Pros and Cons: Bitcoin vs Ethereum vs Cardano
Published October 7th, 2023
Bitcoin, Ethereum and Cardano have been recognized by many as the 3 great cryptocurrencies. They each have their cult-like communities like the Bitcoin-maxis and the ETH-maxis and Cardano, which also has a large community.
One of the common spectacles that people see in the cryptospace on twitter, social media and other forums is the infighting between these 3 communities, continuously, relentlessly debating which is the better cryptocurrency – BTC, ETH or ADA.
We have come here to put this debate to an end once and for all. What are the pros and cons of Bitcoin, Ethereum and Cardano, and most importantly, which are their differences?
Bitcoin, with a 14-year history, processes $8.2 trillion annually in value and boasts over 46,265 nodes, underpinned by a $5.112 billion investment in ASIC Miner infrastructure. Ethereum's extensive network of 955,000+ nodes manage over $2.65 trillion annually, highlighting its influence and innovation, especially with its shift towards Proof of Stake. Cardano, although younger, handles $1.85 trillion annually with 2,911 nodes, showcasing its growth potential. Each crypto's unique features, from Bitcoin's great store of value to Cardano's transaction speed and Ethereum's smart contracts, illustrate the differentiating scope of their abilities and traits.
My name is Jay Theodore, founder of CryptoAtlas, in crypto since 2017. After doing the research, so you don’t have to, and providing you with a unique perspective, I hope to answer a few questions within this article. Bitcoin vs Ethereum vs Cardano, What is their difference? Which is better? What are their pros and cons?
In case you're new, we’ll start with an introduction to Bitcoin, Ethereum and Cardano.
Introduction to the Giants: Bitcoin, Ethereum, and Cardano Explained
Through a whitepaper titled "Bitcoin: A Peer-to-Peer Electronic Cash System," Nakamoto unveiled a vision of a decentralized currency that operates without the need for intermediaries like banks or governments.
This digital currency was born out of the 2008 financial crisis, aiming to provide a more transparent, censorship-resistant, and decentralized financial system where power is returned to the hands of individual users.
At its core, Bitcoin operates on a technology called the blockchain. This decentralized ledger records all transactions across a network of computers, ensuring transparency and security. Every transaction is bundled into a 'block', which is then appended to a 'chain' of previous transactions. This system, combined with the Proof of Work consensus mechanism, ensures that transactions are immutable and resistant to censorship or tampering. The decentralized nature of Bitcoin's blockchain means there's no central point of failure, and it isn't under the control of any single entity.
Bitcoin was conceived as an alternative to traditional fiat currencies, offering benefits like lower transaction fees, global reach, and pseudonymity. Its decentralized design challenges the very foundation of traditional banking systems which operate on central authority and control.
Consequently, many banks and financial institutions have been skeptical or even openly antagonistic towards Bitcoin.
Their apprehensions stem from Bitcoin's potential to disrupt their business models, its association with illicit activities due to its pseudonymous nature, and concerns over its regulatory and security implications.
Additionally, Bitcoin's ethos of empowering individuals and reducing reliance on centralized intermediaries inherently conflicts with the centralized models of most banks.
Today, Bitcoin has adoption from a worldwide audience, including financial institutional products, retail adoption and worldwide exchanges.
Developers and entrepreneurs build on top of the Bitcoin blockchain network to create better technologies such as Layer 2 networks, SegWit and other applications such as safe wallets to onboard new users.
Many Bitcoin wallets have also been developed for mobile phones, PCs and web browsers. [x11] Some Bitcoin wallets are catered to online access, like exchanges, other Bitcoin wallets are created for people wanting privacy, anonymity or ease of use.
Launched in 2015 by a team led by the prodigious programmer Vitalik Buterin, Ethereum emerged as a revolutionary platform with an ambitious vision. While Bitcoin sought to be a decentralized currency, Ethereum aimed higher: to become a platform that would enable developers from around the world to write decentralized applications (dApps) using smart contracts.
These self-executing contracts, defined by code rather than traditional legal terms, promised to facilitate, verify, or enforce credible transactions without intermediaries.
