I have been fascinated by crypto for a long time now, and I enjoy sharing what I have learned about it on ToughNickel.
What Is Cardano?
Cardano is not just a cryptocurrency—it's a decentralized, open-source platform for smart contracts. It was founded by Charles Hoskinson, who is also a co-founder of Ethereum. Like Polkadot, it also being called "Ethereum killer."
The platform is named after the mathematician Gerolamo Cardano. The blockchain protocol is divided into two layers: the settlement layer, which processes all transactions with the ADA token, and the computational layer, which hosts the smart contracts. The design aims to improve the safety, scalability, and compatibility of the blockchain, which would make it possible to use in the finance sector and in governance.
Cardano is a proof-of-stake blockchain. This means the network is secured and maintained by staking the native currency, ADA. Cardano uses a unique protocol called Ouroboros, and it is allegedly safer and more energy efficient than any other proof-of-stake protocol.
At the moment Cardano, is a work in progress and far from finished. There are five stages in Cardanos development; Byron (foundation), Shelly (decentralization), Goguen (smart contracts), Basho (scaling) and Volaire (governance).
We are about to enter the Goguen stage, which will finally bring smart contracts and DApps to Cardano. Since the Shelley stage, the founders have claimed that their network is 50 to 100 times more decentralized than most large blockchain networks. This is because most other cryptos are controlled by less than 10 mining pools, which puts them at risk of malicious behavior. Cardano has around 1,000 staking pools.
Charles Hoskinson has a Youtube channel where he frequently uploads videos about his project. The video below is about the Shelley update.
What Makes Cardano Unique?
It is hard for governments and banks to trust cryptocurrencies because they have no metadata of the transactions. They would like to know: Who sent it? Who received it? And for what reason?
Of course, this can be sensitive data, and some people like crypto because it can work as digital cash, but there are cases where transparency is needed. That’s why Cardano wants to give their users the option to add such data to their transactions.
Read More From Toughnickel
Another unique advantage Cardano has over other blockchains it the treasury system. If somebody what’s to launch a new blockchain project, they need to raise money for it. This is usually done with an ICO (Initial Coin Offering) through which the founders sell their token and coins to raise money.
The problem with this is that they cannot do countless ICOs each time they need money, so their investors either have to trust them with a lot of money in the beginning.
Cardano solves this issue by collecting small fees for every transaction on the network in a treasury. This treasury is a smart contract that is not controlled by any one person or institution. When somebody wants to raise funds for a project, they must propose their idea to the community, who then can vote on whether the project should get funding or not. If the community votes for this project, the treasury releases some of its holdings to the developers. This can happen again and again if needed.
These are just a few of Cardano's unique features. In further stages of its development, Cardano will also have multiple side blockchains, and this will make it possible to process transactions more quickly because they can be done in parallel. Another goal is to become the "internet of blockchains" so that other cryptocurrencies can interact with each other through the Cardano network.
The ADA token
ADA, named after Ada Lovelace, is the native cryptocurrency of Cardano. ADA allows you to vote on any change in the platform. This includes projects and DApps built on Cardano. The more is being built on the platform, the higher the demand for the token will be.
Cardano uses proof-of-stake to process transactions, so you can stake ADA to earn rewards. Unlike many other proof-of-stake cryptocurrencies, you don't have to lock your ADA tokens to stake them; you can still use them anytime. However, holders don't get staking rewards for the first 20 days of staking. After that, you can earn about 5% more ADA per year.
On Ethereum, the native token ETH is not only used to pay for ETH transactions but for all transactions on the network—even transactions with other coins or tokens on Ethereum. Cardano will allow transactions to be paid with the coin that is being used. This makes it easier to see beforehand how high the fees will be. On the other hand, this lowers the demand for ADA tokens
If you own ADA, you essentially own a part of Cardano, much like a stock. If Cardano grows, then so will ADA's value. And since smart contract platforms are in high demand currently—thanks to Ethereum's absurdly high fees—Cardano has a good chance of growing.
What Does the Future Hold for Cardano?
Cardano is still a work in progress. So far, developers have made huge promises, but Cardano doesn't even have smart contracts yet.
What the project aims to become could really change the entire world. At this stage in its development, it’s a highly speculative bet. It could have aggressive growth in the coming years, and it is already very popular with crypto investors. Also, since Ethereum is currently almost unusable due to insanely high fees, an alternative like Cardano is clearly needed.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.