I've said it before, and i'll say it again: 2021 is going to be the year of smart contract blockchains, not counting tether. Half of the top 10 cryptocurrencies by market cap are smart contract compatible, and these projects are all seeking to dethrone the current leader ethereum of these large-capped smart contract cryptos.
There are two which stand out as the most likely successors to the throne. I am, of course, speaking about cardano and polkadot. These two juggernauts have seen an unprecedented amount of development and adoption over the past year and they are consequently neck and neck in the rankings by market cap.
Both polka dot and cardano are also on the verge of releasing major updates to their networks. This has many wondering which of the two projects will triumph as the true alternative to ethereum in 2021.
So today i will be comparing cardano and polkadot and reveal which one, i think has the best chance of becoming the next hotbed for smart contracts and decentralized cryptocurrency applications, [ Music ].
Before we continue. There are some terms and conditions you need to know about. First, i am not a financial advisor and nothing in this video should be considered financial or investment advice. Second, i hold both ada and dot as part of my personal cryptocurrency portfolio, and they both amount for about the same percentage of my total crypto holdings.
If you want to know what this percentage is, you'll have to watch till the end. Third, i am not sponsored by any cryptocurrency projects staking pools or venture capital firms, and very rarely do sponsored shout outs during my videos.
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Now we & # 39. Ve got a lot of ground to cover today. So let's, get to it, cardano versus polkadot. When it comes to comparing cryptocurrency projects, there are a lot of different metrics. You can use now, given the size and complexity of both cardano and polkadot.
I'm, not going to get super technical in this video. Instead, i'm, going to stick to metrics that everyone can understand, starting with the least technical metric of all, comparing the founders of both projects.
Dr gavin wood is the founder of polkadot. He's, a computer scientist and holds a phd in human computer. Interfacing gavin is also the founder of the web3 foundation, a swiss non-profit, which oversees the development of polkadot and is the founder of parity technologies, which is a for-profit software development company.
Based here in the uk. It is commissioned by the web3 foundation to develop and maintain polkadot. Charles hoskinson is the founder of cardano. He is a mathematician, but does not have a phd. Charles is also the founder of input, output, hong kong or iohk for short, which is a for-profit software development company based in yup, hong kong iohk and a japanese for-profit software development company, called emergo, are commissioned by the cardano foundation, also a swiss non-profit to develop cardano.
Charles does not hold any official title at the cardano foundation, which sports five council members. By contrast, the web 3 foundation has only three council members, and one of them is gavin. Now, as some of you will already know, charles and gavin also co-founded ethereum, with vitalik buterin and five others in 2013.
, charles left ethereum in june of 2014, 13 months before the ethereum main net went live now. This was apparently due to a disagreement between him and vitalik about accepting venture capital funding which charles supported and vitalik opposed gavin left ethereum in january 2016.
To quote deliver on the promises. Ethereum could not referring to the rollout of ethereum 2.0, which had originally been scheduled to happen shortly after the ethereum main net went live in 2015. until his departure gavin had served as ethereum cto, where he authored the ethereum.
Yellow paper invented the solidity coding language and even coded the first functional version of ethereum, though both gavin and charles are incredibly brilliant. Charles seems to spend a lot more time engaging with the cardano community than gavin does with the polkadot community.
Look no further than to charles's daily youtube videos and live streams for evidence of that and more importantly, gavin and charles have radically different approaches to building their respective projects, and i reckon this is a reflection of their own individual personalities.
Everything that ends up on polka dot first goes through kusama, an unaudited clone of polkadot, where r d stands for quote risk and danger. By contrast, everything that ends up on cardano is peer-reviewed by some of the smartest people in the world before being tested and implemented.
As far as technology goes, cardano and polkadot are both proof-of-stake blockchains. That said, they have notably different architectures, which again seems inspired by the personalities and experiences of their founders.
Given that polkadot was invented to quote deliver on the promises, ethereum could not. Polkadot is eerily similar to ethereum 2.0 polkadot uses an elaborate hybrid consensus mechanism called grandpa babe, which allows the network to process around 1 000 transactions per second gavin has noted that polkadot has a theoretical upper limit of 1 million transactions per second with power chains and Multi-Threading polka dot is essentially an ecosystem of blockchains called parachains that are connected to polkadot's, core blockchain called the relay chain.