At Ethereum's heart lies its groundbreaking technology. Unlike Bitcoin, which has a relatively limited scripting language, Ethereum boasts a more flexible and robust scripting language that allows for the creation of intricate and varied dApps. The Ethereum Virtual Machine (EVM), a decentralized computing environment, interprets and processes these smart contract instructions, ensuring they're executed as written.
This technological leap transformed the way developers approached blockchain, shifting the focus from simple peer-to-peer transactions to a myriad of decentralized applications, spanning from games to financial services and beyond.
Ethereum's impact on the cryptocurrency landscape cannot be overstated. By introducing the concept of programmable blockchains, Ethereum paved the way for the Decentralized Finance (DeFi) movement, Initial Coin Offerings (ICOs), and a plethora of tokens created using its ERC-20 and ERC-721 token standards.
These innovations not only created a booming economy within the Ethereum ecosystem but also inspired a new wave of blockchain projects seeking to build upon or improve Ethereum's pioneering work.
As Ethereum continues to evolve (with upgrades like Ethereum 2.0), its legacy remains a testament to the transformative power of innovative blockchain technology.
Cardano, often referred to by its native token name "ADA," is a third-generation blockchain platform that came into existence with the goal of addressing the challenges faced by earlier blockchain systems like Bitcoin and Ethereum.
Launched in 2017 by Charles Hoskinson, one of Ethereum's co-founders, Cardano was designed from the ground up using peer-reviewed academic research, distinguishing it from many of its contemporaries. Its development has been spearheaded by IOHK (Input Output Hong Kong), a company dedicated to creating peer-to-peer innovations to provide financial services to those without access to them.
With a strong emphasis on sustainability, interoperability, and scalability, Cardano sought to deliver a more secure and efficient decentralized platform.
At the core of Cardano's innovation is its commitment to a research-driven approach. Unlike many other blockchain platforms that evolved through trial and error, Cardano's foundation is deeply rooted in academic research and formal methods.
This ensures rigorous testing and peer review before implementation. The platform's unique layered architecture separates the settlement and computation layers, enabling flexibility and easier upgrades.
Furthermore, Cardano's Ouroboros consensus algorithm stands out as one of the first Proof-of-Stake mechanisms to be mathematically proven as secure, offering energy efficiency without compromising security.
As Cardano continues to roll out its development phases, its dedication to technological excellence remains evident, signaling a promising future for the platform.
Bitcoin became successful as a result of its innate technological foundation: the blockchain. Bitcoin changed the current monetary, humanitarian and financial paradigm with 4 foundational theorems. The first being decentralization, no one should have central control of the monetary system.
The second being transparency, all activity is transparent, available to anyone on the blockchain. The 3rd being permissionless, nobody’s permission is required to participate or interact with the bitcoin network. And the 4th being a strict monetary schedule governed by mathematics, unchangeable by none.
With Bitcoin being the foundation, how has Ethereum and Cardano innovated on these technological foundations?
What technological innovations have they implemented to grow on Bitcoins groundwork? Let’s compare the technological properties of Ethereum, Cardano and Bitcoin to see the differences between them, and their pros and cons.
|Technology: Bitcoin vs Ethereum vs Cardano|
|Consensus Algorithm||Proof of Work||Proof of Stake||Proof of Stake|
|Max Transaction Throughput||7-9 TPS||40 TPS||250 TPS|
|Block Time & Transaction Confirmation Time||10 Minutes (60 Minutes/6 confirmations)||15 Seconds (6 Minutes/30 Confirmations)||20 seconds (5 Minutes/15 Confirmations)|
|Basic TX fee cost||$1.2 - $30||$0.50 - $15||$0.6 to $0.8|
|Technologies Built on Top of Network||
|Total Nodes/Validators Online||46,265||955,159||2,911|
|Time Online(As of this article)||About 14 years and 9 months||About 8 years and 2 months||~6 years|
|Value transferred. Yearly(2022, the previous year)||8.2 Trillion||2.65 Trillion+||1.85+ Trillion|
|Purpose||Store of value||Smart Contract Platform||Smart Contract Platform|
In the ever-evolving world of cryptocurrencies, three titans have etched their names into the blockchain ledger: Bitcoin, Ethereum, and Cardano.
Each has carved out its niche, backed by unique technological underpinnings and visions. As we delve into a comparative technological analysis, it's imperative to remember that each blockchain network offers distinct advantages and disadvantages.
