Ethereum is the largest cryptocurrency after bitcoin that attracts quite exponential capital.
The reason for its popularity is that it is a smart contract-based programmable blockchain that allows programmers to build decentralised software without dealing with the root-level complexities of the blockchain ecosystem.
With Ethereum being a monopoly in space, it charges high gas fees and congestion.
To solve these problems there are several competitors and the two most popular alternatives that we are going to discuss here with comparison are Algorand vs Cardano.
On the surface, both Algorand and Cardano projects look similar as they both provide a range of functionalities to develop decentralised applications and software yet it is in-depth that their differences become evident.
Let’s go through these differences in detail that make them unique and successful projects.
But first, have a brief overview of both before jumping directly into Algorand vs Cardano comparison to understand the technical outlook and context.
Overview of Algorand
A very recently released blockchain Algorand(ALGO) in 2017, an open source blockchain project primarily competing in the programmable blockchain sector made its place by gaining popularity because of the highly appreciated open source tools layer of compelling complex tasks of blockchain with one click solutions.
It uses pure proof of stake technology with these layer 1 tools to be relevant with high-speed transaction and working capabilities.
A smart contract blockchain system is usually a slow process hence there are close to no real-world applications based on it.
In the programmable blockchain space, most of the tasks can be scheduled in the backend but still, the speed of algorithms is designed to compel in nanoseconds where the smart contract-based proceedings take 10-15 minutes.
The main motive of Algorand is to become the fastest in transactions without compromising security.
It processes the protocol with low fees, an interactive interface that requires minimum efforts from the user side with absolutely no coding requirements, and a streamlined token creation process.
Architecture of Algorand
Algorand twists its architecture to create an improved scalable system by adding two layers. These two layers are the foundational layer and the other the upper layer. Let’s discuss them in detail:
- The foundational layer: The foundational layer contains the atomic swap features that are used to swap different assets of data objects to enhance the speed. This layer also deals with smart contracts where community members can create minor smart contracts(called Layer 1 Algorand Smart contracts or ASC1s) fast while creating ASAs.
- The upper layer: In this layer, the major complex smart contracts occur and are usually used for transactions or different functionalities related to developing decentralised applications by developers. This dividing of smart contracts based on the complexity of tasks results in scalability.
The concept of Algorand ecosystem is quite different from Cardano. Let’s understand it also before comparing Algorand vs Cardano critically.
Learn: What are reflections in crypto
Overview of Cardano
The journey of Cardano started in 2015 although the native coin of Cardano was released late in 2017 that is two years after its initial release.
The smart contract feature also launched recently and in a short span caught the eyes of investors and developers because of its high-performance functionalities.
Cardano is solving the blockchain smart contract features pacing issues that are neglected by other projects which cause security scarcity in transactions.
It offers a network that does not sacrifice the promising concepts of blockchain while trying to be fast and scalable at the same time hence compiling more reliable solutions in smart contract-based programmable interfaces.
The founder of the Cardano project is also one of the eight founding members of Ethereum.
So as one who knows the development phase of Ethereum from the initial stage, Charles Hoskinson proved that he is the right person that can overcome the complicated backlashes of Ethereum phases without compromising the root features of blockchain.
The architecture of Cardano
The architecture of Cardano is based on two tiers. The first tier comprises the Settlement layer and the other one is the computational layer. Let’s have closure details about both of these tiers.
- Cardona Settlement Layer(CSL): The other name for this tier is Byron era and the main objective of this tier is to transfer to and collect from other blockchain participants during the transactions in Cardano native cryptocurrency(ADA). It also comprises the immutable transactions record like layer-1 functionalities of other blockchain ecosystems like bitcoin as its major functionality.
- Cardano Computational Layer(CCL): The Computational tier is a whole separate layer that consists of functionalities such as tokenization, inter polarizability, smart contracts, decentralised applications, and a development environment that is crucial for the Cardano ecosystem’s robust functioning. This tier is also responsible for maintaining the software development kits for the ease of developers.
