoskinson hopes that nation states will one day use Cardano for the majority of their operations to create a freer and more equitable society. The Cardano team is developing the blockchain in order to realise their ambitious goals. Hoskinson’s vision and Cardano’s mission has led to one of the largest and most loyal communities in crypto which will be essential for Cardano to overtake Ethereum.
Cardano’s winning strategy
Cardano's winning strategy, to dethrone Ethereum as the smart contract king, rests on three aspects.
First, is accessibility for developers. With the ERC-20 converter any token that lives on the Ethereum blockchain can instantly be transferred to the Cardano blockchain and benefit from its lower fees and faster speed. Migrating to Cardano will be a no-brainer as tokens enjoy the same rights as Cardano’s native Ada such as staking and governance. Projects like Orion, SingularityNET, Celsius and dozens more have already voiced their plans to migrate.
Cardano has a domain specific language called Plutus which is the ideal language for creating ulta-secure and proof-backed smart contracts. However, Hoskinson understood that to attract a larger developer base would be the integration of popular programming languages. IELE does precisely this. It allows developers of various programming languages such as Javascript, C+, Python etc. to develop projects on the Cardano blockchain. Cardano does not have to rely on blockchain specific developers, it will have the largest developer resource pool of all protocols to tap into.
The second factor in Cardano’s favour is staking rewards. Holders of Cardano’s native Ada token can choose to stake the token on the Daedalus or Yoroi wallet to receive 5-7% annual returns in Ada. The passive income incentive has resulted in 70% of Ada being staked, which shields Ada from drastic downward selling pressure.
The third and perhaps most important factor is sustainability. Project Catalyst is a funding mechanism that ensures developers and operators have the capital required to innovate and support the protocol indefinitely. Cardano’s governance system enables token holders to participate in voting on funding proposals and will ultimately allow the community to dictate design aspects of the protocol, making it the ultimate decentralized blockchain.
Cardano’s two hurdles
Our Cardano review has covered the most important factors that make Cardano a top Ethereum contender. This Cardano review would be incomplete without addressing the challenges that may prevent its ascension to the smart contract throne.
Ethereum is considered by many to be too-big-to-fail. It is the protocol that boasts the most transactions on its blockchain and the greatest number of projects on its network. Cardano needs to successfully integrate its IELE tool and ERC-20 converter in order to win over developers and projects from the Ethereum camp. Developers and users do not have any particular loyalty to protocols, whichever environment gives the best experience at the lowest price will be the victor.
Cardano is in the process of activating smart contract capabilities. This is the protocol’s most important milestone and will see a rapid expansion of the Cardano ecosystem and allow developers to directly compare the benefits and costs of operating on the respective blockchains. It is essential that Cardano lives up to the high expectations it has set. A failure at launch would contradict the narrative that Cardano is thoughtfully developed and ultra-secure and lead to significant divestment.
Should you invest in Cardano?
In this Cardano review we highlighted all the reasons that lead people to invest in Cardano. It has been one of the best performing crypto assets of the past year and is on the precipice of activating smart contracts. There is a lot of anticipation in the build-up to this event which should see significant price appreciation. This might be the last opportunity to buy Ada in this price range before smart contracts go live and the network achieves mainstream adoption.
Cardano has all the right elements to trump Ethereum but even if the launch of Cardano is successful and all the expectations are met, victory is not assured. Ethereum is a giant in the crypto space and you should never keep all your eggs in one basket. Cardano should serve as a hedge in your portfolio against Ethereum’s failure, which is not a given. Cardano is a riskier investment than Ethereum but it has a higher growth potential as it has a significantly smaller market capitalization.
If you choose to invest in Cardano by buying the Ada token we highly recommend staking to earn passive crypto rewards on your investment. Readers should do their own research before investing in any project. We provide important information that investors need to be aware of but it should not be construed as financial advice. Cryptocurrency is considered a high-risk asset class, invest wisely.
Conclusion
Ethereum is buckling under the weight of its own success and weak foundational design. Cardano was developed with scalability and sustainability from the start and is the project that is best positioned to deliver on the promises Ethereum could not. The coming months will tell if Cardano’s careful planning and academic approach pays off.
This concludes our Cardano review. Cardano vs Ethereum is one of the most hotly contested debates in the crypto space. We hope the knowledge you have gained from our review will provide the basis for a wise investment strategy. Good luck out there!
