Cardano: Everything to Know
By Beluga Research July 15, 2023
- Cardano is a blockchain-based platform for decentralized applications
- Cardano was designed to be more secure than other similar blockchains
- On Cardano, transactions are validated by a network of nodes
- The cryptocurrency for Cardano is ADA, named for Ada Lovelace, the 19th century computer programmer
Cardano is a blockchain-based platform aiming to provide a more secure and sustainable infrastructure for decentralized applications. Charles Hoskinson, one of the co-founders of Ethereum, launched Cardano in 2017.
Cardano is built on a proof-of-stake consensus algorithm. This ensures that transactions are validated by a network of nodes rather than a centralized authority. The method of validation makes Cardano more secure and less susceptible to attacks than some other networks.
Cardano is known for its layered architecture. The platform is divided into two layers: The settlement layer and the computation layer. The settlement layer is responsible for handling transactions and maintaining the ledger. The computation layer is responsible for running smart contracts and decentralized applications. The separation of work and the presence of two layers is another feature that makes Cardano more flexible and scalable than other platforms.
A Brief History
Cardano was founded in 2015 by Charles Hoskinson and Jeremy Wood. Hoskinson was one of the co-founders of Ethereum. He left the project due to disagreements with the other founders. One of Hoskinson's next projects was to create Cardano. His goal was to build a more secure and sustainable blockchain platform.
Hoskinson funded the development of Cardano through an initial coin offering (ICO) in 2017. The effort raised over $60 million. He launched the platform later that year. Since then, Cardano has grown in popularity and value.
What is Cardano?
Cardano is a public, open-source, blockchain-based platform built on a proof-of-stake consensus algorithm. It is designed to be more secure, flexible, and sustainable than other blockchain platforms. The platform is built on scientific principles. It has been peer-reviewed by experts in the field. Not every platform is peer-reviewed. These attributes of Cardano ensure that it is reliable and less prone to errors than other platforms.
Cardano has its own cryptocurrency, ADA. This is used to pay for transactions on the platform. It is also used as a store of value. The total supply of ADA is 45 billion tokens. As of early July 2023, there are approximately 32 billion tokens in circulation.
- Acquire ADA. ADA can be bought on various cryptocurrency exchanges. A user can also earn ADA by participating in the network as a validator.
- Store ADA. ADA can be stored in a compatible wallet, such as Daedalus or Yoroi. A user can download these from the official Cardano website.
- Staking mechanism. Staking involves holding ADA in a compatible wallet and delegating it to a validator node. Then the user can participate in the network's consensus mechanism. Validators are rewarded with ADA for processing transactions and maintaining the network. Staking is an essential component of Cardano's proof-of-stake consensus mechanism. This mechanism aims to be more energy-efficient and scalable than traditional proof-of-work systems.
- Pay transaction fees. An investor can use ADA to pay transaction fees on the Cardano network.
- Focus on research and development. Cardano is built on a scientific philosophy. All changes and upgrades to the network are based on peer-reviewed research. This approach ensures that the platform is continually evolving and improving. It also helps to avoid potential security vulnerabilities and other issues.
- Multi-layer architecture. The platform is divided into two parts, the settlement layer and the computation layer. This architecture allows for greater flexibility and scalability. Each layer can be upgraded independently of the other.
- Focus on interoperability. Cardano was designed to be compatible with other blockchains and legacy systems. This feature of the platform makes it easier for developers to build decentralized applications that can interact with other networks. Cardano achieves this interoperability through the use of sidechains and other technologies. Such mechanisms allow for secure and efficient communication between different systems.
- Governance by decentralized community of stakeholders. The Cardano community can propose and vote on changes to the protocol. This approach ensures that the platform is continually evolving and improving. The approach also helps to avoid potential centralization issues that can arise in other blockchain networks.
- Scalability. Cardano is designed to be highly scalable. It has the ability to process up to 1,000 transactions per second. It achieves this feat through its layered architecture, which allows for faster and more efficient processing of transactions.
- Sustainability. Unlike other blockchain platforms that consume a significant amount of energy to validate transactions, Cardano uses a proof-of-stake consensus algorithm. This requires significantly less energy. Cardano's ability to use less energy makes it a more sustainable and environmentally friendly option.
- Interoperability. Cardano is designed to be interoperable with other blockchain platforms. Its structure allows for the seamless transfer of assets and data between different networks.
- Security. The layered architecture and peer-reviewed approach to development of Cardano makes it secure. Cardano uses advanced cryptography techniques to ensure the privacy and security of transactions.
- Decentralization. Cardano is a decentralized platform governed by its community of users. The platform's decentralization and user-centered method of control ensure that transactions are transparent and free from external influence.
- Complexity. Cardano's layered architecture and academic approach to development make it more complex and difficult to understand for some users.
- Limited adoption. Cardano has gained a significant following within the cryptocurrency community, but its adoption outside of this space is still limited. This can make it more difficult for certain users to use the platform and exchange ADA.
- Lack of smart contract functionality. Cardano is designed to support smart contracts, but this functionality is not yet fully implemented. This can limit use cases of the platform. It also limits Cardano's adoption and the use of ADA in certain industries.
- Centralization of stake pools. Cardano is designed to be decentralized. The centralization of stake pools poses a risk to the platform's security and decentralization.