These power chains will host all the smart contracts and dapps in polkadot's ecosystem, and there will be an initial limit of 100 power chains. Unfortunately, it's, not yet clear whether these parachains will be interoperable at the outset, which is going to be a key factor in the adoption of polka dot once these parachains start to go live later this year.
Now, if you want a more in-depth explanation of how polka dot works, be sure to open up a new tab by right-clicking on that link, that's in the top right of the video here, in contrast to polkadot cardano, has a more original design.
The cardano blockchain has two layers: the cardano settlement layer, which keeps track of token balances and transfers, and the cardano computation layer which runs all the smart contracts. Cardano uses a consensus mechanism called oroborus proof of stake, which allows the network to process a few hundred transactions per second.
However, once the hydra scaling solution is implemented, cardano will be able to process 1 000 transactions per second for every validator. That's connected to the network. Now this means that cardano would need 1 000 validators to match the speed of polka dot in its final form.
On that note, cardano still has a way to go before you can call it a finished product. We are only at stage two of five in cardano's. Development roadmap with the remaining stages set to occur in the next year or two.
The next stage gogen is set to go live in march of this year and will enable smart contracts on cardano. You can learn more about this by watching my recent video on cardano be sure to open up a new tab using that link in the top right staking on cardano and polkadot is where things really start to get interesting, starting with cardano.
There are currently over 1500 validators that are collectively staking over 70 percent of all ada in circulation. Delegation can be done directly from the uri and daedalus wallets and offers a return of around 5 per year in ada, polkadot has around 300 validators that are collectively staking over 60 of all dot in circulation.
Nomination, which is polkadot's. Version of delegation can be done using the polkadot js browser extension and offers a return of around 14 per year in dodd. Now you might be thinking. Polka dot is the clear winner here and you'd.
Be right were it not for one small detail when you stake on polka dot, that dot has a 28 day unlocking period. If and when you decide to withdraw on cardano, you can withdraw your ada at any time. You, like the fine print on cardano's.
Taking is that the first time you stake, you will not earn any rewards for the first 20 days and will only be able to claim rewards after 25 days after that initial 25 day period, you can stake and unstake as you please, with no penalties.
That said, staking on cardano seems to be a bit risky as daedalus and yoroi are not the most stable wallets out there, and any big updates to cardano can lead to technical issues for delegators. Despite these issues, cardano is technically five times more decentralized than polkadot.
In terms of validators and cardano explicitly intends to become the most decentralized cryptocurrency blockchain in existence. By contrast, polkadot has an upper limit of 1000 validators. Now for everyone's, favorite topic tokenomics, the most obvious difference between cardano and polkadot.
In this regard is the difference. In their token supply, ada has a current supply of around 31.8 billion, with a maximum supply of 45 billion dot has a current supply of 960 million and an initial supply of 1 billion.
Logically, the larger the supply, the lower the value of the coin, which is why dot is worth 16 and ada, is worth 35 cents, even though both have similar market caps. You'd, be surprised how often this basic economic fact flies over the head of retail investors.
Anyways dot is inflationary to the tune of about eight percent per year and this inflation is used to reward validators and nominators. That said, one percent of any dot that was not spent from the polka dot treasury is burned every month.
Even though ada is not inflationary. Around 13.9 billion ada will gradually be minted over the next two decades to pay for staking rewards, which works out to a functional inflation rate of around seven percent per year.
Ada's. Supply dynamics are a bit more complicated than this, and i'll leave a link in the description to an in-depth explanation. In case you're interested one big difference between dot and ada is token allocation, as you can see here.
Just over 80 percent of ada's, initial supply of 31 billion is in the hands of the community compared to fifty percent for dot. This is reflected in the account balances of both cryptocurrencies, which revealed that aida's.
Supply is more equitably distributed compared to the supply of dot, which is heavily concentrated in the top 100 wallets. Speaking of wallets. There are nearly 300 000 cardano wallets compared to just under 110 000 polka dot wallets.
This is actually pretty solid. Considering polkadot has been live for less than a year, while cardano has been around since september 2017.. This also gives dot an edge from a technical analysis perspective, since it does not have a significant previous all-time high, where it could see some serious resistance.
By contrast, ada may get rejected around its previous highs of around 1.2 dollars when the next altcoin cycle starts, because i'm sure there are more than a few investors who bought the top that want to make back their losses.
