How profitable is Cardano staking compared to Bitcoin holding

There is a major difference between holding ADA and BTC coins, as Cardano allows staking. Each ADA holder receives regular rewards for working for the network. These accumulate over time so that the user has more and more coins. What role does this play in the long term? Let’s try to play with the numbers using artificially contrived examples.

The value of coins secures the network

As demand for coins increases, their value increases. As the value of coins increases, the security of the network increases. Specifically the resistance to the 51% attack. It is in the interest of any network that the value of coins grows. Network characteristics can support demand. Cardano allows each ADA holder to participate in decentralization and earn regular rewards. This increases the demand for ADA coins. Since people are greedy and want to secure passive income, they are naturally interested in staking. The interests of the network and the people are aligned.

Bitcoin has no cash flow. If you want to get more BTC coins, you have to buy them or start mining. Mining is only profitable in some locations, it is a risky business and requires some initial capital. Miners are forced to sell a part of the BTC coins they get on the market to cover the energy costs. Cardano has a cash flow. If you hold ADA coins, for a transaction fee you can start staking. The number of coins in your wallet will grow every 5 days at a rate of approximately 5% per year.

If you hold 1 BTC for one year, you will have only 1 BTC again in one year. Same thing in 5 or 10 years. However, if you hold 100,000 ADA, in a year you will have approximately 105,433 ADA. Time plays an important role in investing. Compound interest literally works wonders. Over a longer period of time, say 10 years, it could be up to 167,733 ADA. You can have 67,733 more ADA coins. How much is that in USD? It depends on how much ADA is worth in 10 years. For example, if 1 ADA is worth $3 (which was the last ATH), you will have $203,199. If you sell only the earned rewards, you will still have 100,000 ADA. In other words, you will still be securing the network and earning rewards.

See the rewards for a given amount of staked ADA for a given time. We will show the rewards in ADA as it is difficult to predict the value in USD over the long term. The monthly bonuses are interesting. For example, if you had 100,000 ADA and the value of the ADA was consistently above $3, what can happen in a few years, you would have $1,305 per month by selling the rewards.

Cryptocurrencies are volatile and no one can predict their future value. Nevertheless, it makes sense to think about it carefully and consider staking as well. Human greed is important to the network because it makes it more secure. What the network really secures is essentially people’s belief and assumption of a bright future in terms of the value of coins.

What is the difference between holding BTC and ADA coins when considering staking? Let’s try to show you some artificial scenarios. The article does not take into account other factors that will affect the growth of the value of coins. Let’s assume that both Cardano and Bitcoin are able to get to the last ATH.

Hopefully, the cryptocurrency world can get rid of the cycles caused by Bitcoin halving and the individual projects can maintain their fair value.

Why speculation is an inevitable part of the cryptocurrency space

Before we get into examples, let’s explain why speculating on the value of coins is important and this topic should not be taboo.

Decentralization and network security are first and foremost about the number of people actively participating in the network consensus. The network must motivate people to participate. The best motivation to do a particular job has always been a financial reward. Although people may want to maintain the network for other reasons, the financial ones will prevail.

There are costs associated with block production. In addition, pool operators should have their skin in the game, which requires them to have some entry capital. It is not advantageous for the network to allow anyone to produce blocks for free. The network must motivate people financially and reward them fairly for a job well done.

Staking on Cardano is designed to allow any number of people to participate regardless of the size of their financial means. To decentralize the network, it is more beneficial if 1,000 independent delegators with 1,000 ADA delegate to their chosen pool than 1 whale with 1,000,000 ADA to a single pool.

The network cannot choose its own staff. Anyone who buys ADA coins has the right to participate in staking and does not have to ask anyone for permission. A delegator with 1000 ADA has exactly the same options as a whale with 1M ADA. All stakers calculate the reward in a given horizon and estimate the profit.

People buy ADA coins with fiat currency they earned through their labor. ADA coins are worth at least as much to them as the work they had to do to buy the coins. However, ADA coins are a certain hope for these people that the profit will be higher than if they held fiat currency. That may or may not happen, and it must be said that no one in the world can guarantee that we will see new ATH again. However, we can assume it and a lot of people believe it.

Holding ADA coins has many other meanings that are not directly related to the financial side. However, most stakers will deal with the financial aspect first and foremost, as no one wants to lose money. In other words, people would like a different future but do not want to lose their financial resources in a decentralized revolution.