Bitcoin: Utilizes the Proof of Work (PoW) consensus. While PoW is exceptionally secure, critics point to its significant energy consumption, with environmental implications. The pro of Bitcoin’s PoW consensus algo its security, the disadvantage is the electricity required to run the network.
Ethereum: Born as a PoW blockchain, Ethereum has embarked on a journey towards Proof of Stake to enhance scalability and environmental sustainability. The advantage of this is that Ethereum has greater security, with less electricity consumption. Ethereum, compared to Bitcoins’ PoW, has the disadvantage that not everyone can run a validator/node (32 ETH required). In Bitcoin anyone can run a node.
Cardano: A Proof of Stake blockchain from its inception, aiming for efficient, scalable consensus without compromising security. One of the negatives of Cardano currently is the lack of sufficient decentralization. More validators are required to fix this.
Verdict: While PoW's security is unparalleled, its environmental footprint is a concern. PoS, championed by Ethereum and Cardano, offers scalability with fewer environmental qualms but is newer and still proving its long-term resilience. Cardano lacks decentralization due to sufficient numbers of validators online. Ethereum on the other hand, has a 32 ETH barrier to entry requirement.
Bitcoin: Processes about 7-9 TPS. Although secure, this rate limits Bitcoin's potential for handling micro-transactions efficiently. Lightning network and other L2 technologies seek to improve this, though it's still a disadvantage that Bitcoin has.
Ethereum: Boasts a throughput of 40 TPS. Faster than Bitcoin, but still faces challenges during network congestion. L2s such as Optimism, and Arbitrum seek to fix this problem, though congestion is still likely.
Cardano: The speedster of the group with 250 TPS offers promise for a wide array of applications beyond mere currency exchange.
Verdict: Cardano leads in sheer speed, but Ethereum's widespread adoption and Bitcoin's unmatched security offer counterpoints.
Bitcoin: Primarily a store of value, but technologies like the Lightning Network hint at broader utility. Additionally, Rootstock brings smart contract functionality, while Liquid adds a sidechain for enhanced scalability and speed. During times of mayhem, liquidity moves from Altcoins to Bitcoin. Altcoins like Cardano get rekt, while Bitcoin retains its value to a better degree.
Ethereum: The undisputed leader in the smart contract arena. With ERC-20, it birthed an ecosystem of tokens. It's also home to an array of decentralized applications, from exchanges like Uniswap to financial platforms like MakerDAO. Additionally, Ethereum's Layer 2 solutions, like Optimism and zkSync, promise further scalability.
Cardano: Beyond its impressive base layer, Cardano's Catalyst and Hydra signify its foray into decentralized governance and scalability. Milkomeda, its bridge to Ethereum, showcases its interoperability vision. Though it has much room to grow, and severe competition by other blockchain smart contract platforms such as Pulsechain, Solana, Avax, Aptos etc.
Verdict: Ethereum's robust ecosystem is unparalleled, but Cardano's research-driven approach holds promise. Cardano also faces ruthless competition. Bitcoin remains a gold standard, with layers being added to diversify its use-cases.
Bitcoin's ~14-year operational track record and $8.2 trillion annual transfer value underscore its status as a store of value. With over 46,000 nodes, it's a fortress of decentralization.
Ethereum, operational for over 8 years, witnesses over $2.65 trillion in yearly transfers. Its impressive 955,000+ nodes illustrate its sprawling reach.
Cardano, the newest among the trio with ~6 years in operation, handles over $1.85 trillion annually, backed by 2,911 nodes.
Verdict: Bitcoin's longevity and trust are undeniable, but Ethereum's vibrant ecosystem and Cardano's rapid advancements present compelling alternatives.
Bitcoin, as the pioneer, stands as a testament to the potential of decentralized finance and remains a robust store of value, with its long-standing reputation and trust in the crypto community.
Ethereum, with its versatile ecosystem, has given rise to countless applications, tokens, and platforms, making it the go-to platform for decentralized applications and smart contracts.
Cardano, while newer, brings scientific rigor, sustainability, and interoperability to the table, showing significant promise for the future, great for speculators and those betting on rigorous growth.
