Ethereum (ETH) cryptocurrency has a big problem: the speed of transactions. The blockchain network processes fewer transactions per second than the smaller and newer rival Cardano (ADA). This is just one of the reasons Cardano has been able to gain ground. Cardano is now the sixth largest cryptocurrency by market capitalization.
But Ethereum won't forever be a laggard when it comes to speed. An update is underway, with the launch scheduled for next year. The speed of transactions will increase. The power consumption will decrease. And Ethereum will become more efficient overall. Now the question is, is this update bad news for Cardano? Let's find out together.
Comparison of blockchains
First, why should we compare these two blockchains? Well, they have a common history. Ethereum co-founder Charles Hoskinson created Cardano. And he sees Cardano as an improvement over previous cryptocurrencies. Hoskinson brought his expertise from Ethereum to Cardano and aimed to make this new project even better.
So now let's take a look at the Ethereum update. Essentially, it will move the validation process from the proof-of-work (PoW) method to the proof-of-stake (PoS) method. PoW involves complex calculations to validate transactions, which are time-consuming and energy-consuming. PoS reduces both. It is not based on calculations. Conversely, an algorithm chooses validators primarily based on the number of coins they own. Cardano already uses PoS.
By making the switch, Ethereum expects to go from today's 30 transactions per second (TPS) to around 100.000. Initially, this may exceed Cardano's speed. Cardano now processes around 250 TPS, but it won't be left behind. The blockchain is working on a level two scalability project, Hydra, which will eventually allow it to reach 1 million TPS.
Become more efficient
I see the Ethereum upgrade as a way to make the blockchain more efficient and this should attract more users and investors. But I don't see it as a move that will alienate users and investors from Cardano.
Here because. Each of these platforms is a work in progress. This means that one can temporarily beat another by a particular measure. For example, Cardano is faster than Ethereum now. Ethereum could get faster than Cardano until Hydra is launched. Users and investors can enter and exit cryptocurrencies every day if they base their decisions on these elements.
Instead, it's best to look at each cryptocurrency's ultimate goal and plan to get there. In Cardano's case, the future looks bright. Hydra will push the network to the fore in terms of speed and efficiency. Cardano's reliance on peer review before rolling out updates means fewer glitches. And its five-step development program also means we can expect quality.
Obviously, when Ethereum launches its update, we could see a decline in Cardano. But I expect any such move to be short-lived. The history of Cardano is only at the beginning and the users and the Investors they will want to stay in the next chapters.
