Cryptocurrency Explained: What Is Cardano?
What Is Cardano?
Cardano is a blockchain network powered by a mathematical proof of stake consensus mechanism that uses the ADA token as its native cryptocurrency. In addition to buying, selling, and trading cardano’s native ADA crypto token, the network can be used as a platform for developing decentralized applications (dApps). The cardano network’s founders envisioned it to be a more efficient alternative to proof of work blockchains, and it often draws comparisons to ethereum (ETH) because of its functionality as both a cryptocurrency and platform for building decentralized applications.
Cardano ADA’s total market cap was about $14 billion at the time this article was posted.
Two ethereum network engineers, including one of ethereum’s co-founders, were involved in the creation of cardano. Mathematician Charles Hoskinson and fellow ethereum veteran Jeremy Wood worked together to execute their vision for a scalable blockchain network. The cardano network was founded in 2015 and launched in 2017. This pedigree, along with cardano’s native support for building dApps and smart contracts, lends momentum to the cardano vs. ethereum comparisons.
The goal for cardano, according to the network’s founders, is to "achieve the scalability, interoperability, and sustainability needed for real-world applications.” Those three goals – scalability, interoperability, and sustainability – are the “core concepts” of the cardano network, according to the nonprofit Cardano Foundation’s website. Cardano quickly rose to become one of the top 10 most valuable cryptocurrencies by market capitalization in the years since its launch in 2017. Fun fact: the cardano blockchain’s native token name ADA is a reference to pioneering computer programmer Ada Lovelace.
Cardano uses a fixed monetary policy. There will only be 45 billion ADA tokens in existence.
Proof of stake with the Ouroboros
The cardano network is powered by a proof of stake consensus mechanism called the Ouroboros. Proof of stake is a method for validating transactions on the blockchain that is less energy intensive than the traditional proof of work consensus mechanism. With proof of work, computers on the blockchain are working hard to crack complex equations and verify their work on the blockchain. Each time the computers (known as nodes) successfully solve a puzzle, a new block is added to the blockchain. This process is commonly referred to as crypto mining. These complex functions eat up a lot of power as the machines need to run around the clock to contribute new blocks to the blockchain, so proof of stake is an eco-friendly alternative.
With proof of stake, validators are chosen at random to verify transactions on the network instead of high-powered supercomputers crunching complex mathematical equations. Individuals or groups can be validators on a proof of stake consensus mechanism, on the condition that they have put up their own ADA as collateral, showing that they have a “stake” in the outcome of the blockchain project. Validators earn rewards in the form of ADA for transactions they verify and submit to the network.
The cardano blockchain uses separate layers for accounting and computing, the Cardano Settlement Layer (CSL) and Cardano Computational Layer (CCL). The CSL accounts for transactions of ADA as they happen. The CCL handles functions outside of accounting — things like smart contracts, security, and compliance. Splitting the blockchain into two layers helps increase transaction speed on the cardano network. The cardano blockchain can process 250 transactions per second and future upgrades have the potential to increase the throughput on the network as high as 1 million transactions per second.
Where to Buy Cardano (ADA)
Since launching in 2017, cardano quickly gained popularity among blockchain enthusiasts and crypto investors. Most major cryptocurrency exchanges will offer cardano ADA to crypto buyers. CoinFlip Trade Desk offers cardano ADA as well.
The Daedalus Wallet
Not all cryptocurrencies come with their own crypto wallet, but cardano does! Cardano ADA has its own crypto wallet known as the Daedalus wallet. The additional feature of the Daedalus wallet is that it gives wallet holders control over a node on the blockchain, delivering a non-custodial wallet solution and visibility of the cardano blockchain in one package.
How to Stake Cardano
Cardano ADA holders can stake their tokens in one of two ways, either by becoming a stake pool owner or a stake pool operator. By contributing ADA to a pool, one becomes a stake pool owner. The job of being a stake pool operator involves more administrative tasks. Stake pool operators on the cardano blockchain must maintain servers, monitor the node, control the pool keys, and perform various other maintenance tasks to keep their ADA staking pool up and running.
How High Can Cardano Go?
The future price of cardano ADA is tough to predict. Of course, past performance is no indication of future prices. One thing that is thoroughly mapped out are the “eras” of the cardano network. The developers of cardano have broken the blockchain’s development and evolution into distinct phases that they call “eras,” with several of the early phases already being successfully completed.
The earliest era of cardano ADA was the Byron era. The foundations of the cardano network were laid here while it underwent testing to ensure the network ran smoothly. Next, there was the Shelley era, where the main net of the cardano blockchain was launched and efforts to decentralize the network began in earnest. Next up was the Goguen era, which brought in the ADA smart contract functionality. Basho era is next up for the cardano network, allowing more scalability and better performance on the network. Finally, Voltaire is the final era that will shepherd in more community control of the cardano blockchain through things like treasury and voting systems.
Cardano ADA’s built-in support of dApps and mathematically proven proof of stake consensus mechanism lend it some potential upside in the evolving cryptocurrency landscape. Developers and investors both have benefits to consider.
If you’re interested in adding cardano ADA to your portfolio, you can sign up for CoinFlip Trade Desk to get started buying and selling cardano ADA today!
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