Cardano (ADA) is one of the fastest growing blockchain assets in the crypto industry. ADA has been a top-10 cryptocurrency by market cap since it was released in 2015, and it has garnered significant hype. Its technology is advancing at rapid speed and seems to take on the likes of Ethereum in building a significant blockchain ecosystem.
Cardano identifies itself by using mathematical principles in its consensus mechanism and a unique multi-layer architecture, which makes it different from other competing blockchain technologies. With a team creating Ethereum, many believe cardano is the next generation of cryptocurrency solutions.
What is cardano?
Like other cryptocurrencies, ADA – Cardano is a digital coin that can be used to store value or send and receive funds. The ADA cryptocurrency uses cardano blockchain, a first-of-its-kind decentralized network, based on scientific and mathematical principles and built by experts in the fields of cryptography and engineering. The cardano blockchain can be used to build smart contracts, and in turn, create decentralized apps and protocols. Moreover, the ability to send and receive funds instantly through, for minimal fees, have many applications in the world of business and finance.
Instead of attempting to thwart global regulators, cardano is creating a blockchain with regulation in mind, to offer financial services to all.
What Are the Benefits of Cardano?
It has two separate blockchains for its token processing and smart contracts, so it can update the blockchain with soft forks without making any distractions for the other part.
In comparison to other blockchains, it is far more adaptable.
Like other leading cryptocurrencies, Cardano’s blockchain is also decentralized, so no single central entity has an unreasonable amount of control over the security and validation process of transactions.
Improved Financial Freedom
Its vision is to combine user’s convenience and regulatory compliance into a seamless solution, which will give many people access to financial freedom who don’t have access to traditional services.
Partnering With Regulators
It is not going to be a disruptor but an innovator. It’s looking to work within the scope of regional regulations ensuring complete compliance while offering convenience to the end-user.
Cardano blockchain architecture
The cardano blockchain is made of two core components. The Cardano Settlement Layer (CSL) acts as a unit of account and is where token holders can send and receive ADA instantaneously with minimal transaction fees. The Cardano Computational Layer (CCL) is a set of protocols which is the basis of the blockchain, and helps to run smart contracts, ensure security and compliance, and allow for other advanced functionality, like blacklisting and identity recognition. The cardano open source code is written using Haskell, a recognized and secure programming language.
It works on a specially designed proof-of-stake (PoS) blockchain protocol for consensus called Ouroboros. This consensus mechanism allows for ADA to be sent and received easily and securely, while also ensuring the safety of smart contracts on the Cardano blockchain all the times. At the same time, as a PoS consensus mechanism, Ourboros offers rewards to token holders who stake their ADA to the network and help ensure network consensus.
The network randomly chooses a few nodes to have the opportunity for mining new blocks. These nodes are known as slot leaders.
The blockchain is split into slots, each of which is called an epoch.
Slot leaders have can mine their specific epoch, or subpartition of an epoch. Any participant who helps mine an epoch or part of an epoch gains a reward for their services.
An epoch can be partitioned infinitely. This means, the cardano blockchain is, in theory, infinitely scalable, making it possible to run as many transactions as required without hitting a bottleneck.
The biggest benefit of Ouroboros is its mathematical security in selecting blockchain validators. Other blockchains claim they choose block validators at random, but these claims cannot be verified. On the other hand, Ourboros provides a provable way to randomly choose a validator and ensure all token holders who stake ADA to the cardano blockchain have a fair chance of mining a block and receiving the associated reward. This feature eliminates any need for additional computational power prevalent in proof-of-work (PoW) blockchain networks and guarantees an objectively fair staking model that is not found in any other PoS blockchain protocol.
A wallet is a hardware device or software used to store cryptocurrencies such as Bitcoin and Ethereum. It enforces multiple layers of safety to store your funds secure while reducing the odds of losing it. If you want to store your ADA in the safest way possible, you have to use one of the following wallets:
- Daedalus Wallet
- Yoroi – The Cardano Wallet (Google Play)
- Ledger (Cold Wallet)
- Atomic Cardano Wallet
Uses for ADA cardano
The cardano coin can be used as a transfer of value like the cash is currently used. This is not much different from other cryptocurrencies such as Ethereum and bitcoin, but ADA has other uses as well.
