The Solana blockchain uses SOL tokens, while Cardano and Ethereum use ADA and ETH tokens, respectively, for their ecosystems. All these blockchain cryptos have their native tokens along with smart contract functionalities, but what sets them apart is their features and algorithms.
Ethereum, Solana, and Cardano differ from Bitcoin mainly due to their support for smart contracts. Smart contracts are algorithms that execute automatically when specific conditions are met.
Apart from smart contracts, the major difference lies in the consensus mechanism used. Ethereum, Solana, and Cardano employ Proof of Stake (PoS), whereas Bitcoin uses Proof of Work (PoW). Bitcoin is more suited for applications involving the exchange of goods, services, and applications. On the other hand, Ethereum, Solana, and Cardano are better suited for the development of decentralized applications (DApps), including Decentralised Finance (DeFi) and social media apps.
Meanwhile, Bitcoin allows users to perform specific conditions through algorithms, enabling the exchange of Bitcoin for other assets. With smart contracts, a contract is executed from the computer to another network. This results in platforms with smart contracts offering many more features than those without.
The introduction of smart contracts made Ethereum stand out from Bitcoin and other cryptos based on its blockchain. While Bitcoin was introduced as an alternative to real-world currency, Ethereum emerged as an alternative to Bitcoin and beyond. It empowered developers to build applications that do not rely on centralized networks, making the best use of the blockchain system.
However, Ethereum faced one major flaw in its Proof of Work system. Large organizations called miners owned systems that authenticated crypto transactions, which couldn’t be changed. The platform rewarded users for these transactions over their network, similar to Bitcoin.
Cardano, on the other hand, uses a more efficient system known as “Proof-of-Stake.” In this system, miners must stake their crypto first to receive rewards. The platform then uses a predefined number of miners for transaction authentication, reducing computing power and energy consumption. This makes Cardano and Solana more eco-friendly compared to Bitcoin and Ethereum, which also share similar energy consumption problems.
Solana and Cardano are preferred over Ethereum primarily due to their implementation of the “Proof of Stake” system. Their environmental friendliness in terms of power consumption is a major advantage.
Governments and experts have expressed concerns about the energy consumption of cryptocurrencies. Solana and Cardano can reduce energy consumption by up to 99% compared to Ethereum. The widespread adoption of Ethereum by other blockchains has raised the need for Ethereum to become more environmentally friendly.
Proof of Stake and Smart Contracts are major factors deployed in Ethereum, Solana, and Cardano. The key differentiating factor for Ethereum is its scalability. Every ETH transaction requires transaction fees or Gas fees, regardless of the type of transaction. These fees can become highly volatile as the number of transactions on the network increases.
Solana has addressed the scalability issue with its cryptographic feature, Time-stamping, which can achieve up to 6500 TPS, making it remarkable and almost on par with Visa transactions.
Bitcoin is one of the most recognized cryptocurrencies, making it a safer option in some ways. However, its volatile price changes can make it less reliable. The future of cryptocurrencies is heavily dependent on dApps, but ultimately, they are all software and their worth depends on scalability. Each crypto has its own benefits and flaws. Thorough research is essential before trading any crypto.
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