Cardano Calls Itself Blockchain 3.0

What is Cardano?​

Cardano is one of the biggest cryptocurrencies by market cap. It’s designed to be a next-gen evolution of the Ethereum idea — with a blockchain that’s a flexible, sustainable, and scalable platform for running smart contracts, which will allow the development of a wide range of decentralized finance apps, new crypto tokens, games, and more. 

Cardano was created by Charles Hoskinson, a co-founder of Ethereum, another popular cryptocurrency, and it runs on a decentralized public ledger using blockchain technology. Blockchain manages and tracks the cryptocurrency, recording and ordering every transaction that occurs using it, like an endless receipt.

This decentralized system validates transactions, verifies their integrity, and helps to ensure that the system as a whole is robust and error-free. Cardano uses what’s called a “proof-of-stake” system, in which owners of the currency are tasked with validating transactions in exchange for a reward. This “staking” reward can be an attractive way to earn income, and the best crypto brokers let you participate in staking with little or no cost.

Like many other crypto coins, it’s useful to think of Cardano as a token that enables you to power or enable apps. Sending money is just one aspect of what Cardano and many other crypto coins allow you to do.

Cardano is a blockchain platform for changemakers, innovators, and visionaries, with the tools and technologies required to create possibility for the many, as well as the few, and bring about positive global change.

Cardano is a proof-of-stake blockchain platform: the first to be founded on peer-reviewed research and developed through evidence-based methods. It combines pioneering technologies to provide unparalleled security and sustainability to decentralized applications, systems, and societies.

With a leading team of engineers, Cardano exists to redistribute power from unaccountable structures to the margins – to individuals – and be an enabling force for positive change and progress.

Cardano was founded by Charles Hoskinson, who was also one of the co-founders of the Ethereum network. He is the CEO of IOHK, the company that built Cardano’s blockchain.

How Does Cardano Work?

Cardano’s goal is to be the most environmentally sustainable blockchain platform. It uses a unique proof-of-stake consensus mechanism called Ouroboros, as opposed to the energy-intensive proof-of-work system currently used by Bitcoin and Ethereum. (Ethereum is also moving to a proof-of-stake system via the ETH2 upgrade). 

What is proof of work?  Decentralized cryptocurrency networks need to make sure that nobody spends the same money twice without a central authority like Visa or PayPal in the middle. To accomplish this they use a “consensus mechanism.” The original crypto consensus mechanism is called proof of work, first popularized by Bitcoin mining. 

Proof of work requires a huge amount of processing power, which is contributed by virtual “miners” around the world competing to be the first to solve a time-consuming math puzzle. 

The winner gets to update the blockchain with the latest verified transactions, and is rewarded with a predetermined amount of crypto.

What is proof of stake?  Rather than using a network of miners racing to solve a puzzle, proof of stake uses a network of invested participants called validators. Instead of contributing processing power to secure the network and verify transactions as miners do, validators stake their own ADA.

The network selects a winner based on the amount of ADA each validator has in the pool and the length of time they’ve had it there — literally rewarding the most invested participants. 

Once the winner has validated the latest block of transactions, other validators can attest that the block is accurate. When a threshold number of attestations have been made, the network updates the blockchain. 

All participating validators receive a reward in ADA, which is distributed by the network in proportion to each validator’s stake. 

Becoming a validator is a major responsibility, but interested parties can also earn ADA rewards by “delegating” some of their crypto to a staking pool run by someone else. 

The Cardano blockchain is also divided into two separate layers: the Cardano Settlement Layer (CSL) and the Cardano Computing Layer (CCL). The CSL contains the ledger of accounts and balances (and is where the transactions are validated by the Ouroboros consensus mechanism). The CCL layer is where all the computations for apps running on the blockchain are executed — via the operations of smart contracts.

The idea of splitting the blockchain into two layers is to help the Cardano network to process as many as a million transactions a second.

What Does Cardano Do?

