Crypto Currency

What is Cardano (ADA)?

What is Cardano (ADA)?

Cardano is one of the largest cryptocurrencies by market capitalization. It is designed to be a next-generation evolution of the Ethereum idea , with a blockchain that is a flexible, sustainable, and scalable platform. Cardano seeks to enable smart contracts , which will allow developers to create a wide range of decentralized finance (DeFi) applications, new cryptocurrency tokens, games, and much more.

According to the creators of Cardano, “ Ouroboros is the Proof-of-Stake (PoS) protocol that has been proven to be the most secure. It is more secure, more scalable, and more energy efficient than anything before it.”

The Cardano blockchain is divided into two distinct layers: the Cardano Settlement Layer (CSL) and the Cardano Computation Layer (CCL). The CSL contains the ledger of accounts and balances (and this is where transactions are validated using the Ouroboros consensus mechanism).

The CCL layer is where all the calculations of the applications that operate on the blockchain are executed, through the operations of the smart contracts. The idea of ​​splitting the blockchain into two layers is intended to help the Cardano network process up to a million transactions per second.

Unlike Ethereum-based tokens, native Cardano tokens are not created using a smart contract. Instead, they work on the same architecture as the ADA cryptocurrency itself. According to the non-profit Cardano Foundation, this makes native Cardano assets “first-class citizens” on the blockchain. Theoretically, their native architecture can make these tokens more secure and reduce fees associated with transactions.

Brief history of Cardano

Cardano was launched in September 2017 by Ethereum co-founder Charles Hoskinson and is intended to be a third generation blockchain project (or Blockchain 3.0), which is based on the technology pioneered by Bitcoin (first generation) and Ethereum (second generation). Cardano’s goal is to be a highly scalable and energy efficient smart contract platform.

The Ouroboros consensus mechanism is based on peer-reviewed research conducted by a team of computer scientists and cryptographers from the University of Edinburgh, the University of Tokyo, and other institutions. Their goal was to build a decentralized network that could validate transactions in a scalable and secure manner, while ensuring that the Cardano platform was as energy efficient as possible.

How do I stake Cardano?

Cardano’s goal is to be the most environmentally sustainable blockchain platform. It uses a unique Proof-of-Stake (PoS) consensus mechanism called Ouroboros, as opposed to the energy-intensive Proof-of-Work (PoW) system currently used by Bitcoin.

Proof of Work (PoW) vs. Proof of Stake (PoS)

Decentralized cryptocurrency networks must ensure that all transactions are legitimate without supervision by a central authority such as a bank. To achieve this, a “consensus mechanism” is used to verify transactions.

The original cryptocurrency consensus mechanism, called proof-of-work (PoW), was first made popular by Bitcoin mining. Proof of Work (PoW) requires an enormous amount of processing power, which is contributed by “virtual miners” from around the world.

Instead of using a network of miners, Proof of Stake (PoS) uses a network of invested participants called validators.

The network selects a winner based on the amount of ETH each validator has in the pool and how long it has been there, literally rewarding the participants who have invested the most.

Once the winner has validated the last block of transactions, other validators can certify that the block is correct. When a minimum number of these certifications 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 the participation of each validator.

Becoming a validator is a big responsibility, but stakeholders can also earn ADA rewards by “delegating” part of their cryptocurrency to a stake pool managed by someone else.

On March 1, 2021, the Cardano blockchain introduced the ability to create native tokens. Like Ethereum tokens, which can include things like NFTs or stablecoins, Cardano’s native assets can be created and distributed on the blockchain and are capable of interacting with smart contracts (once smart contracts are enabled). on the platform).

Where can I buy Cardano?

Just like the native cryptocurrency of the Ethereum blockchain is ETH, the native cryptocurrency of the Cardano blockchain is ADA, which can be bought or sold through exchanges like Coinbase. Today, ADA can be used to store value (perhaps as part of your cryptocurrency portfolio), to send and receive payments, and to stake and pay transaction fees on the Cardano network.

How do I store Cardano?

You can store ADA on Coinbase, Coinbase Wallet, and various cryptocurrency exchanges and wallets.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button