Before deciding on which crypto asset to invest in, you need to consider many factors. This is sometimes done by comparing two assets.
In this guide, we will compare Bitcoin and Cardano as two crypto assets that anyone can invest in. If you are trying to decide which of the two to invest in, you’re not alone.
We will help to make your decision easier by showing you the differences between the two, including their individual strengths and weaknesses.
What Is Bitcoin (BTC)?
Bitcoin is the first and biggest crypto asset by market capitalization. It is also the most valuable in terms of price. The cryptocurrency was first created as peer-to-peer electronic cash to be used for payments.
This worked for a while, but as the number of users increased, the network became more congested and the transactions slowed. As a result, the network became unsuitable for transactions, and so it didn’t serve the purpose of electronic cash anymore.
Even though you could still spend BTC on goods and services, it wasn’t fast enough for anyone to use it as a regular means of payment, primarily because of the block size which remains at 1 mb, thus limiting the number of transactions it can process.
Bitcoin operates the proof-of-work consensus algorithm, which requires mining. This is the process through which miners verify transaction blocks to ensure no one cheats the network. In return, they are rewarded with a fixed number of BTC, and that is how new BTC enter into circulation.
There are only 21 million BTC that can ever exist, and roughly 20 million have already been mined. Because of the small supply of the asset, investors have discovered that it could be a store of value.
Bitcoin therefore is today used mainly as a store of value, which is a major deviation from its originally intended use. This is so because despite its volatility, the price has risen consistently over the years of its existence.
What Is Cardano (ADA)?
Cardano is a proof-of-work (PoS) cryptocurrency network that is currently the 10th largest by market capitalization. As a PoS network, it is widely different from Bitcoin, since the entire consensus mechanism and the way it works is different.
The network was created as a scalable solution for building smart contracts and decentralized applications. Because of its scalability, Cardano is faster and costs less for transactions than Bitcoin, which makes it a better choice for fast P2P transactions.
Unlike Bitcoin, Cardano’s PoS network relies on validators who stake the native token, ADA to help validate transactions and ensure that the network is secured. The network is however generally regarded as less secure than Bitcoin.
There are a total of 45 billion ADA that can ever be available, and they are premined. This means that all the tokens have already been mined, unlike Bitcoin which requires continuous mining to keep the network going.
The number of tokens in circulation is roughly 36 billion which means roughly 10 billion are still held by the team. ADA total supply and circulating supply are extremely high compared to Bitcoin, but this is done on purpose because it is a utility token used to pay fees, for staking, and governance on the network.
Which is Better?
This question depends on what you intend to do with the asset in question. If you wish to buy a long term investment you can hold, Bitcoin is definitely the better choice. However if your goal is to own a crypto asset you can use to buy and sell regularly, ADA is the better choice.
This is because considering the total supply for instance, Bitcoin has a far smaller total supply than ADA, which makes it more valuable in the future. Bitcoin is also quite slow, and is not suitable for everyday use as a payment asset, therefore you need to choose wisely.