One of the key principles of cardano is its PoS blockchain protocol where ADA is staked to the blockchain to help stake pool operators successfully verify transactions on the blockchain. This is where cardano crypto comes in useful. Those who stake their ADA to the blockchain receive more cardano crypto in return. This staking system helps maintain security throughout the blockchain.
There is also the use of ADA in voting. In cardano, unlike other blockchain projects, miners are not able to vote and decide on changes to the protocol, it is token holders. As a result, when a new change or development is proposed to the cardano blockchain, cardano crypto holders use their ADA to vote on these proposals. This way, everyone who holds the cryptocurrency has a say in its development.
In the future, ADA can be used to power the smart contract platform on the cardano blockchain. Developers will utilize ADA to create smart contracts and applications that run on the secure, decentralized blockchain. Without a native cardano coin, there would be no way to execute these contracts.
Who created cardano?
Cardano was created in 2017 by technologists Charles Hoskinson and Jeremy Wood.
The most high-profile of the two co-founders, Hoskinson, is a co-founder of Ethereum (ETH) and shortly served as CEO for a planned for-profit entity for the project.
The major stakeholders of ADA
Even though Hoskinson and Wood are the masterminds behind the key principles and smart contract platform that make up Cardano, they do not own or operate the blockchain. In fact, there are different stakeholders involved in the project.
- Cardano Foundation – are nonprofit, custodial entity for the whole project to help market and ensure security of the blockchain.
- IOHK – Founded in 2015 by Hoskinson and Jeremy Wood, this research and development firm has helped with the design and engineering of the blockchain.
- Embargo – I s a large funding entity to financially support Cardano and assist with its development.
Is cardano really better than Ethereum?
Both cardano and Ethereum have similar goals and aspirations in that each aims to be the world’s leading decentralized blockchain platform for building new tools and protocols. When Hoskinson left Ethereum, he recognized the lack of a different kind of blockchain that would be immediately scalable and secure, two things that he believed Ethereum would never become. Currently, Ethereum is having its own issues with scalability, and it’s already going through its Ethereum 2.0 program in order to ramp up its scaling. And while Ethereum is more than ten times the size of cardano in market cap, the project did have a significant head start.
Unlike other blockchain technologies, cardano is still relatively new. It was only launched in 2017 and has spent the first years of its existence under development.
Cardano has laid out five distinct phases for its blockchain. Now, Cardano is past its Shelley stage of the process, and is working toward completing the latter half of its phases:
- Byron – Builds the foundational architecture of the network and tests the initial functionality so the network runs well.
- Shelley – Launches the cardano mainnet and starts decentralization of the blockchain network.
- Goguen – Implements a smart contract platform, enabling the function to build decentralized applications.
- Basho – Scaling solutions will be implemented, allowing for blockchain optimization and improved performance.
- Voltaire – Introduces treasury and voting systems to make a self-sustaining network.
Even though these are five different phases, many parts of each phase run in parallel with one another. Each phase goes through various processes themselves before being integrated into cardano. There is heavy academic research that has gone into each step of the process. Prototyping is also a key part of the process, as each piece of open source code need to be rigorously tested to meet predetermined technical specifications before being implemented.
While roadmap phases have often been delayed, Charles Hoskinson and the developers of cardano are quite sure about following through with the roadmap as promised, and deliver the world the next generation of PoS blockchain protocols.
Which Financial Institutions Are Invested in Cardano?
There is no evidence to reveal that any financial institution or bank is financially or strategically invested in the Cardano project. Since its blockchain is still under development, which will make regulatory compliance functional, it is logical to believe that currently, financial entities are holding back to identify if it will shape into a regulatory solution they are searching for. Apart from that, since it plans to ensure regional regulatory compliance, it may have to engage governments on the state and national level to become viable for its intended use. This may be another reason why banks and financial institutions haven’t involved yet.
It is a project that’s backed by world-class engineers and experts who have taken a scientific approach towards building a blockchain and its ecosystem. This is why it seems to attract huge investment in the future.