Blockchain technology is broach and encompasses a diverse range of capabilities. It enables the existence of various digital and virtual currencies known as cryptocurrencies. Currently, there is a variety of cryptocurrencies that differ in terms of construct and functionality, even though they all serve the same purpose. One such cryptocurrency or just crypto is known as Cardano.
Cardano, abbreviated as ADA, has become one of the fastest-growing blockchain assets in the crypto industry. It is currently among the ten largest digital currencies by market capitalization even though it was released less than five years ago. Its uniqueness from other cryptos in terms of flexibility, sustainability, and a scalable blockchain platform has generated huge hype around it in recent years.
Let’s take a look at what Cardano is, its history, and why it’s drawing much attention.
Cardano (ADA) is a digital coin, similar to other cryptos, that can be used to store value and/or send and receive funds. It operates on the Cardano blockchain, a first-of-its-kind open-source and decentralized proof-of-stake (PoS) platform designed to be more efficient than the alternative proof-of-work (PoW) networks. The blockchain platform is designed to be flexible, sustainable, and scalable for running smart contracts. As such, it facilitates the development of various decentralized finance apps, crypto tokens, games, and much more.
ADA is entirely based on scientific and mathematical principles and designed by experienced experts in the fields of cryptography and engineering. That being the case, ADA boasts of the ability to send and receive funds instantly and at minimal fees.
The digital coin seeks to revolutionize cryptocurrency in the world of business and finance. For instance, unlike other cryptos that attempt to thwart regulations, ADA is built on a blockchain platform with global regulators in mind. It seeks to resolve the following problems currently faced by the blockchain industry:
- Leveraging mathematics to guarantee a secure blockchain less susceptible to attacks.
- Creating a secure voting mechanism for token holders.
- Separating accounting and computational layers.
- An infinitely scalable consensus mechanism.
It was created by Charles Hoskinson, who is also the co-founder of Ethereum. Its development was overseen and supervised by the Cardano Foundation based in Zug, Switzerland.
ADA was launched in September 2017. Hoskinson began working on Cardano in 2015 after realizing the limitations of Ethereum blockchain (PoW). He built the crypto on top of technology pioneered by Bitcoin (first gen) and Ethereum (second-gen) to make it a highly scalable and energy-efficient smart contract platform. It was built in five stages—foundation, decentralization, smart contracts, scaling, and governance.
Before delving into how it works, let’s first look at the blockchain architecture under which ADA is built. The blockchain consists of two core components—Cardano Settlement Layer (CSL) and Cardano Computational Layer (CCL).CCL, the backbone of the blockchain, is also a set of protocols that serves a diverse range of roles. It helps run smart contracts, ensure security as well as compliance, and allow for other advanced functionalities including blacklisting and identity recognition.
ADA seeks to be a sustainable blockchain platform. As such, it uses PoS consensus mechanisms known as Ouroboros as opposed to the energy-intensive PoW system used by Bitcoin and Ethereum. Instead of using a network of miners racing to solve a puzzle, PoS uses a network of invested participants called validators. While miners in other cryptos contribute processing power to secure the network and verify transactions, validators stake their own ADA.
The ouroboros process works in the following four steps. Firstly, the network selects a few nodes, called slot leaders, randomly to have the opportunity for mining new blocks. Secondly, the blockchain is split into slot known as an epochs. Thirdly, slot leaders can mine their specific epochs or subpartition of an epoch. A participant who helps mine an epoch or part of it receives a reward for their services. Lastly, an epoch can be partitioned numerous times because the Cardano blockchain is infinitely scalable, making it possible to run multiple transactions without hitting a bottleneck.
ADA has its own wallet known as Daedalus wallet, unlike other cryptocurrencies. With this wallet, Cardano users run a full blockchain node, enabling them to have total control over their funds and the ability to ensure transparency over the Cardano blockchain.
Even though the Cardano coin is built on a unique blockchain to guarantee the security of its users, it is still susceptible to thefts and unauthorized transfers. The first strategy involves safely storing your Cardano in a hardware wallet such as IOHK’s Daedalus after acquiring the coin. Secondly, keep your recovery phrase and private key offline at all times. Thirdly, only trust official websites and communication channels.
We do not provide investment advice. However, we objectively present factual data and information on various cryptos so you can make an informed decision. In this case, Cardano has numerous advantages. It is built on a superior blockchain compared to Bitcoin and Ethereum. It is also more energy-efficient and fast when it comes to facilitating transactions and smart contracts. It is also safe and acknowledges the existence of regulators. Because of the many advantages, Cardano is becoming a digital currency of choice among investors in the cryptocurrency industry.