Cardano enables several different features on its platform:

  • Currency: With a cryptocurrency wallet, you can send and receive Cardano or transfer it in exchange for goods and services.
  • Smart contracts: Cardano enables smart contracts, which are contracts that automatically self-execute when the contract’s conditions are fulfilled.
  • Decentralized finance: Cardano enables people to skip the middleman, such as banks and other financial institutions, to transact directly and on a permission-less basis with other individuals or entities.
  • Digital apps: As part of decentralized finance, Cardano can enable lending, trading, asset management, insurance and other typical financial services.

So it’s useful to think of Cardano as a token that powers various financial services rather than merely as currency, though that is one of its functions, too.

Cardano Blockchain

The Cardano ecosystem is built as a third-generation blockchain platform consisting of two layers — a settlement layer (CSL) and a computation layer (CCL) that serve as the fundamental components of every transaction.

Two layers of the Cardano blockchain

Cardano Settlement Layer (CSL) 

Cardano’s developers wanted to build a system that separates the value of a transaction from its computational data. 

The Cardano Settlement Layer is designed to manage the movement of the value (or the currency) between the sender and the receiver. In other words, the settlement layer is the routing layer for all the control layers and systems. 

The CSL uses two dedicated scripting languages — Plutus and Marlowe — for moving the value and enhancing support for overlay network protocol. 

Cardano Computation Layer (CCL)

The Cardano Computation Layer helps Cardano to replicate the Bitcoin (BTC) ecosystem’s smart contract platform, Rootstock (RSK blockchain). The reasoning behind CCL’s implementation lies in its ability to help scale specialized protocols over the years. This involves adding hardware security modules (HSM) to the existing stack of protocols as technology advances. 

The two layers of the Cardano blockchain allow the ecosystem to proactively implement changes to support faster and more secure transactions while eliminating any user metadata that proves to be irrelevant to the process.

 
Benefits of the Cardano Blockchain

Secured protocol

This protocol is said to be secured when the honest participants hold 51 % of the stake. Stringent security measures and new iterations will improve the protocol.

Incentives and rewards

The sustainability of the blockchain is maintained by an incentive technology that provides rewards to the participants.

Stake delegation and stake pools

Ouroboros is a proof of stake protocol. It distributes network control across stake pools.

However, a stake pool is assigned to each slot as a slot leader, who will be rewarded for assigning blocks to the chain.

Energy efficient

Cardano solves the greatest challenge with the existing blockchain. However, they can perform securely, sustainably ethically 4 million times then the energy efficiency of a bitcoin.

What Makes Cardano Unique?

Cardano is one of the biggest blockchains to successfully use a proof-of-stake consensus mechanism, which is less energy intensive than the proof-of-work algorithm relied upon by Bitcoin. Although the much larger Ethereum is going to be upgrading to PoS, this transition is only going to take place gradually.

The project has taken pride in ensuring that all of the technology developed goes through a process of peer-reviewed research, meaning that bold ideas can be challenged before they are validated. According to the Cardano team, this academic rigor helps the blockchain to be durable and stable — increasing the chance that potential pitfalls can be anticipated in advance.

In 2020, Cardano held a Shelley upgrade that aimed to make its blockchain “50 to 100 times more decentralized” than other large blockchains. At the time, Hoskinson predicted that this would pave the way for hundreds of assets to run on its network.

The Alonzo hard fork launch in September 2021 will bring an end to the Shelley era, and usher in the Goguen phase. Users can develop and deploy smart contracts on Cardano, allowing native decentralized applications (DApps) to be built on blockchain. Cardano price broke the $3 mark and hit an all-time high of $3.101 on Sept. 2, 2021, ahead of the launch.

With a leading team of engineers, Cardano exists to redistribute power from unaccountable structures to the margins – to individuals – and be an enabling force for positive change and progress.

How is Cardano Different From Bitcoin and Ethereum?

Despite its projectile increase in less than two months, ADA is somewhat of an outlier in the volatile world of cryptocurrencies. 

Ouroboros utilizes a Proof of Stake (PoS) approach to save on energy costs and enable faster transaction processing. Instead of having a copy of individual blockchains on each node (as is common in bitcoin), Cardano’s blockchain streamlines the number of nodes in a network by appointing a leaders responsible for verifying and validating transactions from a collection of nodes. Subsequently, the leader node pushes transactions to the main network. 