Key Differences between Algorand vs Cardano
Now with an appropriate context about the proceedings of both the crypto project let’s evaluate Algorand vs Cardano covering each minute detail about them.
|Algorand uses the slight variation of proof of stake called pure proof of stake of PPOS which is an open source consensus mechanism that is highly democratised and requires little to no staking for securing and participating over the network. In comparison to Ethereum which requires 32 Ethereum to participate and security over the network, Algorand requires only one. This thing can also have an adverse effect as a low quantity at stake means more vulnerability through participating nodes because of the low entry barrier. The working of the Algorand consensus mechanism depends on participation and relay nodes. The participation nodes work on proposing while the relay nodes work on voting for the distribution.||Cardano uses a proprietary proof of stack consensus protocol called Ouroboros which is the phenomenal innovation of the project as it contains vast high-performing functionalities. It is the first Proof of stake algorithm that is independently audited and verified hence becoming a peer-reviewed algorithm. Ouroboros delegates the ADA holders to a stake pool for validating transactions in the Cardano blockchain. Each validating transaction is considered as the node and these nodes select their node leader based on the holding ADA amount until a pool saturation. Then the collected tax amount is distributed to the priority of the nodes set from the leader node to last.|
|ALGO which is Algorand native crypto currency plays a direct role within the Algorand ecosystem. The reward that is generated through validators for producing blocks is not only distributed among the block producers but to all ADA coin holders which are estimated as a constant return.||ADA, Cardano’s native cryptocurrency, pays off the return rewards based on a priority system where the regards are distributed in such a way that the producing blocks get the top priority, and then the more transaction accounts holding ADA coins get their share based on their holdings. Hence strict constant returns are not the case here.|
|Algorand priorities are set to scalability for the whole decentralised architecture. So although they are working in a programmable space their major priority is to make the crypto functionalities grow to common workings through the means of technical aspects.||Cardano is more focused on the ease aspects of blockchain, especially for the developers. Their main motive is not the expansion but rather focuses more on the frequent use of their features when it comes to creating the decentralised applications that are best from the present competitors in the space.|
|In terms of speed of transaction, Algorand is beating every competitor with 4.5 seconds per ALGO coin with an almost immediate confirmation code generation. The current ALgorrand system can process up to 1300 TPS (transactions per second) which is expected to go as high as 3000 TPS in the future.||In the case of Cardano, the Cardano can process up to 250 TPS which is quite low in the race of Algorand vs Cardano but for reference bitcoin processes 5 TPS while the Ethereum process is up to 13 TPS. Hence it is not quite low when compared to established cryptocurrencies and also their prior focus is to add more functionalities for the development aspects.
|The one important aspect is the cost of gas when it comes to cryptocurrency transactions. In Algorand there is no concept of gas fees as it still takes fees that are .001 ALGO coins but it is close to 0 USD.||In Cardano’s ADA coin the cost of gas fees is 0.17 ADA coin which is equivalent to 0.91 USD which is although nominal but still can look as a load if interested in selecting specifically one from Algorand vs Cardano.|
|There are two main components of Algorand Smart Contracts(ASC1) that are stateful and stateless. The Algorand ecosystem consists of an Algorand virtual machine that reads these two types of smart contracts written in the TEAL language that we discussed above, is a low-level programming language that provides fast processing for the transaction.||In the case of Cardano, the functioning of Smart contracts is pretty similar to Ethereum where the Smart contracts and tokens go hand in hand in the blockchain ecosystem. There are two-tier systems that work behind the scenes that are the Cardano computational layer which manages multiple components related to tokenization and Decentralised apps and the settlement layer enables the processing of ADA with other blockchain participants.|
Well on the surface both Algorand and Cardano is a cryptocurrency that majorly works in programmable space such as Ethereum but here in this article, we cover the fundamental aspects that provide depth to the whole Algorand vs Cardano discussion.
Both cryptocurrencies have their advantages and disadvantages that will be clear in the head-to-head comparison mentioned in the above sections of this article.
It might be interpreted that one is outgrown the other but it is not the case as they both fulfil specific solutions to different problem sets.