With the success of Bitcoin, the world has accepted several other choices, offering competitive advantages to the community. Among them, Cardano ADA has gained popularity in a short time. While Bitcoin is the pioneer in the crypto industry, Cardano has gained momentum in the community with its energy-saving staking and cheaper adoption rates.
While both Bitcoin and Cardano are cryptocurrencies that function on the blockchain, their working mechanism, use, and other features differ significantly. This article will explain the key features of Bitcoin (BTC) and Cardano (ADA), how Cardano differs from Bitcoin, their adoption and market position, and which is better, by providing insights into their roles and features.
What is Bitcoin BTC and How Does it Work?
Bitcoin was launched in 2009, influenced by the Great Recession of 2008, to promote decentralization and eliminate the need for intermediaries like banks, governments, etc.
Key Features of BTC
- Bitcoin Works on a Proof-of-Work (PoW) Consensus Mechanism. Users must solve complex mathematical operations to mine new blocks to the blockchain. However, this is an energy-intensive process.
- Capped Supply: It has a limited supply of 21 million coins, so it is known as digital gold and is often used as a hedge against inflation.
- Easy to Use: BTC does not support any advanced technology like smart contracts and dApps.
What is Cardano ADA and How Does it Work?
A third-generation blockchain built with Ouroboros mechanism, launched in 2017 by the developers of Ethereum. It was introduced to improve the limitations of its predecessor, extending the focus to improved scalability and interoperability. It aims to give a decentralized platform to support projects like DeFi and Smart Contracts.
Key Features of ADA
- ADA uses the Proof of Stake (PoS) consensus mechanism, which is known for its energy efficiency. Unlike PoW it has validators who selected for the number of coins they hold.
- It is separated into two layers; the Cardano Settlement Layer (CSL) and the Cardano Computation Layer (CCL) to increase security.
- Cardano supports advancements such as Smart contracts and dApps to place it on a Decentralized platform.
How does Cardano (ADA) Differ From (BTC)?
Consensus Mechanism
Both use different consensus mechanisms, which are considered as the distinguishing factor for these transactions. Bitcoin runs on Proof of Work (PoW) consensus which requires miners to solve complex problems as new blocks open. In contrast, ADA uses Proof of Sake (PoS) where validators are selected based on their holdings.
Purpose
Bitcoin was introduced with the aim to decentralize currency as an alternative to address the regulatory issues with fiat currency. It was used as a hedge against inflation. Whereas Cardano was developed to address the issues associated with Bitcoin and expand its utility to more advanced scenarios like dApps, DeFi, and smart contracts.
Energy Utilization
PoW is highly energy intensive and is often criticized for its negative environmental impacts. Cardano’s PoS was developed as an effort to address this issue. PoS aligns with the global sustainability goals by minimizing the overall energy consumption.
Adoption and Market Position
Bitcoin, being the first cryptocurrency is largely accepted within the community. It is accepted as a legit payment method in countries like El Salvador. Secondly, it positions itself as holding the largest market share and an influence on the entire market. Cardano has gained significant traction in the market, particularly in domains such as health, education, and supply chain tracking. ADA has managed to remain in the top 10 by market value even though it doesn’t give a competition to BTC.
Scalability
With high demand existing in the market, Bitcoin takes longer to verify and process a transaction, with a transaction speed of 7 transactions per second with a trading volume of $121.1 Billion. Cardano with its trading volume of $3 Billion, can verify and process transactions in less than a minute.
Supply
Bitcoin has a total supply cap of 21 billion which is halved every four years, reducing its rewards by half. This scarcity increases its value. The supply of Cardano is fixed at 45 billion.
Which is Better: BTC or ADA?
Bitcoin is a popular digital asset that is often used as a hedge against inflation. It can be stored as an asset, considering its long-term benefits. It can be also viewed as a medium of exchange. While ADA is ideal for investors seeking sustainability, and other technological advancements. It works to address environmental issues by minimizing energy consumption and improving long-term global sustainability goals.
Here is a glimpse of the similarities and differences of Bitcoin and Cardano:
| Feature | Bitcoin | Cardano |
| Launch year | 2009 | 2017 |
| Consensus mechanism | Proof of Work | Proof of stake |
| Energy efficiency | energy-intensive | energy-efficient |
| Supply cap | 21 million | 45 billion |
| Transaction speed | 7 TPS | ~ 1000 TPS |
| Smart Contracts | Not supported | supported |
| Environmental impact | High due to mining | low due to PoS |
Conclusion
Bitcoin and Cardano are considered significant players in the cryptocurrency ecosystem, offering several benefits. Bitcoin, the first-ever cryptocurrency remains in the top position by market capitalization and adoption and recently crossed its all-time high of over 100K. Known to be working on a PoW consensus mechanism, it requires huge amounts of energy to complete mining.
Cardano was developed as an attempt to improve these negatives. The PoS significantly reduces energy usage and aligns with the long-term sustainability goals. Both BTC and ADA are subject to fluctuations depending on the market sentiments. However, investors should analyze their goals, research well, and understand the nature of the market before investing in any digital assets.
