Ever since Bitcoin’s launch in 2009 as the first ever cryptocurrency, thousands of other cryptocurrencies or altcoins have been released. From meme coins like Dogecoin to utility tokens such as Ethereum and Neo, different types of tokens have emerged in recent years.
Out of the thousands of coins that have been released, only a few have survived and proved to be useful to the public. One of these is Cardano.
Despite only being launched in 2017, it has already climbed through the ranks as one of the top five cryptocurrencies today. What is Cardano and how did it become the outstanding coin it is today? Find the answers to all these questions and more in this ultimate guide to Cardano.
What is Cardano?
Cardano is a blockchain platform that allows users to settle transactions and develop decentralized applications and smart contracts. Running within its own system is its native coin ‘ADA’ named after the world’s first computer scientist, Lady Ada Lovelace.
Cardano entered the crypto scene in 2017 bearing the name of mathematician and Ethereum co-founder Charles Hoskinson. Branding itself as a third-generation blockchain and aiming to be the ‘internet of blockchain’, it garnered a lot of attention during its Initial Coin Offering or ICO. Now, it stands as the fourth-largest cryptocurrency in market capitalization, moving past Ripple XRP.
Unlike other cryptocurrencies, Cardano’s whitepaper was created through an intensive peer-review process that involved prestigious members of the academic community and researchers in related fields. This separated this altcoin from the rest and immediately made it a sensation not just in the world of crypto but also in the academic field.
To this day, the team behind Cardano is immensely focused on research that they specifically have a development branch dedicated to this alone: the IOHK or Internet Output Hongkong headed by Hoskinson himself.
Third-generation blockchain: what does it mean?
With the ambitious claim of solving the problems of interoperability, scalability and sustainability, Cardano took the crypto world by storm when it launched in 2017 after two years of peer-reviewed research. Its ICO alone amassed a total of US$63 million. Since then, the ADA coin has risen to US$20 billion in market capitalization at the current price of US$0.91.
When it comes to scalability, Cardano ranks higher than Bitcoin and Ethereum with a record of 257 transactions per second. They made this possible through their own proof-of-stake structure where slot leaders are elected to process 1 block.
The Cardano network uses a consensus algorithm called Ouroboros Proof-of-Stake where validators need to hold a certain amount of ADA before they can be considered as a slot leader. As an incentive, the network rewards the slot leader for every uploaded block based on the number of coins they have staked.
In the Bitcoin network, every miner competes for the same block but only one receives the block reward. This process wastes a lot of the miners’ effort and resources.
Instead of following this protocol, the Cardano network elects one slot leader to process 1 block at a time. This way, each person is focused on just one block, making use of their time and effort effectively. As a result, more transactions are verified at a faster rate.
How does the Cardano network work?
Cardano has two layers that make it a hybrid of Bitcoin and Ethereum. Its first layer called the ‘Cardano Settlement Layer’ (CSL) handles all ADA transactions. It serves as the balance ledger where all transactions are recorded.
On the other hand, the second layer called ‘Cardano Computation Layer’ contains all the information included in transactions. This is the development layer where Cardano smart contracts are run. By separating the settlement and computation layers, ADA transactions are verified much faster than on other blockchains.
In this sense, it becomes clear why Cardano confidently proclaims itself to be the third generation of blockchains.
Cardano to the future
Hopefully, with this guide to Cardano, you got to understand the reason behind its impressive performance. With ambitious plans backed by research and academic professionals, it’s easy to put your faith in this novel technology that aims to solve major problems in the crypto world.