What Makes Cardano Different From Bitcoin And Ethereum?

Despite the many successes made, ADA is somewhat an outlier in the heavily volatile crypto space which is why it is different.

ADA calls itself the first third-generation cryptocurrency with a goal of tackling scaling and infrastructure problems that showed up in BTC at first as a first-generation cryptocurrency. It introduced the idea of digital coins and the second-generation cryptocurrency Ethereum, which expanded use cases for the coins to smart contracts, making it different than the two.

Cardano however, aims to solve problems related to scalability, sustainability, and interoperability on all crypto platforms. The first problem refers to the slowing down of the networks and the high fees because of the rise in transaction volumes. Ouroboros, the algorithm Cardano uses, has been put forward as a solution to the scaling problems.

Ouroboros uses a Proof of Stake approach to save on energy costs and to enable faster transaction processing but instead of having a copy of individual blockchains on a node, this particular blockchain streamlines the number of nodes in a network by simply appointing the responsible leaders to verify and validate transactions from a collection of nodes. Then, the leader node pushes transactions to the main network.

Cardano adopted RINA or Recursive Internetworked Architecture to scale the network. This idea was initially developed by John Day and enables customized increments to heterogeneous networks. Hoskinson also said that he wants Cardano’s protocols to reach the standards of TCP/IP which is a protocol used on the Internet for exchanges of data.

The interoperability relates to the portability of the cryptocurrency within the natural ecosystem and the interface with the current global financial system. There’s also no way to perform cross-chain transactions between crypto-assets or to conduct a seamless transaction that involves cryptocurrencies and the rest of the financial ecosystem. The exchanges are the only intermediaries here. The assortment of regulations that pertain to customer and transaction identities, distanced the entire ecosystem from its global counterpart.

Cardano aims to enable cross-chain transfers via side chains that are conducting the transactions between two parties off-chain. It is also looking for ways that institutions and individuals can divulge metadata and relate to transactions and identities to enable the use of crypto for daily transactions and trading. Sustainability is about governance structures that provide incentives to miners and other stakeholders about developing a sustainable economic model while also trying to build what the creators describe as a “constitution” of protocols to avoid hard forks as we have seen in both Ethereum and bitcoin.

The protocols will be hardcoded into the Cardano blockchain in the future and all applications using the protocol like exchanges and wallets will automatically check for compliance once applications get built.