If you want to see just how high dot and ada could go, i recommend watching my video about planning your ultimate altcoin exit strategy. Yep, you guessed it folks top right. As far as adoption goes, polkadot seems to be the current leader.
There are over 350 projects. Building on polkadot, 17 of which adapts now, i wasn't able to find a place that lists the project's. Building on cardano and a recent post in the cardano forum suggests that such a site does not yet exist.
As far as i can tell, there is currently only one dapp building on cardano and that's. Bondly finance, but before dot holders laugh their way to the bank. Consider this, while polkadot still seems to be building its bridge to ethereum cardano finished its erc20 converter in the fall of 2020 and demoed it in their october, update to say that it looks damn impressive is an understatement.
During this demo, the iohk team noted they are ready to help ethereum projects clone or migrate their projects to cardano. Many of these can easily be done, given that the erc20 converter allows you to burn the tokens on ethereum to mint an equivalent amount on cardano.
As i mentioned earlier, smart contract functionality for cardano is set to come as early as march of this year with the release of gogen. This will give cardano a huge head start over polkadot, which may not see any dapps launching on it until the end of the year.
This weight could even stretch into 2022 if the polkadot team decides to test their parachain auctions on kusama first, which seems to be the plan. Moreover, each dap on polkadot will need its own parachain and there are only 100 slots available.
This technically means that polkadot will be limited to 100 daps. No such limit exists for cardano now before ada holders get too excited. Consider this, although the number of daps on polka dot will be limited, the parachain loan offering mechanism will ensure that every single one of those daps is a game changer.
These parachain loan offerings will also make it possible to do icos in a unique way. That seems to sidestep any existing regulations either that or it'll put polka dot in the crosshairs of regulators.
You'll have to watch my recent update videos about polka dot to see the details about that one. I've left a link in the description in case you've, not watched it. Yet what a rush given everything i covered in this video? It's, easy to see how both cardano and polkadot rank among the top 10 cryptocurrencies by market cap.
Now i know i only just scratched the surface of what these juggernauts are up to, but i think we have enough information to make a verdict about which one will become the next ethereum, even though neither charles hoskinson nor gavin wood have control over their respective projects, Who they are and how they conduct themselves, certainly has an impact.
Charles may not have the same credentials as gavin does, but charles is calm, calculated and incredibly involved with the development of cardano heck. He pumps out more crypto content than i do. I reckon this is a big part of why cardano has such a large and engaged community.
Polkadot also has a large community, but for a very different reason. As a pioneer of smart contract technologies, gavin seems to attract the same sort of forward-thinking developers that are building dapps that create communities.
In my estimation, this is what has made polka dots so successful, thus far, despite their radically different approaches to development, cardano and polkadot seem to be evenly matched as far as specs go and whether you prefer one over.
The other ultimately depends on what you value more. In a crypto project, if you value decentralization, then you probably prefer cardano. If you value staking rewards, then you probably prefer polkadot.
If you value interoperability, then cardano seems to be the winner. But if you're on the hunt for the next 100x altcoin, you & # 39. Ll, probably find it in polkadot's. Enormous ecosystem until polkadot starts plugging in those power chains, though any issues with ethereum will probably send developers running across cardano's, erc20 bridge for refuge in terms of raw price potential.
You could argue you're better off with ada, because it has a smaller price tag which will attract investment from inexperienced retail investors. However, you could just as easily argue that dot will perform better because of the 28 day unlock period for the hundreds of millions of dot that are currently being staked which restricts the market ready supply.
Then again, you could counter that claim with the fact that most dot tokens are concentrated in only a few dozen wallets any one of those could suddenly dump their dot and crash the price. I think that, overall, these projects are so evenly matched that you may as well flip a coin when deciding which will outperform the other.
I just so happen to have a coin in my pocket. So let's, see what the universe has to say about this heads for cardano tales for polka dot. Ah cardano the gods have spoken, and who am i to argue if you enjoyed this video, prove it by smashing that, like button, if you want to see more content like this, then be sure to subscribe and ping that notification bell, so you stay in the loop Now about my cryptocurrency portfolio, if you want to see what cryptocurrencies i hold, then you'll have to subscribe to my weekly newsletter, where i give you the lowdown on the crypto info, you need so your gains.
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