Decentralization is a differentiating factor of cryptocurrencies. It is one of the traits that separates them from typical fiat currencies. As such, there are levels of decentralization. Some blockchains, like Aptos, have a mere 108-110 validators.
Other blockchain networks, like Solana have a bit more. Decentralization ranges from low decentralization, mid low to high and ultra-high.
There are many factors that contribute to the degree of decentralization that a blockchain network experiences.
In the table below we compare decentralization levels of Bitcoin, Ethereum and Cardano by comparing varying characteristics of their respective blockchain networks. These characteristics influence how decentralized the network is.
|Decentralization: Bitcoin vs Ethereum vs Cardano|
|Total Nodes/Validators Online||46,265||955,159||2,911|
|Capital required to run a validator/ Node||Any Computer(>$500) or $1,600 for the latest Antminer (to be profitable)||32ETH($2.5k USD) + a $1,000 Computer(4TB SSD is required for Geth)||840 ADA($210) + a server/computer(>$1000)|
|Consensus Algorithm||Proof of Work||Proof of Stake||Proof of Stake|
|Number of different software suites for running validators/nodes||
|Total capital invested into running validators/nodes by entire network||[Total hash rate = $5.112 billion worth in Antminer S19's] + 9.925B USD in electricity yearly + Infrastructure costs(cooling, Facilities, maintenance)||45.924 Billion USD (28.439M ETH staked) + about 1.434B in infrastructure(950k+ nodes)||22.98B ADA(staked/6.72 Billion USD) +2911 Nodes operation costs(about $6 Million)|
|Total Main Net Down Time||None||None||Block production halted in July 2020 for 25 minutes due to stake pools running outdated software.|
|Censorship Resistance||Ultra-High (due to decentralized nature)||High but there is still some, 27% of all blocks being OFAC compliant .||High|
|Central Entity Influence||None (fully decentralized)||The Ethereum Foundation has influence but no full control||
|Governance||None, Last upgrade was in 2021||EIP: Ethereum Improvement Proposals||CIP: Cardano Improvement Proposals|
As cryptocurrency continues to gain traction, the principle of decentralization remains a crucial pillar. Different networks prioritize various aspects of decentralization, so let's dissect Bitcoin, Ethereum, and Cardano using the provided table and draw some insightful conclusions.
Bitcoin operates with 46,265 nodes, an impressive testament to its well-spread and pioneering decentralized network.
Ethereum takes it a notch higher with a massive 955,159 nodes, showcasing its expansive and robust decentralized framework.
Cardano, though housing only 2,911 nodes, indicates the potential for rapid expansion given its newer status in the market.
Takeaway: The sheer number of nodes indicates that Bitcoin and Ethereum demonstrate a higher degree of decentralization than Cardano, at least in terms of node distribution.
Bitcoin mining, while robust, requires a significant initial investment. The network has around $5.112 billion invested in Antminer S19's alone, not accounting for the annual electricity bill of $9.925B.
Ethereum network, with a massive staking pool of 28.439M ETH (equivalent to $45.924 billion), hints at a decentralized community-driven investment. The infrastructure also requires an added $1.434B.
Cardano presents a cost-effective entry with about $6 million spent on node operations.
Takeaway: While Bitcoin's decentralized nature is backed by colossal individual investments in mining, Ethereum and Cardano's model leans more towards community-driven staking and operations.
Bitcoin leverages Proof of Work, a tried-and-tested method but often criticized for its environmental footprint.
Ethereum, currently on PoW, is transitioning to Proof of Stake, promising more scalability and decentralization.
Cardano operates on Proof of Stake, ensuring a more energy-efficient consensus mechanism from the get-go.
Takeaway: Ethereum and Cardano's move towards PoS indicates a future-focused approach to decentralization, contrasting Bitcoin's traditional PoW. Though Bitcoin has a battle tested Proof of Work, which we know works.
Bitcoin and Ethereum have showcased a remarkable track record with no recorded mainnet downtimes.
Cardano, however, faced a hiccup with a 25-minute halt in July 2020 due to some stake pools running outdated software.
Takeaway: While Bitcoin and Ethereum have proven their mettle in network stability, Cardano, being relatively newer, still has some kinks to iron out.
