Contemplating Ditching Bitcoin for Cardano as an Alternative Investment?
Bitcoin's price skyrocketed by nearly 290% over the past two years, boosted by ETF approvals, halvings, expectation of low interest rates, and crypto-friendly policies. Yet, bigger gains might lie with smaller cryptos, like Cardano. Known for minting millionaires since its debut, could Cardano be a better buy than Bitcoin?
Cardano vs. Bitcoin: Understanding the Differences
Bitcoin is mined using energy-intensive proof-of-work (PoW), while Cardano utilizes proof-of-stake (PoS). By staking their tokens, Cardano investors earn interest-like rewards. This method is similar to Ethereum and Solana, both PoS blockchains that support smart contracts, decentralized apps (dApps), NFTs, and crypto assets. Bitcoin, however, is primarily used for mining more Bitcoins due to increasing mining difficulty and an expected exhaustion of Bitcoins by 2140.
The Bull Case for Cardano
Cardano has advantages over Ethereum, with a max theoretical speed of 1,000 transactions per second (TPS), compared to Ethereum's 600 TPS. Additionally, Cardano has more predictable transaction fees based on needed computing power, as opposed to Ethereum's congestion-based gas fees. The Chang Hard Fork improved Cardano's speed, security, and scalability, and Grayscale submitted an ETF application to the SEC, which could attract more institutional investors.
The Bear Case Against Cardano
Cardano falls short when comparing to other PoS blockchains such as Solana, which achieves faster and cheaper transactions, and has plans to boost its Blockchain speed to 100,000 TPS, posing a threat to smaller PoS blockchains like Cardano.
Is Cardano a Viable Replacement for Bitcoin?
While Cardano's potential may be boosted temporary by market changes or ETF approvals, Bitcoin's scarcity and overall investment potential make it a more reliable option, unlike Cardano, which remains a speculative altcoin for the foreseeable future.
Investing in Cardano, with its proof-of-stake system, allows investors to earn interest-like rewards by staking their tokens. Despite its advantages over Ethereum in terms of speed and transaction fees, Cardano still lags behind in comparison to other PoS blockchains like Solana in terms of transaction speed and cost. Eventually, the average investor might consider the potential gains from Cardano, given its faster approach toward becoming a viable platform for decentralized apps, smart contracts, and NFTs. However, Bitcoin's scarcity and overall investment potential, as well as its primacy in cryptocurrency mining, make it a more reliable option compared to Cardano, which remains a speculative altcoin for the time being.
