Cardano vs Ethereum: The Arms Race is On
Crypto day-traders, deviant Wallstreet speculators, and the merely curious have all had their eyes set on the latest showdown that’s arrived in the world of cryptography. Cardano vs Ethereum is the latest rivalry to hit the streets.
Given the massive market capitalizations of both Cardano and Ethereum trading on exchanges today, there’s certainly enough appetite for both coins, but the race is on to see which one’s going to earn the greatest overall return in the short run.
This goes deeper than just a simple competition for market share, as the two blockchains share a checkered history, with their founders sharing a heated rivalry that has been well-publicized.
Let’s examine the history, value proposition, and challenges faced by each blockchain.
Origins of Cardano and Ethereum
Ethereum is headed by the Russian-Canadian programmer, Vitalik Biturin, who’s also the inventor and co-founder of the blockchain. Biturin originally authored a whitepaper in 2013 which outlined the concept of Ethereum and smart contracts, this culminated with him and eight co-founders building the blockchain from scratch and launching it in 2015.
By contrast, Cardano was founded by Charles Hoskinson, a mathematician who also happened to be one of the eight founding members of Ethereum. With corporate backing, he managed to build Cardano into the third-largest cryptocurrency by market cap as of the day of this writing.
The history behind how Hoskinson split off from Biturin’s team is a checkered one, and one that resulted in no love lost between the two. However, the gist of the story was that the Ethereum founding team had a falling out in 2015, around the time of its launch which boiled down to a debate of whether Ethereum should prioritize corporate interests and accept venture funding (Hoskinson) or maintain its nonprofit approach (Biturin).
This disagreement eventually boiled over, resulting in the termination of Hoskinson from the Ethereum team. Eventually, many of the original founders of Ethereum would split off to pursue their own blockchain projects.
Following the split, Hoskinson would link up with ex-colleague Jeremy Woods to establish IOHK and the Cardano Foundation, while Biturin continued to head efforts around Ethereum.
Where does Ethereum stand?
Ethereum saw major success over the past few years, skyrocketing from under $400 in late 2020 to almost $4,000 at its high in early 2021. Ethereum introduced smart contracts, which added a layer of functionality that Bitcoin did not have. The smart contract lays at the core of Ethereum’s success and is what makes blockchain-based applications like decentralized finance (DeFi) and non-fungible tokens (NFTs) possible.
Today, Ethereum is the most popular, and arguably only blockchain, with a demonstrated track record of hosting decentralized applications, or “dapps.” There is currently over $83 billion of value locked in, on various Ethereum and multi-chain-based applications according to DeFi Pulse.
However, Ethereum has encountered obstacles in the form of environmental and scalability issues, which are also shared by Bitcoin. To date, both blockchains face issues of high load times and large quantities of carbon emissions generated by the underlying proof-of-work methodology. This has also resulted in above-average transaction fees.
Proof-of-work is essential to keeping blockchains like Bitcoin and Ethereum secure, as it makes it exceedingly expensive for bad actors to infiltrate the blockchain. The consensus requires blockchain miners to perform progressively more difficult calculations to grow the chains. This methodology ensures that duplicate and fraudulent transactions are extremely difficult, if not ruinously expensive, to execute.
What challenges does Ethereum face?
As Ethereum grows and the amount of computing power required to solve these cryptographic equations grows over time, the output results in growing amounts of both carbon emissions and load times.
Enter Ethereum’s planned transition to proof-of-stake, which is estimated to drop as early as Q1 of 2022. Planned since Ethereum’s launch, proof-of-stake is by and large predicted to solve the majority of Ethereum’s scaling and carbon emissions problems.
Where does Cardano stand?
Cardano saw meteoric growth in popularity over the past few years, expanding into the third most popular cryptocurrency by market capitalization as of the date of this publication, estimated at a total of $78 billion.
Cardano has had the benefit of carefully watching and observing everything that Ethereum has accomplished over the past few years and more. The Cardano project itself was founded in 2017 as part of a corporate-backed project known as Input Output Hong Kong (IOHK).
Hoskinson and his team emphasize the importance of peer review and governance in their development process, with cycles taking several quarters before changes are rolled out. During this process, the Cardano team postulates that they conduct a rigorous peer review process that consists of an intensive academic review by participants from major universities around the world.
Cardano also has the advantage of being a blockchain that started on the proof-of-stake consensus, rather than having to evolve into it, like Ethereum. It’s currently the most popular blockchain which uses a delegated proof-of-stake consensus; this allows users to stake their ADA cryptocurrency through compatible Cardano wallets. This also helps them avoid many of the scalability issues facing its top rivals, Bitcoin and Ethereum.
What challenges does Cardano face?
Unfortunately, the lag time from its extended development cycle has arguably hampered its growth, and Cardano has a long road ahead of it if it wants to catch up to its fleet-footed rivals. Cardano also currently does not feature smart contracts, which are largely responsible for Ethereum’s stratospheric growth.
Much of the price run-up seen between late July and August of 2021 has been in anticipation of the announcement of the Goguen phase of the Cardano roadmap. The Goguen update is expected to introduce smart contract functionality to the Cardano blockchain, and with it, the ability to support decentralized applications (“dapps”) and other functions that are currently live on Ethereum.
What’s next for Ethereum and Cardano?
At this point, both blockchains remain at pivotal points in their development roadmaps, and both teams are working feverishly to move key features out the door.
All hands are on deck at Ethereum to fully complete its transition to Ethereum 2.0 and the new proof-of-stake consensus by sometime in Q1 or Q2 of 2022.
Meanwhile, the Cardano team continues to hit the pavement running as investors eagerly look on in anticipation of its new smart contract capability, and all of the potential benefits that accompany it.
The answer to which blockchain may be dominant will depend on how well each team can execute, how many use cases might be developed for each blockchain’s interface, and how quickly and successfully each can capture market share. We’ll see how each team fares over the next year, and it’s likely that 2022 could be integral to determining the winner of this race.