What is Cardano?
What is Cardano? well, Cardano is one of my favourite blockchains in the crypto space for various reasons, which I will be discussing in this blog.
Cardano is the first peer-reviewed blockchain network that aims to provide a more secure and sustainable environment for the development and execution of decentralized applications (dapps). It was created by Input Output Hong Kong (IOHK), a blockchain research and development company, in 2015 and launched in 2017. Charles Hoskinson is a co-founder of IOHK and is also one of the five founders of Ethereum. He is currently the CEO of IOHK and one of the reasons Cardano was highly anticipated. He has a background in mathematics and cryptography and has been involved in the blockchain industry since its early days. As the CEO of IOHK, Hoskinson has been instrumental in the development of Cardano and is one of the driving forces in the blockchain industry.
What is ADA?
ADA is the cryptocurrency token of the Cardano blockchain. It is used to execute transactions on the network, as well as to pay for the computational resources required to run smart contracts and dapps. Holders of ADA also can participate in the governance of the network by voting on proposed changes and upgrades to the protocol. Additionally, ADA can be used to delegate to staking pools to earn staking rewards, this process is commonly known as “staking”. But what is staking? let me explain.
Staking
One of the key features of Cardano is the ouroboros a consensus algorithm which allows proof-of-stake (PoS). PoS is far more energy-efficient than the proof-of-work (PoW) algorithm used by other blockchains such as Bitcoin and Litecoin. In a PoS system, the nodes that validate transactions and create new blocks are chosen based on the amount of cryptocurrency they hold and are willing to “stake” as collateral. This is in contrast to a PoW system, where nodes race to solve complex mathematical puzzles to validate transactions and create new blocks, which can require significant computational power and energy. In layman’s terms unlike bitcoin, you won’t have to mine ADA to get free coins or keep the network secure. You also won’t have to own a small power plant and more graphics cards than your local pc shop.
How to stake?
You simply delegate your Ada to a staking pool and get paid in Ada every 5 days. This is a great way to earn passive income, I see this as similar to a dividend payment from a stock. This is one of Cardano’s best selling points, as it simply has the best Pos protocol out of all the top cryptocurrencies. The reason is there is no lock-up period for your coins and your coins never leave your custody. This is great for emergencies or if you need your funds unexpectedly. Another major point is that you can stake for as little as one Ada which is fantastic compared to Ethereum which would cost you 32 Eth and be locked.
Architecture
Another notable feature of Cardano is its use of a multi-layer architecture, which separates the network’s accounting infrastructure (the ledger) from the execution layer where smart contracts and dapps are deployed. This allows for greater flexibility and scalability, as well as the potential for improved security and privacy.
Cardano also uses a unique form of smart contracts called “Plutus,” which are written in the functional programming language Haskell. This allows for more formal verification of the code, which can help to reduce the risk of bugs and vulnerabilities. Additionally, Cardano’s smart contracts can be upgraded more easily than those on other platforms, which helps to promote a more long-term and sustainable ecosystem for dapp development. However, this has had slight negative feedback from some developers who have found it hard to code in the Haskell programming language.
Haskell
Haskell is not preferred in crypto as there are far easier coding languages to use, such as Solidity, Rust and newer ones like Move and Pact. Despite this, I still think it’s a great language to use. The reason is Haskell is used widely in the finance world as a secure language that offers high security compared to solidity, which has had numerous hacks over the years to the tune of billions of dollars. Now, this is not just down to the language itself but also to do with the level of the developer. Haskell supposedly has a steep learning curve compared to some of the other languages used in crypto. This in turn leaves high-level and dedicated developers willing to proceed. Allowing Cardano to automatically avoid inexperienced or novice developers only looking for a quick money grab.
Cardano foundation
In addition to its technical features, Cardano also has a strong emphasis on governance and community participation. This is left to be run by the Cardano Foundation, an independent standards organization based in Switzerland that is responsible for driving platform adoption and supporting the Cardano community and ecosystem. The foundation also works closely with IOHK, as well as other organizations and individuals that are involved in the Cardano community such as Emurgo.
