What Is Cardano (ADA)?

Cardano is a Proof of Stake blockchain project that has yet to reach its full potential. A “third-generation” blockchain, it seeks to address the scalability issues inherent in second-generation blockchains, similar as the exceptionally expected Ethereum 2.0.

Cardano’s development is portrayed by a scientific philosophy and plenty of academic research. With the 2020 Shelley Shelly, Cardano moves closer to achieving its objectives.

Introduction

The Cardano project and its related ADA cryptocurrency have generated a lot of community buzz since its 2015 inception. The academic rigor applied to its development makes Cardano to somewhat unique in the cryptocurrency space.

The Cardano project is developed mainly by the technology company Info Result Hong Kong (IOHK), founded by Charles Hoskinson. Hoskinson was also involved with Ethereum in its initial days.

But, what is Cardano, and what functionality does it have planned in its extensive guide? Lets find out.

What is Cardano (ADA)?

Cardano is a general-purpose blockchain designed based on peer-reviewed academic research. It’s being developed by a multidisciplinary group of engineers, mathematicians, researchers, and business professionals.

Ongoing platform development is constantly accomplished using a scientific approach. According to its creators, the key design principles behind Cardano are security, scalability, and interoperability.

Ada, the native currency of Cardano, is used to perform operations on the Cardano blockchain, similar as the connection between ether (ETH) and Ethereum.

Cardano’s development is separated into multiple business units. IOHK handles the development of the Cardano protocol, while the Cardano Foundation regulates the project, and EMURGO is reasonable for business development and driving adoption. IOHK also has been engaged with the development of Ethereum Classic (ETC).

What is the Cardano (ADA) roadmap?

The Cardano roadmap consists of five primary phases: Byron, Shelley, Goguen, Basho, and Voltaire. Byron, the first phase marked the launch of the network along with basic functionality, such as, transferring ADA. The Shelley hard fork took place in 2020 and offers further steps towards decentralization. Nodes are presently operated by the Cardano community, with stake pools run by ADA holders.

As of December 2020, functional smart contracts can’t be deployed on the blockchain platform. As part of the roadmap, this will roll out as a part of the Goguen update. Following Goguen, the Basho era focuses on optimization of scalability and interoperability, and the Voltaire era acquaints a treasury system to address governance.

How does Cardano (ADA) work?

Cardano is designed as a “third-generation” blockchain, aiming to solve the scalability problems of generation one (e.g., Bitcoin) and age two (e.g., Ethereum).

According to the proponents of this classification, previous age blockchains suffer from bottlenecks limit the amount of throughput they can handle. This makes them an inefficient choice for overall mass use. We can took to fluctuating BTC and ETH transaction times to confirm this problem.

Cardano references VISA’s computational power in their documentation as a comparison:

Cardano aims to improve throughput in various ways. One of the most significant pillars of the goal is their own proof of Stake (PoS) consensus mechanism called Ouroboros. Ouroboros reduces decreases energy costs compared to proof of Work (PoW) while providing provable security ensures.

Cardano’s Layer 2 solution for further scalability, Hydra, is named after the mythical creature of the similar name. The idea is that throughput is inreased as each new node is added to the network.

The hard fork combinator is also a key feature of Cardano, which allows hard forking without interruptions or restarts to the blockchain. The success of the Shelley update is a testament to the effectiveness of this approach.

Cardano (ADA) key features

As we’ve mentioned, Cardano’s strong points are the academic and scientific philosophy behind it. The team developing Cardano has published more than 90 whitepapers for the underlying technology. The project has a well-defined roadmap, while the network wants to have baked-in security, scalability, and interoperability.

While not yet operational, the Cardano blockchain will allow for scalable smart contract functionality in the future. Built looking to VISA as a competitor and hardware limits as a theoretical goalpost, Cardano could have all the necessary building blocks to be used as a powerful fintech disruptor.

Much like Ethereum, the possibilities for the use cases of Cardano are vast. It only aims to act as the base layer for applications to be built on top.

Despite big promises, Cardano has yet to fully deliver – just like almost anything in the cryptocurrency space apart from Bitcoin. While Cardano is ambitious in its foundations, its development is relatively slow.

What is the ADA token?

ADA is Cardano’s token, named after the 19th-century mathematician Ada Lovelace. 57.6% of the ADA supply was distributed in an Initial Coin Offering (ICO), in which Cardano raised $62.2 million.

The token is both a digital currency and a way to make transactions on the Cardano network (similar to how you need ether to transact on Ethereum).

ADA holders also have a stake in the Cardano network, which can be used in stake pools to generate staking rewards.

How to store Cardano (ADA)

Developed by IOHK, Daedalus is the open-source desktop software wallet of choice for storing ADA. It’s a full node wallet, which means the full Cardano blockchain needs to be downloaded, and each transaction is verified for maximum user security.

Light wallets, which don’t require downloading the full blockchain, are the Yoroi Wallet and AdaLite. ADA can also be stored on cold storage hardware wallets, such as, Ledger and Trezor through Daedalus, Yoroi Wallet, and AdaLite.

Closing thoughts

Cardano is an ambitious project that aims to provide blockchain infrastructure in the crypto ecosystem. While the project progresses slower than some may expect, it also aims high.

But will this third-generation blockchain project end up becoming the dominant smart contract platform, or will it come to market too slowly? Are there fourth-age blockchains that could do what it is better? These questions remain to be answered as Cardano progresses further on its roadmap.

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