Cardano has also adopted RINA (Recursive Internetworked Architecture) to scale its network. This network topology was first developed by John Day and enables customized increments to heterogenous networks. Hoskinson has said that he wants Cardano’s protocols to reach the standards of TCP/IP, the dominant protocol used on the Internet for exchange of data.  

Interoperability relates to the portability of a cryptocurrency both within its natural ecosystem and in its interface with the existing global finance ecosystem. Currently, there is no way to perform cross-chain transactions between cryptocurrencies or to conduct a seamless transaction involving cryptocurrencies and the global finance ecosystem. Exchanges, which crash or charge exorbitant fees, are the only intermediaries. An assortment of regulations pertaining to customer and transaction identities has further distanced the cryptocurrency ecosystem from its global counterpart. 

Cardano aims to enable cross chain transfers through side chains, which conduct transactions between two parties off chain. It is also exploring ways for institutions and individuals to selectively divulge metadata related to transactions and identities to enable use of cryptocurrencies for trading and daily transactions. 

Finally, sustainability is about governance structures that provide incentives to miners and other stakeholders and about evolving a self-sustaining economic model for the cryptocurrency. In addition to this, it aims to build what its creators describe as a “constitution” of protocols to avoid messy hard forks (such as the ones that occurred in bitcoin and ethereum).

In the future, protocols will be hard coded into Cardano blockchains and applications using the protocol, such as online exchanges and wallets, will automatically check for compliance as the applications are being built. The automation could also cut down time required to discuss and implement forks. Hoskinson has referred to it as “mechanization of a social process.”

Conceptual Innovation

i. Privacy and regulation

The original Bitcoin blockchain was meant to be a way for individuals to transact directly and anonymously with each other outside the control of banks and governments. This guarantees privacy in financial dealings, a fundamental individual right, but full anonymity can be counterproductive. Today most blockchain projects look to further either the aims of privacy or of regulation. To be effective globally, we think our blockchain must ‘square the circle’ by finding the right mix of individual privacy protection and provision for regulatory control.

ii. Governance

Public, decentralized blockchain projects rely on crowd-based governance models. This allows for democratic control of the network by its participants, which is essential to building truly decentralised economies. However, if they are not carefully designed, such governance can go awry. Both the Bitcoin and Ethereum communities have experienced devastating schisms on the question of how to upgrade their networks – in Ethereum’s case already causing a split. The Cardano blockchain has an airtight governance model that allow the community to democratically take clear and binding decisions.

iii. Funding

The Cardano blockchain has sophisticated maintenance and development needs and is able to adequately fund itself, both in terms of running costs and new investment.

What is the Cardano Foundation?

Areas of Focus:

1. Cardano Protocol – We function as an objective standards body for the Cardano protocol as it evolves over time.
2. Cardano community – We support, grow and help educate the Cardano blockchain community.
3. Cardano ecosystem – We work to expand and protect the Cardano ecosystem. This includes promoting Cardano as a platform for commercial entities and serving as an objective organization for enterprises interested in joining Cardano.
4. Serving the wider blockchain community – We aim to influence and progress the emerging commercial and legislative landscape for blockchain technology and cryptocurrencies in general. We proactively approach government and regulatory bodies and form strategic partnerships with businesses, enterprises and other open-source projects.

Advantages of Cardano 

Cardano has a wide array of advantages. Below are 5 of the most important ones compared to competitors in the crypto sphere.

Fast transactions – Cardano is created to be highly scalable. At the moment, it provides 250+ transactions per second, compared to Ethereum’s 15.

• Cheap gas fees – Additionally, the PoS model allows Cardano to offer nominal transaction fees on its network. The average cost of a transaction on Cardano costs around 0.1 ADA, which equates to a couple of cents. Compare this to the price of Ethereum of $15 per transaction.

• A higher degree of decentralization – The network becomes increasingly decentralized because everyone can become a node validator in Ouroboros. At the moment, there are more than 1500 validator pools in Cardano.

• Eco-friendly – one of the main concerns in the 2021 bull run is the high amount of electricity required by PoW blockchains such as Bitcoin and Ethereum. Cardano, with its PoS mechanism, consumes 99% less electricity than either of these blockchains.

