The Beginner’s Guide to Cardano – What You Need To know
By mixing a scientific approach with philosophy, Cardano manages to provide one of the most secure cryptocurrencies to date. Most probably, the future of mainstream crypto as we know it.
While miners inhabit most blockchain-based ledgers, Cardano amassed many mathematicians, scientists, and independent thinkers. Together they develop and support an open-source and patent-free platform where users can create and execute DApps and smart contracts faster on a multi-layer protocol.
Like most decentralized and highly-promising public networks that use blockchain technology, Cardano has its native asset. ADA is a utility token that you can use on the platform and store it in the community-developed Daedalus Wallet.
Cardano is developing slowly but steadily into an innovative cryptocurrency with a development philosophy of its own.
Cardano in a Nutshell
- Cardano is a decentralized, open-source, patent-free platform
- Cardano uses blockchain technology to enable the creation of smart contracts and DApps
- Cardano was released in 2015 by two former Ethereum employees
- Cardano uses scientific papers instead of a whitepaper
- Cardano uses ADA as native crypto on the platform
- Cardano is the first cryptocurrency to use a Proof of Stake protocol that is scientifically proven to be secure
- Cardano uses the Ouroboros algorithm to obtain Proof of Stake instead of mining
- Cardano’s ADA tokens can be stored in the community-created Daedalus Wallet
What is Cardano?
Cardano is a decentralized public network that uses blockchain technology to enable smart contracts and DApps.
Cardano is in direct competition with Ethereum, which is the largest smart contract-supporting blockchain on the market.
Like its giant-size competitor, Cardano has a native digital asset in the form of ADA and a Proof of Stake-like consensus mechanism called Ouroboros.
Where Cardano claims to have a competitive advantage is its academically peer-reviewed nature. This fully open-source platform is named after Gerolamo Cardano, a famous Italian polymath from the 16th century. According to its creators, it is the only blockchain network to follow scientific philosophy in its research and development.
Cardano replaced the standard whitepaper that almost all cryptocurrencies release on their launching with a set of academic papers on which it bases its philosophy.
Another aspect that differentiates Cardano from Ethereum is its versatile offer of applications and ease of use. The network can process transactions and smart contracts in a multi-layer style to enable users to develop DApps faster and more efficiently.
ADA is the cryptocurrency available on the Cardano network. It is a utility token that allows users to transfer and receive digital funds. Its creators believe that this crypto’s use and behavior on the market give us a sneak preview of how the money will look like in the future.
At the time of writing, ADA had a value of USD 0.038545 per unit, and a market cap of USD 999,350,627, according to CoinMarketCap.
A brief history of Cardano
Cardano is the creation of Charles Hoskinson (one of Ethereum’s co-founders) and one of his former colleagues at Ethereum, Jeremy Wood.
In 2015, the two developers proposed a new blockchain-based platform for smart contracts and cryptos that would expand the use and understanding of the world of digital assets and applications.
Hoskinson and Wood established Input Output Hong Kong (IOHK), which became one of the main companies to support Cardano’s development. In time, two others joined their efforts – Emurgo and The Foundation.
The developers raised almost $63 million for Cardano’s development in an ICO that lasted for almost 2 years, between January 2015 and January 2017.
Cardano is the only blockchain-based network to have passed the official algorithm review at the International Cryptology Conference in 2017.
How does Cardano work?
Cardano works as the Cardano Settlement Layer (CSL), the balance ledger, and is the network’s foremost layer. According to the Ouroboros whitepaper, its developers consider it an improvement to Bitcoin and a cryptocurrency innovation.
Cardano uses Ouroboros, a Proof of Stake algorithm with additional features that make it completely distinct from other smart contract-based blockchains.
Ouroboros is a crucial element of the system that supports the ADA cryptocurrency. Contrary to other algorithms, it takes out the need for mining from the users. Instead, it uses mathematics to prove the validity of a transaction through a randomly selected stakeholder, which only has a proportional size to the stake.
Ouroboros is the first algorithm to develop a proof of stake algorithm that ensures both complete randomness and optimal security. This process uses a multiparty implementation of a coin-flipping protocol, which is an innovation in cryptocurrency.
Cardano also summarizes its entire development into an allegorical sequence called the Cardano Roadmap.
Staying true to the network’s philosophical and scientific approach to cryptocurrency, the Cardano Roadmap uses 5 divisions of development, each named after great historical innovators, as it follows:
- Byron | Shelley | Goguen | Basho | Voltaire
These five stages are called eras, and they will develop in parallel but will be delivered sequentially. They will include years of research, proposed algorithms, developments, and prototyping that will link the academic discoveries with innovations in cryptocurrency to transform Cardano in the next generation of cryptos ready available for mainstream adoption.
Each era in the Cardano Roadmap has a countdown to its release. Once an era is revealed, all of its content becomes accessible to the Cardano community.
How to buy and own ADA
Cardano’s native asset ADA has a hard cap of 45 billion pre-mined tokens.
You cannot buy an ADA with fiat money. However, you can make an account on popular cryptocurrency exchanges online and exchange fiat currencies for other cryptos like Bitcoin, Ethereum, or Litecoin. Next, you can use these tokens to purchase ADA.
Here are some of the best choices for becoming an ADA owner:
Where to store ADA
When it comes to storing ADA, Cardano offers a reliable solution with its Daedalus Wallet.
This storage option for digital assets is a safe, multi-platform, HD wallet specifically developed for the Ada cryptocurrency. You can easily install it on your computer, whether it is a PC or a MAC, and benefit from:
- High protection encrypted private keys and passwords.
- Protection against hacker attacks and malware
- The option to export the wallet to cold storage solutions like paper certificates
- Transaction assurance level monitoring
The Cardano developers are currently working on enhancement solutions to benefit the ease of using ADA tokens and the ledger. These projects include:
- Support for Ethereum and Bitcoin
- A portable wallet for both iOS and Android-running smartphones
- The possibility for ADA holders to participate in the block generation process actively.
- An app store where the community can promote its locally-built applications
The advantages of using Cardano
- Cardano uses Ouroboros – the first Proof of Stake protocol that is scientifically proven to be secure.
- Cardano uses a multi-layer protocol to enable the execution of smart contracts and DApps concomitantly on different layers.
- Cardano fulfills the main requirements of cryptocurrency by ensuring both the security of its users and the viability of its processes at the same time.
- Cardano can easily adapt to the upcoming changes in the cryptocurrency market through soft forks.
- Cardano is open source and patent-free.
The risk of investing in Cardano
The development speed of Cardano is slow despite its promising potential and future success. The ICO that took two years to complete is a clear sign that while Cardano uses a scientific approach to create the most secure cryptocurrency to date, maybe overthinking its next steps dents its evolutionary pace.