Should You Forget Bitcoin and Buy Cardano Instead?

Bitcoin's (CRYPTO: BTC) price soared nearly 290% over the past two years. That rally was driven by the approvals of its first spot-price ETFs last January, its halving (which reduces its mining rewards) last April, expectations for lower interest rates, and the Trump administration's crypto-friendly policies. The world's top cryptocurrency also gained traction among institutional investors as an alternative to gold, silver, and other precious metals.

Bitcoin could still have plenty of room to grow over the next few years, but investors who are looking for bigger gains might check out some of the market's smaller cryptocurrencies. Could Cardano (CRYPTO: ADA), which has minted plenty of millionaires since its market debut eight years ago, actually be a better buy than Bitcoin right now?

Bitcoin is mined through the energy-intensive proof-of-work (PoW) mechanism, while Cardano isn't mined at all. Instead, Cardano uses the less energy-intensive proof-of-stake (PoS) method to "stake" tokens on the blockchain to validate transactions. By staking their tokens and locking them up for fixed periods, its investors can earn interest-like rewards.

That validation method makes Cardano comparable to other PoS blockchains, like Ethereum (CRYPTO: ETH) and Solana (CRYPTO: SOL). PoS blockchains also support smart contracts, which are used to develop decentralized apps (dApps), non-fungible tokens (NFTs), and other crypto assets. Therefore, PoS tokens are often valued by the transaction speeds on their underlying blockchains and the size of their developer ecosystems.

By comparison, Bitcoin's blockchain can only be used to mine more Bitcoins. With the difficulty of mining increasing every four years and the last tiny sliver of a Bitcoin expected to be mined in the year 2140, Bitcoin is valued by its scarcity much like gold and other physical commodities.

Cardano has two main advantages against Ethereum, the largest PoS blockchain. First, it has a max theoretical speed of 1,000 transactions per second (TPS), whereas Ethereum's max speed currently is about 600 TPS.

Second, it sets its transaction fees based on the size and necessary computing power of each transaction. That makes its prices much more predictable than Ethereum's congestion-based gas fees.

Last August, Cardano deployed a long-awaited network upgrade called the Chang Hard Fork, which increased its speed, security, and scalability. That upgrade could draw more decentralized application and crypto developers to its blockchain.