Bitcoin vs Cardano: What New Crypto Investors Should Know
Bitcoin is a proof-of-work currency used mainly for spending and monetary transfer purposes. Cardano is a proof-of-stake unit for smart contracts and dApps, but it can also work for spending if necessary through its two-layer structure. The mining processes for these two are different, plus Bitcoin has a higher demand than Cardano. But they both have limits over how many tokens can be produced in their lives, ensuring their values could potentially rise as they become more scarce and harder to mine.
While Bitcoin has long been the most dominant name in the cryptocurrency world, many other choices are also available for cryptocurrency users looking to branch out. Cardano is one such option. Cardano uses a different staking system than Bitcoin. Plus, it is cheaper to use while taking less time to manage. But Bitcoin has greater adoption, making it easier for people to trade the currency and use it for a multitude of purposes. Here’s a closer look at how these two currencies differ from one another and what you can expect from the two.
Bitcoin or Cardano? Which is the Better?
Bitcoin is the gold standard when it comes to cryptocurrencies, as it has been in operation since 2009. Bitcoin is a proof-of-work currency that focuses on the transfer of funds. People can use Bitcoin to pay for many items online. The design of Bitcoin ensures it can work anywhere.
The main selling point of Bitcoin is its decentralized design. Instead of going through a central bank, Bitcoin is run by many nodes that link to a blockchain network. The nodes will confirm transactions worldwide. The network is always open, and it can handle transfers of all sizes. The design ensures people can move funds to anyone without worrying about exchanges or other physical barriers for work.
Bitcoin is a speculative currency, as only 21 million tokens will be mined within its lifespan. The rewards people receive when mining Bitcoin will also drop over time, potentially boosting its value after a while.
Cardano uses a different approach for token production, as Cardano is a proof-of-stake cryptocurrency. It uses the Ouroboros consensus system to distribute rewards to miners. In this setup, slot leaders are chosen by the platform. Those leaders will verify blocks for the chain during each slot. Cardano requires a few slot leaders in each period, plus there is less of a need to use more powerful or expensive materials in the mining process.
Cardano also uses a two-layer approach to development. The first layer entails using the ADA token as a cryptocurrency, similar to what people get from Bitcoin. The second layer allows people to trade assets through smart contracts and decentralized apps or dApps. Users have more control over how they can handle different assets and payments through Cardano. The smart contract system also ensures people will execute their agreements only when the right terms within the contract are met.
What Makes Bitcoin and Cardano Different?
You’ll immediately see when trading Bitcoin and Cardano that the prices for each token differs drastically. Bitcoin has a value of about $40,000 as of September 2021, while one Cardano token is worth approximately $2 during the same period. The two currencies also have substantial market caps, with Bitcoin having a cap of about $750 billion and Cardano having the fourth-largest cap at $64 billion.
The proof-of-stake approach to Cardano mining allows people to mine Cardano without using expensive or powerful computers and mining rigs. Miners must hold a stake in the Cardano blockchain and verify transactions to earn rewards.
Bitcoin uses a proof-of-work approach, meaning that people must be actively mining the currency. The rewards for mining go out to a random miner, with miners who contribute a higher share of mining power having a higher chance of winning the mining rewards. Bitcoin’s complex and competitive mining process means participants must spend more on computing power and energy to mine the cryptocurrency. In comparison, Cardano is often more affordable for miners, despite Cardano being worth less money.
Timing and Demand
The massive demand for Bitcoin makes it take longer for transactions to work. Some transactions can take up to an hour to verify. Bitcoin has an average volume of $50 billion each day, making it a high traffic blockchain.
Cardano is not as well-accepted or recognized compared to Bitcoin. But it does have a daily volume of $6 billion, so activity is relatively high. In many cases, Cardano transactions can be verified in less than a minute.
What Make Bitcoin and Cardano Similar?
Both of these currencies are suitable for financial payments. Cardano has the bonus of managing smart contracts and dApps, but it can also be used for traditional payments.
Bitcoin and Cardano both have limits when it comes to their maximum token supply. Bitcoin will have up to 21 million tokens, while Cardano will feature up to 45 billion tokens. The limitations ensure that there will be some form of scarcity for these currencies in the future, thus potentially boosting their values.
Side-by-Side Comparison of Bitcoin and Cardano
Bitcoin and Cardano have many differences to note for users looking for a currency that fits their crypto plans. Here’s a brief look at how these two currencies differ.
To function as a currency for all operations
Smart contracts, dApp production, and currency use
How Is the Currency Used?
As a digital currency for the payment of goods and services
As both a smart contract management system and a tool for payment purposes
What Influences the Value?
Demand and global regulations
Peer-reviewed academic studies, demand
Maximum Available Supply
Proof of work
Proof of stake