What is Cardano?
What is Cardano?
Cardano (ADA) is an open-source Proof of Stake cryptocurrency designed to function as a platform for fast, efficient, and easy-to-deploy smart contracts. The Cardano ecosystem can be used to develop and deploy a broad spectrum of decentralized applications (dAps), blockchain tokens, blockchain-based games, and decentralized finance (DeFi) protocols.
As one of the largest and most popular cryptocurrencies by market cap, Cardano is a highly successful blockchain project that builds on the core principles of the Ethereum project. Unlike Ethereum, however, Cardano takes a significantly different approach to development.
The Cardano project follows the principles of peer-reviewed, evidence-based research in order to develop and integrate new solutions to the challenges faced by blockchain technology.
Cardano is a general-purpose blockchain that is currently under active development by a multidisciplinary team of scientists, cryptography experts, mathematicians, engineers, and business experts. The core principles of the Cardano project focus on interoperability, open-source design, scalability, and security.
A Brief History of Cardano
Cardano was founded in 2015 by Ethereum co-founder Charles Hoskinson, who launched the Cardano project during a hiatus from the Ethereum project due to friction with Ethereum co-founder Vitalik Buterin.
Hoskinson’s core vision for the Ethereum project included structural elements that would allow Ethereum to function as a for-profit enterprise and open the doors to venture capital investment, while Buterin preferred to keep the Ethereum project operating on a nonprofit basis.
Partnering with Jeremy Wood, another Ethereum developer, Hoskinson launched IOHK — the blockchain engineering organization behind the Cardano project. The Cardano project went live in 2017, and is named after Italian polymath Gerolamo Cardano. The ADA token is named after mathematician Ada Lovelace.
How Does Cardano Work & How is it Different From Ethereum?
Cardano smart contracts are now live, which means the Cardano network is able to offer many of the same functions and use cases as the Ethereum network. There are, however, a number of important differences between Ethereum and Cardano.
While Ethereum is currently in the process of shifting to a completely Proof of Stake consensus algorithm, Cardano already operates as a Proof of Stake blockchain. Cardano uses the Ouroboros consensus protocol, which integrates Proof of Stake elements that allow anybody to create a node and validate transactions.
In order to participate in node operation and transaction validation, Cardano network participants must stake, or pledge ADA tokens. The Ouroboros protocol selects a node pseudo-randomly every time a block must be committed to the Cardano chain, a process that is, in part, based on the amount of ADA the node has staked.
Nodes that solve blocks are rewarded with a block reward in the form of ADA. Cardano is split into three layers — the Cardano Settlement Layer (CSL), in which transactions are validated and committed to the Cardano blockchain, and the Cardano Computing Layer (CCL), in which smart contracts and other computations are calculated.
What is ADA Token Used For?
ADA is the native token of the Cardano blockchain. ADA is the fuel that drives the Cardano project, and is used to store and transfer value, stake tokens in order to participate in transaction validation, pay transaction fees, and as the Cardano network grows, participate in decentralized governance features.
Cardano as an Investment
Cardano has grown from a relatively straightforward application of Proof of Stake technology into a robust, multifaceted blockchain network. There are a number of features that make Cardano stand out when compared to other blockchain networks, such as the environmentally-friendly Proof of Stake algorithm it uses to gain consensus.
The relatively recent launch of the Cardano Computing Layer now makes it possible for developers to create decentralized applications on the Cardano blockchain, create Cardano native tokens, or use Cardano to launch entire decentralized finance ecosystems.
The development philosophy that drives Cardano focuses on a slow, methodological approach to integrating new features. As such, Cardano has displayed relatively consistent growth from launch and is therefore attractive to investors seeking a high market cap alternative to Ethereum backed by a large developer community.
What Does the Future of Cardano Look Like?
Following recent upgrades to the Cardano network that saw the launch of smart contract functionality, upcoming roadmap events such as the upcoming Cardano Basho update will see significant scalability and transaction processing upgrades integrated into the Cardano blockchain.
Other notable roadmap events for Cardano include the highly-anticipated Voltaire update, which will provide token holders with a far greater degree of input over the direction of Cardano development through decentralized governance.
Today, Cardano is a robust, widely used blockchain that provides developers with the ability to create decentralized applications and smart contracts, presenting use cases such as NFTs, DeFi, and dApps as an alternative to the relatively congested Ethereum network.
Cardano (ADA) is currently available to trade alongside over 40 digital assets via the Firstrade Crypto trading platform.