Having established itself as the third generation of cryptocurrency, Cardano has secured its spot in the top ten cryptocurrency list based on its market cap. Built primarily to compete with Ethereum’s smart contract platform, Cardano has grown to be the most multi-faceted cryptocurrency out there today.
The blockchain technology has been ever evolving ever since its starting cryptocurrency, Bitcoin. The Bitcoin blockchain is considered to be a first generation blockchain as it had only one use i.e. to maintain an incorruptible ledger of transactions. Initially, this was very helpful and satisfied all the needs of a cryptocurrency.
A few years later, the Ethereum blockchain was released. The inclusion of smart contracts and DApps on the blockchain gave this piece of technology a whole new dynamic. The list of possibilities of integration with different technologies, such as AI, AR/VR etc grew rapidly. Ethereum, then, went on to dethrone so many other top cryptocurrencies and eventually ended up right behind Bitcoin. Soon, other cryptocurrencies were developed whose core purpose was to be the second generation blockchain.
The second generation of blockchain was a very big upgrade from the first generation. It widened the people’s point of view on the usage of this technology. However, one of the biggest problems faced by both the first and second generation of blockchain was the scalability issue. While there were other cryptocurrencies out there that aimed at tackling the scalability issue, none of those cryptocurrencies had as many features or use cases. Thus, the need for the next generation of blockchain came into existence.
Unlike other cryptocurrencies that launched their platforms hastily in order to get their product up and running, Cardano settled for passive development. With over a thousand cryptocurrencies with different use cases out there, Cardano started it’s research in 2015. By taking into consideration the advantages of several cryptocurrencies and researching more to develop them further, Cardano was finally released on September 29th, 2017.
Cardano did not fail to disappoint its supporters, after being extensively developed for over two years.
Cardano started as a project with no white paper and was able to have a working platform in a couple of years. On the other hand, many other platforms that started off with a white paper, eventually failed to deliver all their claims. The amazing features of Cardano got the attention of many and thus, it reached the top ten cryptocurrencies ranking in under a year.
Let us dive deeper into this technology and see what solutions it has to offer the whole world.
The Team Behind Cardano
Charles Hoskinson is the brain behind the Cardano project.
Hoskinson was the co-founder of Ethereum alongside Vitalik Buterin and thus, has a lot of knowledge when it comes to smart contracts.
The Cardano team comprises of three different companies:
Each of these work on different aspects of the project. These three companies focus on blockchain development as well.
Their massive team has contributed immensely to bringing out a working product after researching for over two years. Some of the most prominent names other than Charles on the team are:
Michael Parsons FCA
Getting Started with Cardano
Often referred to as the Ethereum killer, Cardano has lived up to the expectations of many people. Cardano is similar to the way Ethereum works in many ways. However, when it comes to efficiency and scaling, Cardano is miles ahead of Ethereum.
As opposed to Ethereum’s “build first” structure of working, Cardano follows a more “research first” approach. The main reason for this is that changes can be implemented more easily on a stationary service than a moving one. Since Ethereum is already up and running, implementing any changes need to be done more carefully without causing any damage to the funds in the wallets of its users. Cardano, on the other hand, implemented all the features that users wanted when it was still under research by doing proper market research. The platform was released only after all the changes were accounted for.
Similar to the way how Ethereum is the platform and Ether is the cryptocurrency, Cardano is the platform where ADA is the cryptocurrency. Deployment of smart contracts and DApps on the Cardano platform offers the same functionality as that offered by Ethereum’s smart contracts. However, the fee charged on the Cardano blockchain and the speed of execution of smart contracts is unmatched by any other cryptocurrency.
Due to its increasing popularity, Cardano is supported by several cryptocurrency wallets like Daedalus wallet, Yoroi wallet and the Infinito wallet.
How does Cardano Work?
The Problem with Proof of Work
The main problem with the existing blockchains is the proof of work algorithm. Ethereum uses this method wherein the computing power of computers is used to verify all the transactions on the network. As the computing power of computers is limited, this computation often takes a lot of time.
Additionally, the amount of electricity consumed due to the proof of work algorithms is extremely high. Thus, this makes the whole system inefficient and slow.
The Alternate – Proof of Stake
The only way around the proof of work algorithms is the proof of stake algorithm. In this method, a large amount of cryptocurrencies are staked to a particular address and this node helps to sign and verify all the transactions on the network. As there is no need for any computation power, this is a very fast and efficient alternative for the proof of work algorithm. However, the way this algorithm is currently being used in many existing blockchains is not very effective. There are issues related to network congestions on proof of stake cryptocurrencies as well.
The Solution by Cardano – Ouroboros Algorithm
After a lot of research, Cardano has come up with a unique solution called the Ouroboros algorithm. In this algorithm, the chain splits into many sub-chains and each sub-chain is assigned a leader that is chosen randomly. The leader acts like a miner of a proof of work algorithm and verifies the transactions on the network. Thus, the individual chain works parallelly and the transactions are confirmed very quickly.
The average time taken by the Cardano sub-chain is as low as 20 seconds. The fee that it costs one to run these transactions is also very low. Thus, this creates the ideal solution for the problems with proof of stake algorithms.