Bitcoin remains unparalleled with ultra-high censorship resistance and no centralized influence, embodying the decentralization spirit.
Ethereum, while also having a bit of transaction censorship, does see some influence from the Ethereum Foundation.
Cardano, though strong against censorship, has developmental guidance from entities like IOHK and EMURGO.
Takeaway: Bitcoin stands as the beacon of pure decentralization. Ethereum and Cardano, while highly decentralized, have some elements of central entity guidance.
Analyzing the metrics, Bitcoin undeniably stands as the bastion of decentralization, reflecting its foundational principles. Bitcoin offers more decentralization features than Ethereum and Cardano.
Ethereum, with its expansive network and shift towards PoS, represents a dynamic approach to decentralization, balancing scalability with distributed governance. One negative about Ethereum is that some validators censor transactions due to OPAC compliance.
Cardano isn’t as decentralized as Ethereum and Bitcoin, though it offers more anti-censorship and a lower barrier cost to entry in network node operation than Ethereum.
Tokenomics is also another differentiating trait that separates Cryptocurrencies from traditional Fiats. Bitcoin was the first cryptocurrency to have tokenomic traits. These traits help Bitcoin, and other cryptocurrencies appreciate in value and hold their value in times of FUD(Fear, Uncertainty, and Doubt).
Superior tokenomics will launch a cryptocurrency to the stratosphere, making many people money. Cryptocurrencies with superior tokenomics also tend to hold their value in the long term.
Let's compare Bitcoin, Ethereum and Cardano to see which has superior tokenomics. We will illustrate various tokenomic properties in the table below for Bitcoin, Ethereum and Cardano.
|Tokenomics: Bitcoin vs Ethereum vs Cardano|
|Circulating Supply||19,505,137||120,244,439||35.143 Billion ADA|
|Total Supply||19,505,137||120,244,439||36.229 Billion ADA|
|Max Supply||21 Million||Infinite||45 Billion|
|% Circulating supply of Total Supply||100%||100%||97%|
|Circulating Supply Inflation rate(2023)||1.73%||0.367%||2.55%|
|Circulating Supply Inflation rate(2024)||0.865%||0.367%(at this rate of network usage)||0.858%|
|Yearly Inflation Rate(2023)||1.73%||0.367%(at this rate of network usage)||2.55%|
|Yearly Inflation Rate(2024)||0.865%||0.367%(at this rate of network usage)||0.858%|
|Coin Use Cases (Points of Demand)||
In designing Bitcoin as a store of value, Satoshi coded the network so that the inflation of Bitcoin reduced every 4 years by a half. This is because the block reward is reduced every 4 years. In April 2024 the block reward will be reduced from 6.25 BTC to 3.125 BTC. Satoshi also coded a maximum of 21 Million Bitcoins to ever exist.
These are two prime examples of tokenomic traits that give Bitcoin an air of power as a store of value.
Let’s move on to Ethereum and Cardano, two next generation cryptocurrencies that were built on top of the principles that Bitcoin brought.
Comparing Bitcoin and Ethereum we can see that Ethereum currently has lower inflation than Bitcoin. Bitcoin also has lower inflation than Cardano. We can conclude that Ethereum steals the race when it comes to inflation. However, its supply is infinite. Bitcoin and Cardano have finite supply, illustrating that they have better tokenomic traits of supply.
The tokenomic future of Cardano is bright as it is estimated to lower its inflation down to similar levels as Bitcoin of 0.858%. This might definitely help Cardano in the long run. Within the year 2024, Bitcoin Ethereum and Cardano will have sub 1% inflation rates, making the 3 of them attractive cryptocurrencies.
A particular tokenomic characteristic that is important is demand streams. In other words, what methods create demand for the cryptocurrency. For Bitcoin the prime use case for the cryptocurrency is that it is a store of value. People buy Bitcoin to store their wealth or savings. Bitcoin is also required to be able to send Bitcoin transactions.
Ethereum generally has more points of demand than Cardano and Bitcoin, theoretically creating more demand for Ethereum. This correlated to higher appreciation of value, compared to Bitcoin or Cardano.
In conclusion, Ethereum has better tokenomics than Bitcoin and Cardano, mainly because it has an ultra-low inflation rate coupled with many coin use cases that make the coin more demanded by the market.