• Passive income – finally, every Cardano holder has the opportunity to gain passive income by staking their ADA coins. The procedure is as simple as purchasing ADA tokens and locking them up in a wallet such as Yoroi.

Disdvantages of Cardano 

• Cardano’s voting mechanism lets token holders vote on the future of the blockchain. In some libraries, improvements and modifications could be proposed, and token owners could vote on whether they should be implemented. Unfortunately, Cardano has several drawbacks in this regard. The difference between you and the lead is added to your account if you are ahead by a certain percentage.

• Cardano faces an uphill battle in its battle against Ethereum, even with an army one-hundredth the size of Ethereum. One of its rivals, Solana, is much larger and growing at a faster pace.

Even though low prices are beneficial, they also mean less demand for network space. As smart contracts are introduced into the network, there is a possibility that this could change since smart contracts require more storage than payments.

In the case that a stake pool’s servers are unavailable when a block is scheduled to be minted, rewards will be lost. Monitor the “luck” statistic of a stake pool over time if it fails to hit a block. Check to see if their percentage is much lower than 100 percent to see if there are any missing blocks (like 95 percent or less). The average will be 100 percent if no blocks are missing from a pool. The ideal situation does not exist. When a pool is newly constructed, the values will be significantly different. The stake pool will eventually reach 100 percent of its original value after minting each block that is assigned to it

A useful tool that can be used to check the history of transactions that have taken place on the Cardano blockchain.

The Cardano roadmap will be regularly updated to show the research and development progress or plan of the Cardano platform.

Cardano SL (or Cardano Settlement Layer) is a cryptographic currency designed and developed by IOHK in conjunction with the University of Edinburgh, the University of Athens and the University of Connecticut.

Cardano Launchpad Projects

Launchpad is a decentralized fundraising platform and startup accelerator built on Cardano, it fully supports Cardano native tokens, NFT, Metaverse projects and provides DeFi features required by new applications and it also encourages starting projects to grow.

Flickto is a media project launchpad that provides fundraising for Film, TV and Streaming content creators.

The first insured cross-chain accelerator for Cardano.

A suite of DeFi solutions tailored for Cardano. Designed to deliver market leading applications.

A Cardano focused multi-chain decentralized presale platform, an IDO platform, an incubator and accelerator.

TrustPad is a decentralized multi-chain fundraising platform enabling projects to raise capital.

Cardano Future

Bitcoin and Ethereum, the two most popular cryptocurrencies, have made major waves in the investment world. Cardano, on the other hand, is a newcomer that is giving the big cryptos a run for their money. Cardano’s digital token, ADA, is now the sixth-largest cryptocurrency in the world. After a price surge, it hit a new high of US$3 in September and is now trading at US$1.38. Despite the enormous increase, Cardano’s price remained below $2 for the majority of the year. But it’s unclear what the future holds for 2022. As a result, we try to figure out how likely it is for ADA to hit new highs in the future year and what will cause it to do so.

According to Cardano expert, Cardano has established itself as the best ‘Ethereum Killer’ during the last year. ADA has been a fantastic investment for new and existing investors based on previous price activity. Cardano’s price has dropped 10.98% in the last seven days, compared to 12.64% and 3.69% for Bitcoin and Ethereum, respectively. However, you must first understand Cardano’s long-term performance and price forecasts before investing. You should, however, be aware of the aspects that will determine its future value. Nobody knows if cryptocurrencies will out to be a profitable investment. If you believe in ADA’s long-term potential, though, be prepared to stick with your investment through the ups and downs.

Due to a variety of factors, Cardano’s price is predicted to surge in 2022. Cardano is expected to enter the institutional adoption circle in the near future. The investment’s worth will increase as it grows. The market’s focus on supply and demand is expected to put ADA on the back foot. Demand-side factors have a bigger impact on price determination than supply-side factors due to the limited supply of bitcoin. Its ecologically friendly characteristics also boost to its growth and distinguish it from the Bitcoin and Ethereum craze. The crypto network has also gotten a software update, putting it in direct competition with Etheruem.

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