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Cardano vs Bitcoin: which is the better asset to buy in September 2020?

By Capital.com Research Team

06:16, 4 September 2020

Cardano vs Bitcoin

What’s the  difference between Cardano and Bitcoin?

In the past 3 months, the price of Cardano (ADA) increased by 53 per cent, while that of Bitcoin by only 22 per cent. What gives ADA this edge – and will it stay ahead of Bitcoin in terms of growth rate? To get to the answers, we first need to analyze the difference between Cardano and Bitcoin.

Cardano vs Bitcoin

Of course, the most obvious difference when comparing Cardano and Bictoin is scale: the market cap of Bitcoin is 70 times higher and its daily trading volume is 90 times larger. But this doesn't mean that Bitcoin is a better investment asset or that it's inherently better as technology. Let's compare the two coins based on several criteria.

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Comparing Cardano and Bitcoin governance

Bitcoin doesn't have any central governing structure or foundation that would decide how the network should develop. Consensus, block rewards, blockchain rules – everything is still the same as in Satoshi Nakamoto's White Paper. There was a non-profit called Bitcoin Foundation, but it’s defunct. Because of this lack of central structure, it's hard for Bitcoin to evolve.

By contrast, Cardano is governed by three connected bodies: IOHK, Cardano Foundation and EMURGO. They oversee development, research and investments and can introduce changes to the protocol. Another difference between Cardano and Bitcoin is that most ADA developers are paid. This structure allows the cryptocurrency to evolve in a steady, well-planned way.

Ecosystem potential: support for smart contracts

Right now you can't build decentralised applications (dApps) or create other assets on either Cardano or Bitcoin blockchain. That's because they don't support smart contracts – yet. This functionality is on the cards for both coins, but on very different time frames. 

Cardano devs are already hard at work on the Goguen update, which will include smart contracts in a purpose created language, Plutus. The testnet will be rolled out in Q3 2020.

Cardano vs Bitcoin

Meanwhile, Bitcoin developer Jeremy Rubin is working on a smart contract language called Sapio, but actual implementation is still far in the future. Thus, just like with governance, ADA comes out as a winner in the Cardano vs. Bitcoin battle when it comes to contracts and native assets.

Ease of use and passive income opportunities

Sending ADA is many times cheaper and faster than BTC, so it’s far better suited for everyday transactions. On the other hand, Bitcoin is easier to buy with a credit card, though on Capital.com you can easily top up your account using Visa or Mastercard and buy either coin. 

Apart from trading or storing coins in a wallet, you can earn an additional revenue with both Cardano and Bitcoin – but through different instruments. Cardano, being a Proof-of-Stake coin, supports staking. This means delegating coins to a blockchain node in exchange for a share in the rewards the node earns for validating transactions. The nominal APR of ADA staking is 3.68 per cent a year. 

As for BTC, you can lend it through various crypto lending platforms. The APR reaches 6 per cent – much higher than for ADA. Under this criterion, Bitcoin wins. 

Comparing price action: Cardano vs Bitcoin in June – August 2020

Overall, Cardano has gained 270 per cent in 2020 so far – and 53 per cent between June and August. It's now above $0.12 – the highest since August 2018. The main driver behind this rally was the much-anticipated network update, Shelley. It was finally released on 29 July. 

Cardano vs Bitcoin

Many expected the price to jump again following the update, but instead there was an unexpected slump after 26 July. The dip had nothing to do specifically with Cardano, however: as the price of BTC surged, investors began selling off altcoins. You can see the BTC rally in the chart below: 

Cardano vs Bitcoin

XRP/USD

1.55 Price
+5.900% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 0.01168

Gold

2,716.45 Price
+1.740% 1D Chg, %
Long position overnight fee -0.0174%
Short position overnight fee 0.0092%
Overnight fee time 22:00 (UTC)
Spread 0.60

BTC/USD

98,621.90 Price
-0.870% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 106.00

US100

20,800.30 Price
+0.440% 1D Chg, %
Long position overnight fee -0.0241%
Short position overnight fee 0.0019%
Overnight fee time 22:00 (UTC)
Spread 7.0

BTC has grown by 61 per cent this year, and by 24 per cent since 20 July. This can't compare to Cardano's gains, but for a coin with such a huge market cap it's actually very impressive. The last time BTC was worth over $11,500 was back in June 2019. 

Cardano vs Bitcoin

Expert predictions

Crypto experts are currently bullish on both coins, though some more aggressively than others. Here are a few forecasts for late 2020 – beginning of 2021:

Bitcoin

Michael Novogratz: $20,000

Max Keiser, founder of Heisenberg Capital: $28,000

DigitalCoin: $25,700

PrevisioniBitcoin: $40,540

Cardano

AMBCrypto: $0.262

DigitalCoin: $0.248

PrevisioniBitcoin: $0.43

Cardano vs Bitcoin: which coin should you buy in September 2020?

Bitcoin has the first mover advantage on its side: nobody expects Cardano to ever overtake BTC in terms of market cap or price. For many people, Bitcoin is the cryptocurrency, while all others are nothing but “altcoins”. In the long term, BTC will probably keep appreciating.

On a short- or mid-term scale, however, ADA has advantages. As we've seen, it’s technologically superior to BTC in many ways. Cardano is fast, cheap, and will soon offer smart contract support. It has a detailed roadmap with several updates planned in the next 12 months, which can generate a lot of enthusiasm for the coin. Thus, ADA will gain both from its own achievements and from the general crypto uptrend led by Bitcoin.

To answer the question in the title of this article: there's no way to choose between ADA and BTC. Both Cardano and Bitcoin are good investments and should be included in your portfolio. How much capital to allocate to each depends on your investment horizon.

If it's longer than 12 months, BTC is perhaps a better bet. But if you are looking to invest for 3-6 months, ADA might bring higher gains.

Remember that investing in cryptocurrency is associated with high risks. 

Read more: Cardano vs Ethereum: which coin should you invest in right now?

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Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that Capital.com believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

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