What is Cardano (ADA)? Everything you need to know
Cardano (ADA) is a proof-of-stake blockchain project that has yet to reach its full potential. A “third generation” blockchain, seeks to address the scalability issues inherent in second generation blockchains, much like the highly anticipated Ethereum 2.0 . The development of Cardano is characterized by a scientific philosophy and a lot of academic research. With the release of Shelley 2020, Cardano is getting closer to achieving its goals.
he Cardano project and its associated ADA cryptocurrency have generated a lot of interest in the community since its inception in 2015. The academic rigor applied to its development makes Cardano unique in the cryptocurrency space.
The Cardano project is primarily developed by the Input Output Hong Kong (IOHK) technology company, founded by Charles Hoskinson. Hoskinson was also involved with Ethereum in its early days. But what is Cardano and what functionality does it have planned in its extensive roadmap? Let’s find out.
The development of Cardano is a general purpose blockchain designed based on peer-reviewed academic research. It is being developed by a multidisciplinary team of engineers, mathematicians, scientists, and business professionals.
The continuous development of the platform is always achieved through a scientific approach. According to its creators, the key design principles behind Cardano are security, scalability , and interoperability. Cardano’s native currency, Ada, is used to perform operations on the Cardano blockchain , much like the relationship between ether (ETH) and Ethereum .
Cardano development is divided into multiple business units. IOHK handles the development of the Cardano protocol, while the Cardano Foundation oversees the project, and EMURGO is responsible for business development and driving adoption. IOHK has also been involved in the development of Ethereum Classic (ETC).
What is the Cardano (ADA) Roadmap?
The Cardano roadmap consists of five main phases: Byron, Shelley, Goguen, Basho, and Voltaire. Byron, the first phase marked the launch of the network along with basic functionality such as ADA transfer. The Shelley hard fork took place in 2020 and offers new steps towards decentralization. Nodes are now operated by the Cardano community, with interest groups managed by ADA holders.
As of December 2020, functional smart contracts cannot be implemented on the blockchain platform . As part of the roadmap, this will be implemented as part of the Goguen update. After Goguen, the Basho era focuses on optimizing scalability and interoperability, and the Voltaire era introduces a treasury system to address governance.
How Does Cardano (ADA) Work?
The development of Cardano is designed as a “third generation” blockchain , with the goal of solving generation one (eg Bitcoin ) and generation two (eg Ethereum ) scalability issues.
According to proponents of this classification, older generation blockchains suffer from bottlenecks that fundamentally limit the amount of throughput they can handle. This makes them an ineffective option for mass use around the world. We can look at the fluctuation of BTC and ETH transaction times to confirm this issue. Cardano references VISA’s computational power in its documentation as a comparison:
The network reportedly handles an average of 1,736 payment transactions per second (TPS) with the ability to handle up to 24,000 TPS.
Cardano aims to improve performance in various ways. One of the most important pillars of this goal is its own Proof-of-Stake (PoS) consensus mechanism called Ouroboros. Ouroboros reduces energy cost compared to Proof of Work (PoW) while providing verifiable security guarantees.
Cardano’s Layer 2 solution for increased scalability , Hydra, is named after the mythical creature of the same name. The idea is that performance increases as each new node is added to the network. The hard fork combiner is also a key feature of Cardano, which enables hard forking without interruptions or reboots in the blockchain . The success of the Shelley update is a testament to the effectiveness of this approach.
Cardano (ADA) Key Features
As we have mentioned, the strengths of Cardano are the academic and scientific philosophy behind it. The team that develops Cardano has published more than 90 white papers on the underlying technology. The project has a well-defined roadmap, while the network wants to have built-in security, scalability , and interoperability.
While not yet operational, the Cardano blockchain will allow for scalable smart contract functionality in the future. Built with VISA as a competitor and hardware limits as a theoretical goal, Cardano could have all the necessary building blocks to be used as a powerful fintech disruptor.
Like Ethereum , the possibilities for Cardano’s use cases are huge. It is only intended to act as the base layer for the applications that will be built on top of it. Despite the big promises, Cardano has yet to fully deliver, like pretty much anything in the cryptocurrency space apart from Bitcoin . While Cardano is ambitious at its foundation, its development is relatively slow.
What is the ADA Token?
ADA is the Cardano 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 transact on the Cardano network (similar to how ether is needed to transact on Ethereum ). ADA holders also have a stake in the Cardano network, which can be used in staking pools to generate staking rewards.
Cardano Conservation (ADA)
Powered by IOHK, Daedalus is the preferred open source desktop software wallet for storing ADA. It is a full node wallet, which means the entire Cardano blockchain must be downloaded, and every transaction is verified for maximum user security.
Light wallets, which do not require downloading the entire blockchain , are Yoroi Wallet and AdaLite. ADA can also be stored in cold storage hardware wallets like Ledger and Trezor through Daedalus, Yoroi Wallet, and AdaLite.
Cardano is an ambitious project that aims to provide a blockchain infrastructure in the crypto ecosystem. While the project is moving slower than some may expect, it is also aiming high.