What is Cardano (ADA)?
Cardano (ADA) is a decentralized proof of stake (PoS) blockchain designed as a more efficient alternative to proof of work (PoW) networks. It aims to evolve into a system with multiple use cases, managed by those who have staked their cryptocurrency.
The cryptocurrency of Cardano is named “Ada” after Countess Ada Lovelace (Augusta Ada King, 1815-1852), who is often considered the first computer programmer. Ada is used for the blockchain’s PoS consensus mechanism. It is rewarded for the work done on the blockchain and can also be purchased on exchanges.
Key Points
- Cardano is a blockchain platform founded by Charles Hoskinson in 2015 and launched in 2017.
- Cardano aims to be a decentralized application (dApp) development platform with a multi-asset ledger and verifiable smart contracts.
- Cardano operates on its native token Ada on the Ouroboros proof of stake consensus protocol.
History of Cardano (ADA)
Cardano was developed by Ethereum co-founder Charles Hoskinson, starting in 2015 and launching the platform in 2017.
Cardano positions itself as an alternative to Ethereum. Both platforms are used for similar applications, such as smart contracts, and aim to build a connected decentralized system.
Cardano considers itself an upgrade to Ethereum, calling itself a “third-generation” platform compared to Ethereum’s “second-generation” credentials. Another goal of this blockchain platform is to provide banking services to the world’s unbanked.
Cardano vs. Bitcoin
There are several key differences between Bitcoin and Cardano. Bitcoin was developed as a peer-to-peer payment system. Cardano is an ecosystem that allows other developers to create tokens, decentralized applications (dApps), or any other use that a scalable blockchain network can host.
The Cardano platform operates on the Ouroboros consensus protocol. Ouroboros, created in the foundational phase of Cardano, is the first proof of stake (PoS) protocol designed to reduce the energy consumption required for proof of work (PoW) mining. It achieves this by eliminating the vast computational resources used by the proof of work algorithm.
Cardano does not reward its cryptocurrency as an incentive for a competitive mining process like Bitcoin. Since there’s no need for massive electricity to power computers specifically designed for mining, it reduces the energy and waste footprint. Cardano users can install compatible wallet software on their computers or devices, stake their Ada, and start earning participation rewards.
What is Cardano Staking?
In Cardano’s PoS system, staking determines the capability of nodes to open blocks on the blockchain. A node’s stake is equivalent to the amount of Ada it holds over the long term. Stakes are the interests held by participants in a staking pool, with Ada staked as collateral. Holders cannot use or spend the staked Ada, as it is held as collateral for honest validation actions. Users staking Ada are rewarded based on the amount of Ada staked.
Users join or create staking pools (groups of Ada holders staking their tokens) and work together to update the ledger, open new blocks, and earn rewards.
How Does a Cardano Staking Pool Work?
Cardano uses a PoS consensus mechanism where users “stake” a token to gain the chance to become validators. Users can participate in the staking and validation process in two ways: you can stake your Ada in a pool or create your own Ada. Staking pools are trusted server nodes responsible for the work of validating transactions. These pools can be public or private. Public pools distribute rewards to their members based on the amount of Ada staked. Private pools, as the name implies, offer rewards to the owner.
Staking pools must be run by operators with the knowledge and skill to maintain the pool by renting servers, monitoring nodes, holding staking pool keys, and performing other staking pool management tasks.
Smart Contracts
Cardano implemented support for smart contracts through the Alonzo update in 2021. This testnet update was the first iteration bringing promised scalability and use cases to users. The update allows users to create smart contracts and non-fungible tokens (NFTs) and manage multiple assets. Future versions and forks will bring more functionalities to the mainnet.
Where is the Best Place to Stake Cardano?
You can choose from multiple staking pools to stake your Ada. It’s essential to thoroughly read the pool’s website, user reviews, complaints, or issues to ensure you’re joining a reputable pool.
You can also use community-built tools like ADApools.org, Cardanoscan.io, Pool.pm, Poolstats.org, or Pooltool.io to help you choose a pool. You can also use wallets like Yoroi, Exodus, or Binance to stake your Ada. You can also use Daedalus, a full desktop application developed by IOHK that downloads a copy of the blockchain. Daedalus is a full node, acting as a wallet,
verifying all transactions in its history, and allowing you to select the pool to join.
The Future of Cardano
Cardano’s design goal is to develop in “eras” named after poets and historical figures in poetry and computer science: Byron, Shelley, Goguen, Basho, and Voltaire. Basho is an era of scaling and optimization, aiming to bring more functionality to Cardano. As of 2023, Cardano is expected to transition from Basho to Voltaire.
Voltaire is the final era in Cardano’s development, aimed at achieving the governance and financial management of the blockchain and network through the smart contract functionalities and system improvements introduced earlier. When Voltaire is completed, IOHK’s goal is to release the blockchain and network to the community, as it will be fully decentralized and capable of developing, maintaining, and securing itself.
Where Can I Get Cardano (ADA)?
You can purchase Cardano (ADA) through cryptocurrency exchanges or by participating in the network.
How to Mine Cardano (ADA)?
Cardano cannot be mined like other cryptocurrencies. Instead, it must be purchased on a cryptocurrency exchange or earned.
What is the Market Cap of Cardano (ADA)?
As of March 4, 2024, Cardano (ADA)’s market cap is approximately $27.9 billion.
Bottom Line
Cardano is a decentralized PoS blockchain, established in 2015 and launched in 2017. It positions itself as an alternative to PoW blockchains like Bitcoin because it’s more energy-efficient and scalable.
Cardano’s development plans are ambitious. Its developers believe that once future additions of blockchain voting and financial management are added to Cardano’s functionalities, Cardano will ultimately be fully decentralized.
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