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What is Cardano and how is it different from Bitcoin?

Key Takeaways
  • Cardano offers a sustainable, efficient blockchain for smart contracts, challenging Bitcoin's dominance.
  • ADA offers diverse utility in DeFi, governance, NFTs, and beyond, making it a multifunctional cryptocurrency.
  • Invest in ADA wisely, considering technology, team, but also crypto's inherent volatility and regulatory uncertainties.
13-Oct-2023 Sudeep Saxena
What is Cardano and how is it different from Bitcoin?

Cardano: A Smart Contract Blockchain vs. Bitcoin

Bitcoin is the undisputed king of crypto but even though all insiders accept its supremacy, they also understand the limitations of the Bitcoin blockchain and encourage other projects which have the potential to leverage the blockchain technology to further empower the decentralized world of finance. 

This is a space where many Web 3.0 projects have emerged with different value propositions and one of the most promising ones include Cardano. Cardano (ADA) is a blockchain that aims to eliminate the inefficiencies of the Ethereum (2nd generation) blockchain and natively adopts a more power-efficient consensus mechanism.  

In this article, we are going to introduce you to the Cardano ecosystem and understand the problems that it aims to solve. 

What is Cardano and why does it exist?

Cardano is a decentralized, open-source blockchain platform that aims to provide a secure, sustainable, and scalable infrastructure for the development of smart contracts and decentralized applications (dApps). It was founded by Charles Hoskinson, one of the co-founders of Ethereum, and its development is driven by IOHK (Input Output Hong Kong), a technology company.

The primary purpose of Cardano is to address and improve upon the limitations and challenges faced by existing blockchain platforms, including scalability, sustainability, interoperability, and governance. The project was designed with a strong focus on research-driven development and a commitment to evidence-based protocols. 

Backstory of ADA token

The ADA token is the native cryptocurrency of the Cardano blockchain, developed by IOHK. Launched in 2017. The ADA token is named after Ada Lovelace, a 19th-century mathematician recognized as the first computer programmer. Cardano aims to create a more secure and scalable blockchain and is known for its unique proof-of-stake consensus mechanism, Ouroboros. 

ADA serves multiple purposes within the Cardano ecosystem, including staking, operating smart contracts, and transferring value. Through its emphasis on scientific research and a dedicated development roadmap, Cardano and its ADA token aspire to address the challenges faced by the blockchain industry, such as scalability, sustainability, and interoperability.

Here are some of the most prominent use cases of ADA tokens:

  • Currency and value transfer

  • Staking and delegation

  • Creating and executing smart contracts

  • Governance of the Cardano blockchain

  • Utilized in various DeFi applications 

  • NFT minting, buying, and selling

  • Identity verification on Cardano’s Atala PRISM

  • Cross-chain interoperability

  • Creating a transparent and immutable supply chain 

Cardano staking

Cardano staking involves participating in the network's proof-of-stake (PoS) consensus mechanism, Ouroboros, by allocating ADA tokens to a stake pool to help validate transactions and produce new blocks. 

Unlike proof-of-work (PoW) systems of Bitcoin, which require substantial energy and computational power, Cardano's PoS system selects validators based on the amount of ADA staked, making it more energy-efficient and sustainable. ADA holders can either establish their own stake pool, requiring technical knowledge and constant network monitoring or delegate their ADA to an existing stake pool, participating indirectly in the staking process. 

1PCT, IOG, BLOOM, DIGI, ADLT, and SCAR are some of the most popular Cardano staking platforms that you can use to stake your ADA tokens. By staking ADA you get an opportunity to support the development and decentralization of the Cardano network, fostering a robust ecosystem that can host various financial and social applications.

How is Cardano different from Bitcoin?

Cardano is natively different from Bitcoin in different aspects and enables its users to build on top of its blockchain, unlike Bitcoin which did not allow it before the recent Ordinal update. Even after the Bitcoin Ordinals update, building on top of Bitcoin is not cost-effective due to the highly congested mainnet and high power consumption in validating the transactions. Here are some of the major differences between Cardano and Bitcoin which gives Cardano the upper hand over the world’s leading cryptocurrency:




Consensus Mechanism

Proof of Work (PoW)

Proof of Stake (PoS) - Ouroboros

Average transaction time

10 minutes

20 seconds

Supply limit

21 million

45 billion



250 TPS


Decentralized, BIP Governance

On-chain governance



Designed for interoperability

With these differences, Cardano comes out to be a better choice for anyone to be a part of but Bitcoin’s legacy in the crypto ecosystem is unmatchable and yet to be overtaken by any other cryptocurrency. 

Should you invest in ADA?

Investing in ADA, or any cryptocurrency, should be based on thorough research and an understanding of the market instead of an impulsive decision based on any suggestion. Cardano (ADA) has garnered attention due to its scientific philosophy and methodical approach to development. 

If you resonate with the core idea behind the Cardano blockchain, you should consider becoming a part of the blockchain by investing in ADA. To make it easier for you, here are some of the reasons why you should and why you should not invest in ADA:

Reasons to Consider

Technological Advancements: Cardano’s proof-of-stake mechanism, Ouroboros, and its smart contract platform provide a technologically advanced and energy-efficient blockchain.

Strong Development Team: Led by Charles Hoskinson, the team behind Cardano is robust, with a clear focus on creating a sustainable and scalable blockchain.

Diverse Use Cases: With smart contract functionality, Cardano supports a wide array of decentralized applications, including those in the growing DeFi sector.

Reasons for Caution

Market Volatility: Like all cryptocurrencies, ADA is subject to high market volatility, which can result in significant financial losses.

Regulatory Uncertainty: The global regulatory environment for cryptocurrencies is still evolving, which can impact the price and usability of ADA in the future.

Cardano is indeed a project backed by solid market research and an aim to solve real-life problems of decentralized finance. However, with ETH shifting to PoS and other blockchains getting faster, more efficient, and cheaper, Cardano is trying to redefine its position in the global crypto landscape. It is also true that the blockchain and cryptocurrency market is too young to be judged based on absolute statements and the best of the projects including Cardano is yet to be unveiled. 

Also Read: OpenAI CEO Sam Altman Praises Bitcoin's Technological Significance

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