Ethereum is the leading cryptocurrency with an open-source blockchain system. Because of that, other crypto applications are able to run on its network. Ethereum’s success in this path has therefore encouraged other cryptocurrencies to do the same, with the primary goal of becoming a better, bigger, and faster blockchain system.
The major competitors of Ethereum are presently Cardano and Solana. These two are coming up close to Ethereum and so are often termed Ethereum killers. And with their recent updates and plans for the future, the speculation that Cardano and Solana will one day overtake Ethereum may soon come to pass.
In this post, we will be comparing these three crypto giants to see what similarities they have, as well as some features that set them apart. So let’s go deep comparing Ethereum, Cardano, and Solana.
Smart Contracts: The Major Similarity between the Three
The major thing that makes Ethereum, Cardano, and Solana different from Bitcoin is smart contracts. Smart contracts are a tiny piece of code embedded in their algorithm which helps to execute certain actions when some pre-agreed conditions are met.
Smart contracts don’t need the involvement of any third party – they are self-executing, and so, they cannot be changed by anyone too. Once the conditions in the agreement are met, the agreed action will also happen. For instance, if John agreed to sell his car to Jimmy for $4000, both of them can create a smart contract to that effect. Once Jimmy pays $4000 to John, the car will be automatically released to him. But if the money remains even a cent to make $4000, the action will not be executed – which is releasing the car to Jimmy.
Smart contracts are presently opening a world of possibilities in the crypto space. Because of that, these three platforms – Ethereum, Cardano, and Solana can be used to build decentralized apps, be it decentralized finance apps (DeFi apps) or social media platforms.
A Closer Look at Each of the Crypto Platforms
Although these three platforms are open-source blockchains and have many things in common, yet they are quite different in some aspects, especially in the type of operating procedure they use. Let’s take a look at some of these differences.
Ethereum is presently the second-largest cryptocurrency that exists after Bitcoin – based on market capitalization. A part of Ethereum’s platform is smart contracts which are designed to execute an online agreement between two parties. This automatically removes the involvement of any third party in a transaction, and so cuts transaction costs while increasing the reliability of the transaction.
Because of the smart contract functionality of Ethereum, the platform has also become a good ground for developers to build decentralized apps (dApps). Ethereum is also used for DeFi and NFT market, both of which have contributed greatly to the popularity and acceptance of Ethereum.
However, despite all these interesting features of Ethereum, the platform has some serious fundamental challenges. One of them is that transaction speed is very low on the Ethereum network. Presently, it could only handle about 30 transactions per second max compared to other crypto networks like Visa which handles more than 20,000 transactions per second.
Another challenge is that transaction costs are also extremely high on the Ethereum network. And this has posed a serious concern to developers using the platform to build different applications.
Cardano is also a decentralized open-source blockchain platform like Ethereum. Cardano also runs smart contracts on its network, which means developers can also build dApps and DeFi on it – thanks to its recent Alonzo upgrade. Although Cardano’s transaction speed is a bit higher than that of Ethereum, there is still lots of room for improvement too. It presently handles about 250 transactions per second.
But with the new Alonzo upgrade on the network, Cardano promises to increase its transaction speed to 1 million transactions per second in the nearest future. And that, of course, will have a major impact on transaction costs too.
Solana is quite unique in its working procedure as it uses the Proof-of-History (PoH) consensus algorithm unlike Ethereum and Cardano who use Proof-of-Stake (PoS). This type of algorithm is designed to work based on past performance between computers on a decentralized network without necessarily having all computers to communicate and agree. Transactions are executed based on the past reputation of the contributing nodes.
Because PoH doesn’t have to have all nodes to agree before making a decision, transactions are much faster on it. With it, Solana is able to handle up to 50,000 transactions per second, which is presently way too high than what its competitors are doing.
Apart from having extremely fast transaction speeds, Solana platform can also execute smart contracts, making it a suitable platform for building different applications, including dApps, DeFi, NFTs, etc.
Another Difference: Market Capitalization
Another major thing that sets these three apart is their market capitalization. Ethereum is presently the second-largest crypto after Bitcoin with a market cap of more than $400 billion.
Cardano has experienced rapid growth this year, which also boosts its market cap. Presently, the ADA is ranked number three based on market capitalization. It currently has a market cap of about $97 billion. Since the beginning of the year, Cardano has grown by more than 1600%.
The year has also been a good one for Solana as the crypto started the year at $1.5. But right now, one SOL is worth $140. Solana has experienced about 7000% growth in 2021 bringing it to the seventh position on the table based on market capitalization. It presently has a market cap of $35 billion.
Why is Cardano and Solana Called Ethereum Killers?
The major reason these two are called Ethereum killers lies in their algorithm. Presently, Ethereum uses Proof-of-Work which poses a major concern to the crypto and non-crypto community due to its mining activities. But with the proof of stake and proof of history of Cardano and Solana respectively, the two are said to have the potential to put an end to this major concern about Ethereum.
However, with the new Ethereum 2.0 upgrade where it will be switching from proof of work to proof of stake, Ethereum will be bringing a solution to the problem. PoW is too energy-demanding for mining but PoS doesn’t require mining and so will consume less energy.
Who is Likely Going to Win the Race?
While Cardano and Solana seem to providing a solution to the major problem of Ethereum, having high transaction speed and reduced transaction costs, the major problem with the two is that their adoption cannot be matched with that of Ethereum.
Both of them have far less market capitalization compared to Ethereum, which means they remain speculative at the present. So, anyone buying SOL and ADA tokens or building an app on their networks is presently taking a risk on a platform that currently only works in theory.