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The first mover advantage is certainly a relevant phenomenon. When someone invents a brand new product and manages to successfully penetrate the market, others start copying the idea. The first mover has an advantage because its brand is the most well-known at the beginning and it manages to build a strong market position before competitors appear.
In an open market, the first mover advantage may only be temporary. Competitors try to undermine this first mover advantage in various ways. This could be a lower price, a slightly different product or service, more aggressive marketing, partnerships, or a different user group.
The Bitcoin community likes to claim that Bitcoin has a first mover advantage and therefore no other projects have a chance of success. This view is contrary to what is commonly happening in the market and society. Every product, every service, and every political or opinion movement has an alternative. Monopoly is even considered unhealthy and not beneficial to society. Competition, on the other hand, is healthy because it encourages innovation and pushes for greater efficiency and lower prices.
Bitcoin has its own mission and community. Cardano also has a large community, but the mission of the project is different. While Bitcoin is seen as non-state money or store of value, Cardano is meant to become a global financial and social operating system. Both projects have something in common, for example, they use blockchain and are decentralized. On the other hand, we can find many differences. For example, a different consensus mechanism, Cardano’s platform allows third parties to build their own financial applications, which Bitcoin deliberately cannot do.
Bitcoin was first to market, so it has a huge community and its adoption is naturally the highest. Does that mean there shouldn’t be competition? Does it mean that it doesn’t make sense to develop the original idea further and create something new? People will always create competing projects and innovate. The idea that it can’t or doesn’t make sense is completely irrelevant. Technological development cannot be stopped. Bitcoin had an advantage in the beginning, but whether we want to admit it or not, it is slowly losing it as new projects innovate and push technological boundaries.
Bitcoin was said to be a slow and expensive database. Cardano uses PoS consensus, so we have a faster and cheaper database. Bitcoin was said to never scale at layer one. Ouroboros Leios will allow much higher scalability than PoW networks. Bitcoin’s transaction network can only send a transaction unconditionally. Cardano can send a transaction conditionally, which is a fundamental building block that various financial applications can take advantage of. We could go on for a long time.
Is Bitcoin or Cardano better? Everyone will give you a slightly different answer to this question. Someone will choose the first project, and someone else the second. There will be people who will happily use both projects, each for something different. The cryptocurrency world will not have a single winner that will take over the entire market. In the end, there will be multiple projects. From time to time, one will be replaced by a competitor. This may happen as much to Bitcoin as to Cardano.
The only defense to stay in the market as long as possible is to keep innovating. The first mover must keep up with the newer competition. If it doesn’t, it risks losing its dominance one day. Google, Meta, Amazon, and all the other giants are carefully maintaining their position through innovation. They are even willing to buy a competing product and incorporate it into their ecosystem. The blockchain world will be the same and will not break out of the established orders of competition in the market.
You can often hear the argument that we only need one sound money. It’s just that if the Cardano community says that the ADA is going to be a store of value or sound money for them, it will happen. It’s natural for merchants to accept BTC at this point. Many are accepting other cryptocurrencies alongside it and even stablecoins today. Once Bitcoin breaks ground, others will have easier work to catch up and their adoption will be faster. Merchants will accept whatever customers want to pay with if there are enough of them. Does it bother anyone that BTC will be used by, say, 20% of paying customers and ADA only 5%? Actually, it doesn’t bother anyone and the ratio can change. And maybe with volatile cryptocurrencies, no one will ever be willing to pay and everything will be replaced by stablecoins. This is also a scenario that cannot be ruled out. It is even more likely.
The second drive also has many advantages. For example, it can learn from the mistakes of its predecessors. It is possible to think more and longer about the technology and then implement it well. This will increase efficiency. For example, Satoshi could not use PoS because he could not implement it and it would be a problem to distribute coins among users at the beginning. Today, more than 91% of BTC coins are mined. Satoshi predicted that as BTC coins slowly run out, more money will come into the security budget through transaction fees. This is not happening and no one knows how to solve the problem. PoS is a solution that may be more sustainable in the long run than PoW.
A platform can collect more fees than a transaction network because it will be more useful. Only utility can generate enough profit to reward those who keep the network running. Another benefit that has recently become apparent is that DeFi will allow coins to be used in financial services. Users of Bitcoin only hold BTC coins and if they want to use them for anything other than payments, they have to trust third parties. If the network enables the creation of simple embedded financial services, that’s a step forward in utility, which will necessarily encourage adoption.
