Ethereum (ETH -0.11%) has been making headlines recently as developers announced a tentative date for its latest update. "The Merge" is set to roll out on Sept. 19, and many investors are optimistic about the future of Ethereum.
Cardano (ADA 4.22%) has also seen its price spike in recent weeks, partly due to its upcoming update, the Vasil Hard Fork -- which aims to make the network stronger and more scalable. While the upgrade was recently delayed past its late-July release date, many investors are excited about its potential to improve the network.
Ethereum and Cardano are similar in many ways, but which one is the stronger investment? There are a few factors to consider.
Ethereum: The pros and cons
Ethereum's biggest strength is its sheer size. It's the second-most popular cryptocurrency behind Bitcoin, with a market cap of roughly $200 billion (compared to Cardano's $17 billion).
It's also the most popular network for non-fungible token (NFT) marketplaces, decentralized finance (DeFi) applications, and metaverse projects. While Cardano can also host these types of applications, Ethereum is the clear leader in this space.
The biggest hurdle Ethereum is facing right now is its slow transaction times. Currently, the network can only handle around 15 transactions per second, and those sluggish speeds are also driving up transaction costs. As a result, developers and users have been flocking to faster blockchains like Cardano.
However, The Merge aims to solve this problem. Ethereum has been slowly transitioning from a proof of work (PoW) mining protocol to proof of stake (PoS). Once this upgrade is complete, the network could potentially process up to 100,000 transactions per second. (For context, Cardano already uses a PoS protocol and can currently handle around 250 transactions per second.)
Cardano: How does it stack up?
On the surface, Cardano may not seem as strong as Ethereum. However, its slow-but-steady approach could set it up for long-term growth.
One of the primary differences between Cardano and other cryptocurrencies is that it has a five-stage roadmap outlining its progression. It also has a peer-review system when making changes to the network, and all of the technology behind the blockchain is based on peer-reviewed research.
In theory, this should result in fewer bugs and glitches. While Ethereum's upcoming update is an exciting move for the network, it could be rocky, and any issues with the rollout could potentially result in major volatility. Cardano aims to avoid these types of problems, which may lead to more stable growth.
The downside to this approach, though, is that it takes longer for Cardano to make changes. In the crypto world, where everything moves at a breakneck pace, the peer-review process could put Cardano at a disadvantage.
Which one is the better investment?
Ethereum and Cardano are similar in many ways, but they have distinct differences. Which one is right for you will depend largely on your tolerance for risk and personal preferences.
While all cryptocurrencies are risky investments at this point, Ethereum is generally considered the safer bet. It's significantly larger and more widely used than Cardano, which gives it an advantage. Ethereum is also more established, while Cardano is relatively new and still building out its fundamentals.
However, nothing is set in stone at this point, as all of crypto is still speculative right now. Cardano's methodical approach could help it see sustainable growth over time, especially if Ethereum experiences issues with its shift to a PoS protocol.
Keep in mind, too, that crypto isn't necessarily a zero-sum game. It's possible for both Ethereum and Cardano to succeed by carving out their own unique niches within the sector. But by considering the pros and cons of each investment, it will be easier to decide which one is the better fit for you right now.