Bitcoin has the next best tokenomics, simply because it has a finite supply and because the inflation is a network programmed rate, which gets cut in half. Cardano still has great tokenomics out of the 3, just not as good as Bitcoin or Ethereum.
Bitcoin, Ethereum, and Cardano, often heralded as the three titans of the crypto realm, each come with their unique offerings and challenges.
In this section, we'll dissect the key advantages and drawbacks of these major players, ensuring you're equipped with comprehensive knowledge to make informed decisions in the ever-evolving cryptocurrency landscape.
Let's compare Bitcoin, Ethereum and Cardano with their Pros and Cons.
Bitcoin is better than Ethereum and Cardano at retaining value, this can be seen in the bitcoin dominance chart. In times of turmoil, the Bitcoin dominance goes up, while the Ethereum dominance and altcoin dominance(Excluding ETH) goes down. This illustrates that bitcoin outperforms Ether and Altcoins like Cardano. Bitcoin has more pros than cons, but how does Ethereum match up?
Ethereum also has more pros than cons, though Bitcoin did have some unique advantages that Ethereum doesn’t have, and vice versa. Now what advantages does Cardano have that Bitcoin and Ethereum don’t have?
In comparing the three juggernauts of the cryptocurrency world, Bitcoin, Ethereum, and Cardano, we can discern distinct advantages and drawbacks for each. Bitcoin stands tall as a robust store of value, having been tested over time and garnering significant global recognition.
Its impressive infrastructure investment and low entry barriers for node operation highlight its pioneering status in the cryptoverse. However, it falls short in transaction speed and has environmental concerns due to its high electricity consumption.
Ethereum, while inheriting some of Bitcoin's shortcomings, such as high transaction fees, brings to the table a vast ecosystem of DApps and the versatility of smart contracts. Its decentralization is commendable, although the high entry requirements for validators pose a limitation, as well as its low transaction throughput.
Cardano, although relatively newer, promises low transaction fees and impressive transaction speeds. It offers the flexibility of smart contracts, similar to Ethereum, and has an exciting roadmap of future upgrades. Nevertheless, it's still in its infancy in terms of DApp ecosystem and institutional support and has fewer nodes, suggesting a lower degree of decentralization.
In the intricate web of cryptocurrency, Bitcoin, Ethereum, and Cardano stand as pillars, each representing unique strengths and areas of growth. Bitcoin, with its storied ~14-year operational history, has solidified its role as a premier store of value, processing an astounding $8.2 trillion annually.
Its robust decentralization, showcased by its network of over 46,265 nodes, and its commitment to principles like transparency and permissionless access, makes it a force to reckon with in the crypto space.
Moreover, the significant investment of $5.112 billion in infrastructure, particularly in Antminer S19's, underlines the level of trust and commitment from its community.
Its commitment to decentralization, transparency, and an unalterable monetary schedule has won it global acclaim and recognition from established financial entities.
The investment in its infrastructure, coupled with its accessibility for potential node runners, cements its foundational importance in the cryptocurrency narrative.
On the other hand, Ethereum and Cardano, while younger in operational years, represent the innovative spirit in the world of blockchain. Ethereum, with its impressive annual transfer value of over $2.65 trillion and a sprawling network of 955,000+ nodes, hints at its influential presence and the trust it has garnered.
While it boasts higher transaction speeds than Bitcoin, Ethereum's migration towards Proof of Stake signals a drive for even greater efficiency and eco-friendliness.
Its diverse ecosystem and position as the leader in the realm of smart contracts make it a dynamic entity in the crypto universe. Cardano, with around 6 years in operation, boasts a significant annual handling of over $1.85 trillion and a growing node network of 2,911, indicating its rising importance in the decentralized world.
The 3 of these have differentiating disadvantages and advantages. While Bitcoin is slow, it is also a great store of value. Cardano, on the other hand, isn’t as great at retaining its value, though it has more impressive transaction throughput and low fees.
An advantage that Cardano has over Ethereum is that people can launch nodes affordably. The Ethereum network, on the other hand, requires 32 Ethereum to launch a validator.
Each of these cryptocurrencies, with their distinct technological foundations and visions, offers compelling insights into the future of finance, decentralization, and digital innovation.