Another key initiative of the Cardano Foundation is its treasury system, which is intended to provide a sustainable funding model for the platform’s development and growth. Under this system, a portion of the network’s transaction fees is set aside in a treasury, which is then used to fund the development and maintenance of the network. Additionally, community members can propose and vote on funding proposals for projects that align with the goals and values of the network.
Ouroboros
As I previously mentioned Ouroboros earlier I thought I would dive a little deeper, as this is the heart of the Cardano blockchain.
Ouroboros is the first provably secure, adaptively secure, and fully decentralized PoS Consensus algorithm. It was created by IOHK and has inspired other blockchains like Polkadot. It is not only the first provably secure, but adaptively secure, PoS algorithm, and features mechanisms to prevent certain types of attacks, like nothing-at-stake and long-range attacks. Additionally, its mathematical properties allow for a high level of scalability, thanks to its high throughput and low latency.
Hail Hydra!
Hydra is the scaling solution for Cardano that will improve the performance of the network, by increasing its transaction speed. All while maintaining low latency, high throughput and lower transaction fees. It is currently being developed and tested by IOHK and is based on the concept of “network sharding,” which is a method of breaking down a large network into smaller, more manageable pieces (or “shards”).
The key idea behind Hydra is that by partitioning the network into multiple shards, each of which processes its own set of transactions independently, the overall transaction throughput of the network can be significantly increased. This is because each shard can process transactions in parallel, rather than sequentially, and the number of transactions that can be processed per second is roughly equal to the number of shards.
One of the key challenges in implementing a sharding solution like Hydra is ensuring that the different shards remain in sync and that the overall integrity of the network is maintained.
In summary, the Hydra scaling solution Cardano is working on will make a vast improvement on the fundamentals a good blockchain needs such as fees, latency, speed and throughput. So with that being said hydra is on test-net and coming in the near future. I can see this catapulting Cardano to higher heights
Cardano’s Advantages
- Fast transactions. Cardano is also much faster at processing transactions than Bitcoin or Ethereum, Cardano can process more than 250 transactions per second (TPS), and with various layer two solutions and blockchain optimisations, this number will continue to rise over time.
- Eco friendly. Cardano is one of the most environmentally friendly blockchain systems. It is claimed that Cardano is 1.6 million times more energy efficient than Bitcoin.
- Constantly building. The Cardano team is constantly building and upgrading the blockchain and has had one of the most active GitHub’s in the crypto space with multiple projects set to release this year like Djed & USDA
- Cardano. has by far one of the biggest if not the biggest community in the crypto space making it a pillar of the overall industry.
Disadvantages of Cardano
- Playing Catch Up. Cardano is trying to create a better version of the number one smart contract network Ethereum which have the obvious first-mover advantage and more developers building products on its network. However, Cardano’s tech is much more advanced than Ethereum which has recently switched to a Pos consensus showing that Cardano can still lead the way in certain aspects.
- Overlooked. Cardano is constantly building and progressing while securing its future as a credible blockchain, able to compete with the best. However, The cryptocurrency market is sometimes fast-paced and focused on getting rich quickly rather than on long-term vision and stability. this is why meme coins can have a greater price run-up and more media attention during a bull market.
- Slow Rollouts. Due to Cardano’s peer-reviewed research, rollouts have been typically slow. Cardano has a mantra which is to “build slow and correct” instead of “build fast and break things” You know the old saying “measure twice and cut once thing”. This was viewed mainly as a negative element in the early days. However, I feel in the current climate of the crypto space, this has been beneficial and ensures quality.
Should You Invest in Cardano?
Overall, Cardano is a blue-chip blockchain network that offers a sustainable and secure environment for the development of dapps. Cardano is backed by a lot of research and resources and surely will be around in the future. However, like all crypto investments, there is a risk. Always invest what you are comfortable losing and always DYOR (do your own research)
Where to Buy Cardano’s Altcoin, Ada
Being one of the top ten cryptocurrencies, you can buy ADA from any of the top cryptocurrency exchanges. Binance, Coinbase, Crypto.com and Kraken are a few of the major players that sell ADA.
To help find a good fit, check out this review and compare the latest crypto exchanges
How to store Ada
After purchasing Ada from an exchange you can then store ADA either on the platform itself or even better have self-custody and store your coins in a hardware wallet for the best hardware wallet for you check the link below.