The teams of each project are working on technologies that will be very useful to the world. At least in their judgment. This usefulness will grow as networks are able to maintain their decentralization and security. And as we have written before, this is directly linked to the market value of the coins. If the number of network users grows, decentralization and security should scale. So if the number of users grows from, say, the order of millions to the tens or hundreds of millions, both decentralization and security should scale 10 to 100 times. This cannot be achieved without an increase in the value of coins.

Bitcoin is more dependent on the growth in the value of BTC than Cardano, as Cardano’s security grows with decentralization, i.e. with the distribution of ADA coins among people. The growth in value is media interesting and attracts the attention of other people who may be interested in owning the same asset as others. Staking can be an extra reason to hold ADA. The more people know how staking works and what the rewards are, the better it will be for the network.

We will show two examples in which Alice and Bob buy BTC and ADA coins for the same dollar value. In the first case, they both buy at ATH. In the second case, they buy coins for the current value. We will show how Alice and Bob will be in a few years. As we wrote, the examples are artificially contrived. Everyone should consider their own strategy and be well aware of all the risks. Certainly do not take the examples as financial recommendations.

Buying at ATH

Suppose Alice bought BTC on ATH, for approximately 67,000 USD. The highest ADA value was 3 USD. Suppose Bob bought 67,000 USD worth of ADA coins at a time when one was worth 3 USD. Bob has 22,333 ADA.

At the time of writing, BTC is worth approximately $19,700, so Alice is down 71% in dollar value. ADA is worth $0.5, so in dollar value, Bob has $11,166. Bob is at an 84% loss. Bob’s about 13% worse off than Alice. 13% isn’t that big of a difference with numbers that big. Plus, that’s only if you don’t count staking. Staking improves the stats. The longer Bob stakes ADA, the better off he will be. The advantage becomes more noticeable as the value of ADA increases.

Check out rewards in ADA and USD values. Assume that the ADA value does not rise and stays at $0,5. Next, look at the rewards in USD if ADA gets back to its already achieved ATH which was $3.

Assume that the value of the coins stays about the same for 3 years and does not rise. For BTC nothing changes, Alice will still have $19,700. Bob will still have $11,166, but extra rewards worth $1,920 (3,841 ADA). A total of $13,086 (11,166 + 1,920). The loss in dollar value will be approximately only 80%. As time goes on, Bob’s situation improves. It has to be said that the value of cryptocurrencies changes very quickly, so it is unimaginable that it would be the same for so long.

We will see much more interesting numbers if we assume that BTC and ADA will reach ATH again within 5 years. Alice will still only have $67,000. Bob will also have $67,000 again but in addition $20,286 worth of rewards. Total of $87,286.

If both ADA and BTC reach their last ATH again, Bob will be better off than Alice.

Buying now

Suppose Alice and Bob want to buy BTC and ADA coins now. At the time of writing, Alice would pay $20,000 for 1 BTC. Bob would buy 40,000 ADA for the same amount of USD.

Look at the dollar value of the rewards if ADA stays at $0.5 and if it gets back to the last ATH. The table is similar to the previous one, but with a different number of ADA coins at the beginning.

We can see that even if the value of the ADA coins stayed the same for 5 years, at $0,5, Bob would gain $6,056 in rewards. That’s a quarter of the cost of acquiring 40,000 ADA coins. If ADA reaches the last ATH again ($3), the reward will be $36,336. That’s about 1.8 times what Bob bought his initial stake for.

The total dollar value of Bob’s ADA coins would be $156,336. Bob increased his original $20,000 capital by 7.8 times. If Bitcoin also gets to the last ATH in 5 years, Alice will have appreciated her capital by 3.35 times. Bob’s profit will be 2.36 times higher than Alice’s.


The examples show that it is more profitable to hold ADA coins than BTC because the potential profit also increases due to the growing number of coins. The longer Bob stakes ADA, the more profit he will make. But of course, that’s only assuming that ADA maintains its current value or grows.

The article is certainly not meant to imply that it is more profitable to support Cardano than Bitcoin. The economic aspects are not the most important thing that cryptocurrencies bring. The projects have missions and reasons why they were created. People should be aware of this and take it into account. Coin ownership is in a way a form of voting on our future. What coins you hold is the future you want. You don’t have to be maximalists and bet on only one horse. The missions of the Cardano and Bitcoin projects are different and both are relevant. People have different ideas about the future and that’s fine.

This article was prepared by Cardanians with support from Cexplorer.

Read the article: How profitable is Cardano staking compared to Bitcoin holding | Cardano Explorer

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