The Strengths of Cardano
Cardano aims to solve most of the issues that are present in the current blockchains. The various strengths of this network are:
All blockchains suffer from the problem of scalability. Not being able to scale up means that mass adoption of a cryptocurrency is currently not possible. One of the main reasons for this is the fact that the existing blockchains use a lot of electricity in order to verify the transactions on their network. As Cardano makes use of proof of stake consensus, the amount of electricity wasted is minimal.
Additionally, Cardano is the only cryptocurrency out there that complies with all the regulations set by the centralized organizations and has been able to stay completely decentralized. The amount of emphasis laid on the KYC verification during its ICO period was very high. All of this put together has made Cardano a highly scalable network.
The proof of work algorithm has a lot of shortcomings. While Bitcoin can only process 6-7 transactions per second and Ethereum can process just 10-20 transactions per second, centralized solutions such as Visa can process over 50,000 transactions every second. Thus, all proof of work networks lack a good throughput.
Cardano on the other hand, has a very impressive throughput as it utilizes the proof of stake algorithm, Ouroboros which we discussed earlier.
Even though the transactions on the Cardano network are not free, they are extremely cheap. Thus, even if you use it on a daily basis, you won’t incur huge losses due to the fees, as is the case in the Ethereum network.
Cardano is the only network on which new updates can be implemented easily without causing any kind of disruption in the entire network.
Additionally, Cardano also supports the deployment of smart contracts and DApps on its platform.
How to Buy and Store Cardano?
Being a popular cryptocurrency, Cardano has a very well established market in place. Cardano can be bought on reputed exchanges like Binance, BitThumb, Bittrex, etc where it is paired against other cryptocurrencies such as BTC, ETH, KRW, and USDT. The ADA coin can also be bought using US dollars on the Kraken exchange. Thus, it offers a multitude of options for buying the cryptocurrency.
Once bought, the coin can be stored on the exchange wallet itself. However, this is not always the recommended place to store a major chunk of your cryptocurrency. Cardano does not have any hardware wallet that it supports as of yet. However, the most trusted ADA wallet out there is the Daedalus wallet. It can be installed on your computer and it offers a very easy to use interface for storing and transferring your cryptocurrency.
Also Read: Ledger Nano S vs Trezor vs KeepKey
Future of Cardano Coin
Even though Cardano never started off with a white paper, they had a very good plan for implementing the project. By incorporating the best features of many other cryptocurrencies, Cardano is very strong when it comes to the core technology underneath the project.
Cardano is the only cryptocurrency which complies with all the regulations and has still managed to remain completely decentralized. Thus, making it a favorite in both the crypto community as well as amongst several centralized organizations.
With KYC norms being followed during the ICO period itself, Cardano was able to gain the trust of the people as well as the centralized organizations. Additionally, it is headed by one of the former co-founders of Ethereum who knows about its disadvantages and the ways to correct them.
Within a few months of its deployment, Cardano was able to test the positions of several reputed cryptocurrencies, including Ripple. It had also secured a position in the top 5 cryptocurrencies for several months.
Even though it has dropped a few spots in the leaderboard, Cardano is still a highly capable cryptocurrency and is the only one that has ever come close enough to test the capability of the Ethereum blockchain.
How Cardano is different from the existing cryptocurrencies?
Most of the cryptocurrencies in the world released their platform without any proper testing . Cardano, on the other hand, was built after taking into consideration the advantages of various crypto platforms out there. This is the main reason for the success of Cardano. Having so many different advantages makes it an ideal platform to use.
The platform has been rigorously tested for various aspects and only after the entire team was satisfied with the platform, it was released for the public. Thus, any further updates to the platform can be done through soft forks itself. However, this is not the case with other cryptocurrencies where hard forks occur very often.
The unique Ouroboros algorithm makes the whole network very fast and highly efficient. Thus, making Cardano a major cryptocurrency to have in your portfolio.
Should you invest in Cardano?
Cardano has been amongst the top ten cryptocurrencies since its launch in 2017. The advantages that it had to offer over Ethereum made it a popular cryptocurrency. During the bull run in 2017, the coin price increased to nearly over a dollar. Since then it has decreased its price to just over $0.07 right now. The potential of the Cardano network is extremely high and this makes it a very good option to go for right now.
According to their roadmap, a new feature of interoperability is going to be implemented by the end of 2019. This could potentially make Cardano one of the greatest cryptocurrencies of all time. With the inclusion of side chains, the potential of this network will increase exponentially and so will its prices.
Cardano is currently available at a very low price and this would be the prime opportunity for you to stack up on these coins. You are sure to reap the benefits when the prices of Cardano go up once again.
Frequently Asked Questions on Cardano
What was the need for KYC?
Cardano is probably the only cryptocurrency to believe that the only way to achieve mass adoption is to comply with all the regulations. Thus, the KYC procedure was held during the ICO period of the coin (which lasted for 2 years).
Even though Cardano complies with all the required regulations, it is completely decentralized and gives its users complete control over their funds. Thus, Cardano has managed to gain the support of both people as well as the centralized organizations.
Many might feel that Cardano is still in its early days and will not survive the crypto battle against Ethereum. However, Cardano was founded by a former co-founder of Ethereum who knew about all its disadvantages and made sure that the Cardano network did not carry any of those disadvantages.
Additionally, the Cardano network has been operational for just over a year. However, it was under research and development since 2015. So, considering it an underdog in the crypto space would be a big mistake. Cardano has put together all the good features of various cryptocurrencies into a single platform, making it the most well-engineered cryptocurrency yet.