What is Cardano? Definition, Algorithm & News
Cardano is the first Proof-of-Stake blockchain platform built on peer-reviewed research. Cardano was founded to redistribute power from unaccountable systems to the margins – to individuals – and to promote good change and development via the use of a world-class engineering team. You will also gain insights about several other critical components of Cardano in this article on “What is Cardano?”
1. What is Cardano?
Charles Hoskinson, Ethereum’s co-founder, established the platform in 2017 as a competitor to Ethereum.
Cardano is a decentralized Proof-of-Stake (PoS) blockchain platform of the third generation that surpasses Proof-of-Work (PoW) networks.
Scalability, interoperability, and sustainability of PoW networks like Ethereum are constrained by the infrastructure burden of rising costs, energy consumption, and lengthy transaction times. Cardano development is divided into five stages: foundation, decentralization, smart contracts, scalability, and governance.
Cardano’s governance is shared between the Cardano Foundation, IOHK, and EMURGO.
2. What is ADA?
Cardano’s primary coin is known as “ADA.” It is based on the Cardano blockchain, a first-of-its-kind decentralized network designed solely by cryptography and engineering specialists using scientific and mathematical concepts.
Its goal is to enable a quick and secure value exchange while also allowing users to run smart contracts and apps.
Furthermore, the ability to transmit and receive payments promptly and at a minimal cost has several uses in the commercial and financial realms.
It is a Proof-of-Stake coin that is used to power the Cardano Ecosystem.
3. Cardano’s Supply and Value
Cardano’s current market capitalization is 2.1823 USD, and the maximum supply of Cardano is 45 billion. There are currently 34 billion in circulation.
4. What Makes Cardano Such a Hit?
Cardano has become a lot more popular in recent years.
Current: ADA, the native coin of the popular alt-coin Cardano, has broken a record even though there was a big price crash warning.
On September 17, 2021, the ADA/USD rate of exchange hit $2.56 for the first time. This marked the end of a 154.54 percent price surge that began on July 20.
Cardano is written in Haskell, which is a programming language that lets more strict contracts be made.
5. The Layers of the Cardano Network
In the Cardano blockchain, there are two types of layers: The Settlement Layer and the Computation Layer.
The job of the Settlement Layer (CSL) is to make sure that transactions made by network peers in ADA, the local currency, get paid.
The Computation Layer (CCL) was made with smart contracts and decentralized apps in mind. It was built this way.
Developers came up with a layered protocol to make the network’s capacity for protocol changes and soft fork implementations as big as possible.
6. Cardano’s Consensus Algorithm: How It Works
Earlier, we talked about how Haskell, a well-known and safe programming language, is used to make the Cardano open-source code.
There is a unique blockchain technology called Proof-of-Stake (PoS) called Ouroboros that is used by Cardano.
This consensus method makes sure that ADA can be sent and received quickly and safely, and it also makes sure that Cardano smart contracts are safe.
The Proof-of-Stake consensus mechanism, Ouroboros, also rewards token holders who stake their ADA in the network and make sure the network stays together. This is called “PoS.”
The next section talks about how Ouroboros works.
- First, the network picks a few nodes called “Slot leaders” at random. These nodes have the chance to mine new blocks and control the flow of data in the network.
- Second, the Blockchain is broken up into slots called epochs. Each epoch is called a “block.”
- Lastly, for the first time in history, slot leaders can mine their own epoch! Any person who helps with the mining of an epoch or a part of it is given money.
The same can be said for an epoch. It can be split up an infinite number of times.
7. How Cardano Can be Used
ADA is staked to the blockchain as part of a protocol called PoS, which allows “stake pool operators” to check that transactions on the Blockchain go through.
People who put their ADA on the blockchain are given more Cardano as a reward. This staking system helps keep the blockchain safe.
In addition, ADA is used when people vote. Cardano token holders, not miners, decide on protocol changes. This is different from other blockchain projects.
8. What does Cardano Do?
Cardano lets you use a lot of different things on its platform:
- It’s cash: With a cryptocurrency wallet, you can send and get Cardano, or you can trade it for goods and services.
- Smart contracts: Cardano can make smart contracts, which are contracts that automatically start working when the contract’s conditions are met.
- Decentralized finance: Cardano lets people cut out the middleman, like banks and other financial institutions, so they can trade directly and without permission from other people or groups.
- As part of decentralized finance, Cardano can be used to lend, trade, manage assets, insure, and do other typical financial things.
So it’s better to think of Cardano as a token that powers a lot of different financial services, not just as money, even though that is one of its jobs, too.
9. Is Cardano a Good Investment?
Cardano’s price, like that of many other cryptocurrencies, has been extremely unstable. While Cardano is down from its recent highs, as are many other crypto currencies, it has certainly gained many investors considerable money, particularly if they purchased and held from its introduction in 2017. Rather than focusing on recent profits or losses, it’s critical to understand what you’re purchasing.
Because Cardano is not backed by any assets or cash flow from the business that it is linked to, that is a big difference from most cryptocurrencies and stocks. There are many different types of stocks. If a company grows over time, the stock will likely rise in value, too. If you buy stock in a company, you own a share of the company’s assets and cash flow. Shareholders of the stock may also get a check in the mail as a reward.
Investors in Cardano, on the other hand, have no such claims or safety nets for their money. Cardano rises and falls as traders’ confidence grows and fades, which makes it rise and fall. What drives cryptocurrencies like Cardano isn’t the success of the businesses they’re based on, but the emotions and hopes of other traders. Traders think they can sell the coin later to someone else for more money, which is called the “greater fool theory of investing.”
The market often runs out of people who are getting even better at being optimistic, so the price drops as people flee. In this case, there is not a growing, cash-producing company behind the investment. This is why many high-profile investors, like Warren Buffett, do not invest in cryptocurrency.
10. The Bottom Line
If you think that cryptocurrencies are going to be the next big thing, you could invest in them. There are other ways to play them, though, so you don’t have to invest in the tokens. As an example, you can buy stocks in companies that make money from blockchain technology and ride the wave that way.
If you’re going to trade Cardano or other cryptocurrencies, though, you need to be prepared for a lot of ups and downs. If you buy an asset that isn’t backed by anything, you could lose all of your money. Make sure you don’t put any money in that you can’t afford to lose, so