The IOG team was able to assess UTXO, which uses Bitcoin, with the account-based model used by Ethereum. It was possible to compare the two accounting models, find all the advantages and disadvantages, and then choose the better one. The IOG team chose UTXO and expanded on the concept. The result was Extended-UTXO, which is more secure from the developers’ point of view and more suitable from the scalability point of view.
Compared to other PoS projects, Cardano doesn’t lock coins for any period of time, you don’t need to own a certain high amount of ADA coins to engage in staking, and most importantly, Cardano doesn’t have slashing, so ADA holders never lose coins due to operator errors. The whole system is set up to encourage the growth of decentralization. There is a lot of research, effort, and modeling behind staking on Cardano.
We could go on for a long time listing the advantages of the second mover. Many small details can ultimately determine success in the market. The second mover has the disadvantage that there are more competitors in the market and every single project is trying to succeed. It is difficult for users to find their way around. It’s easy to play it safe and bet on the first mover. However, over a longer period of time, a competitor will emerge that gains the necessary traction. Once Bitcoin gains say, a 60% market share, many tech enthusiasts will start trying new things. A new project will emerge that will have a similar status to what Bitcoin had in the beginning. This is quite natural human behavior. Is this project Cardano? We dare not say, because it is too early to tell. If Cardano stays in the top 10 for another 5–10 years, it will be more than certain that the project has established itself in a competitive environment and has enough users.
The adoption of Bitcoin essentially helps all competing projects. We already mentioned that once merchants start accepting BTC, over time they will start accepting other projects like LTC, ETH, and ADA. The same applies to investment funds. Bitcoiners are laughing that some fund is only buying BTC and not other projects. Where is it written that these funds won’t be buying others in a year? Actually, it’s already happening. Very few institutions are buying only BTC these days. Even the most conservative funds are buying BTC and ETH. It is natural to be aware of the competition and recognize it early. Cardano is slowly gaining attention and this will continue. However, Cardano is not about investment funds that buy ADA. Cardano is a platform for people.
Financial applications or Web3 services can be created on Cardano that can use tokens and decentralized identity. Once these services succeed, it will be a success for Cardano as well. All it takes is one successful NFT collection and more people will know about Cardano. All it takes is one globally successful decentralized application and Cardano will be talked about everywhere. Almost everyone has heard of Bitcoin and no one will be surprised by its existence in the future. Cardano has the advantage that brand new things will be popping up on it almost all the time. Cardano can be used in finance, gaming, Web3, and other industries. Cardano will surprise people all the time because it will allow people to unleash their potential.
The Java programming platform itself is boring and nobody (except programmers) cares much about it. Yet Java applications are used by many people every day. Users don’t know what the applications they use are built on. The teams and companies that built the applications for people had to invent a business model. The Java platform allowed companies to implement and monetize their ideas. This fate now awaits all smart contract platforms, including Cardano.
Being the second mover was an advantage for Cardano as the team couldn’t just copy the original idea of Bitcoin. It had to come up with something more complex that would allow for more things. This was accomplished. The team has the capacity to continue to develop and innovate the technology. This will keep it in the market for a long time to come. In fact, it’s at the very beginning of its trajectory.
People like to believe the idea that Bitcoin will never be beaten because it was the first. This is only true in the sense that there will not be an exact second Bitcoin created at the same time as Bitcoin and under the same conditions. The rest is completely open and no one can see into the future. Being second, third, or fourth is not as big a disadvantage as some people believe. In fact, it can even be an advantage, as something completely new will be created that will develop the first idea. People are the ones who will use the networks and only adoption will determine success.
Bitcoin has a strong market position. Cardano and a lot of other projects do not aspire to beat Bitcoin in market capitalization. The Bitcoin community likes to condemn other projects, but if they studied what these projects are aiming for, they would understand that they are no competition for Bitcoin. Can the platform beat Bitcoin in the market capitalization? It’s the same question as whether Google or Amazon can beat gold in capitalization. In the end, it doesn’t matter, because gold and the giants named above have a completely different mission. Gold, Bitcoin, Amazon, and Cardano all have their place in the market.
It definitely makes sense to build Cardano and other projects. People will never agree on a one-size-fits-all solution to use forever anyway. Humanity will always be divided into multiple camps. Even if Bitcoin were to become money, it would be healthy for it to have competition. If we want to have decentralized money, we also need to have decentralized financial services. But that’s just our opinion. Those who only want to have decentralized money can use bitcoins. Those who no longer want to trust unreliable and inefficient intermediaries can use financial services on Cardano. Both are a benefit to humanity regardless of their market capitalization.
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