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Cardano vs. Algorand: Stirring up smart contracts

Thomas Sweeney

Oct 6, 20255 min read

As one of the 21st century’s major technological breakthroughs, the blockchain is a massive innovation hub. Programmers around the world are constantly working on new ways to make this technology faster, cheaper, and more scalable without sacrificing security and decentralization.

Of the thousands of projects entering the Web3 space, two cryptocurrencies stand out as eco-friendly alternatives to Ethereum (ETH) in the smart contract sphere. Cardano (ADA) and Algorand (ALGO) are both well-backed projects that brand themselves as next-gen cryptocurrencies. Although many of the features behind Cardano and Algorand are the same, they have nuanced distinctions in their goals and underlying mechanics.

Whether people want to invest in or use one of these blockchains, there are a few crucial facts to learn about Cardano versus Algorand. Understanding how Cardano differs from Algorand can clarify how these projects envision blockchain technology.

What’s Cardano?

The entrepreneur Charles Hoskinson played a pivotal role in Ethereum’s development before launching Cardano in 2017. He left Ethereum in 2014 over disagreements with the leadership team. Hoskinson believed he could create a more scalable blockchain that offered all of Ethereum’s features without perceived weaknesses like slow transaction throughput and high gas fees.

Cardano lets third-party developers use automated programs called smart contracts to create decentralized applications (dApps) in fields like decentralized finance (DeFi) and non-fungible token (NFT) trading. But unlike many competing smart contract blockchains (including Ethereum), Cardano takes a deliberately slow approach to development with multi-year development eras and peer-reviewed research. The combination of a proprietary proof-of-stake (PoS) consensus mechanism (also known as Ouroboros) and a split between the settlement and computation layers makes Cardano an eco-friendly, fast, and cheap blockchain.

Due to its commitment to research and extensive testing, Cardano has gained notoriety with many universities and governmental organizations, including the Ethiopian Ministry of Education, the University of Zurich, and SERPRO.

What’s Algorand?

Algorand is part of a second wave of smart contract blockchains – including names like Solana (SOL) and Avalanche (AVAX) – that launched before the 2021 crypto bull run

One feature that distinguishes Algorand from competitors is its deep connection to academia, notably MIT. The award-winning computer scientist and MIT professor Silvio Micali is the leading force behind Algorand and the company Algorand Technologies, which runs the Layer 1 blockchain.

Algorand introduced a unique consensus algorithm called pure proof-of-stake (PPoS), which seeks to democratize the decision-making process by using a lottery system to randomly choose validators. Algorand also boasts instant finality, low fees, and a carbon-negative environmental status.

ALGO vs. ADA: Purpose and tokenomics 

ALGO and ADA are the native cryptocurrencies on the Algorand and Cardano blockchains, respectively. They’re essential for supporting the staking mechanics and rewarding validators for publishing transaction data on the immutable payment ledgers. ALGO and ADA are also used to pay for services, products, and gas fees on each blockchain, and they come with governance rights that holders can use to express their opinions on development proposals. 

In terms of tokenomics and crypto monetary policies, ALGO and ADA also have more in common than not. To curb inflation, there’s a hard-cap maximum supply for ALGO and ADA, similar to Bitcoin (BTC)’s limit of 21 million coins. In ALGO’s case, there can only be 10 billion coins, while ADA has a max supply of 45 billion.

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Key differences between Cardano and Algorand

While Cardano and Algorand are very similar blockchain platforms, there are some critical differences in their approach and structure.

Feature

Cardano

Algorand 

Consensus algorithm 

Research-backed PoS model called Ouroboros

PPoS

Blockchain architecture 

Two-tiered structure: Cardano Settlement Layer (CSL) for peer-to-peer transactions and native token transfers, and the Cardano Computation Layer (CCL) for smart contracts and dApps

Two-tiered structure: One for simple transactions and another for complex functions and smart contracts

Block time

20 seconds

2.85 seconds

Transaction finality 

About one day

Instant

Approach to development 

High standards for academic rigor and peer-reviewed research that ensure security but slow the pace of development

Greater emphasis on efficiency, utility, and implementation rather than excessive time in testing

Coding language 

Uses the Haskell-derived Plutus language for writing smart contracts

Uses TEAL for writing smart contracts, but welcomes PyTEAL for those more familiar with Python

Which is better: Cardano or Algorand?

Whether Cardano or Algorand is “better” depends on what investors, developers, and partners are looking for in a smart contract blockchain. Both projects offer similar features and have major financial backing within the blockchain space. However, there are significant differences in how Cardano and Algorand go about development. 

Cardano takes a methodical approach to every update, often involving multiple peer-reviewed studies and months (or years) of testing. The long gap between theory and implementation – along with its dependence on high-level coding languages like Plutus and Haskell – gives Cardano greater credibility with institutions who need ironclad security. However, Cardano’s deliberately slow development makes it less agile than competing smart contract blockchains, meaning it risks losing market share to other projects. 

Algorand’s security standards and commitment to research are some of its core values, but it doesn’t make a peer-reviewed approach the cornerstone of its identity. Instead, Algorand takes a more practical approach to designing and implementing upgrades through Algorand Technologies and the Algorand Foundation. The comparatively quicker rate of development means that Algorand has faster finality and block times versus Cardano. At time of writing, Algorand is fully ready for third-party development, whereas Cardano is still working through the eras in its roadmap.

Generally, individuals and institutions who prioritize safety and compliance tend to like Cardano’s meticulous approach to development, while those looking for a fast and scalable blockchain that’s ready for use today start with Algorand. But generally, Cardano and Algorand are both high-performance smart contract blockchains with high transaction throughput, sustainable mindsets, and potential for long-term growth and widespread adoption. 

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Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.

FAQ

What smart contract platform does Cardano use?

Cardano has a purpose-built smart contract deployment and development network known as the Plutus Platform. Plutus is also the coding language Cardano developed based on the Haskell language to write smart contracts on its blockchain. 

What programming languages does Algorand use to write smart contracts?

Algorand primarily supports Transaction Execution Approval Language (aka TEAL) to write smart contracts, but it also lets developers write code in Python via PyTEAL.

Does Algorand have a future? 

Although there’s significant competition amongst smart contract blockchains, Algorand has a chance for future adoption thanks to its high-profile development team and proven performance. It’s impossible to say whether Algorand will equal or surpass competitor chains like Solana, Cardano, or Avalanche, but it frequently appears in the top 50 cryptocurrencies by market cap and has already partnered with major organizations and institutions like the Republic of the Marshall Islands.

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