What is Cardano (ADA)?
Cardano (ADA) is a third-generation public blockchain and Dapp development platform. The platform earned international media attention as the first blockchain to incorporate a peer-reviewed research strategy into its core principals. Today, ADA is one of the top cryptocurrencies in the world.
It’s common for investors and analysts to refer to Cardano as a third-generation cryptocurrency. Notably, the first generation of cryptocurrencies such as Bitcoin introduced the world to a secure decentralized cash system. Shortly after its release, Ethereum entered the market with an overall focus on Dapp development. This was the goal of second-generation cryptocurrencies.
Third-generation cryptocurrencies take the lessons learned from Bitcoin and Ethereum concepts and improve upon their shortcomings. Third generations cryptos such as ADA utilize new developments such as layered architecture to improve scalability, security, and sustainability. In this way, they create more usefulness, address flaws, and rectify inefficiencies.
Why Cardano (ADA) Matters
Cardano differs from the competition in many ways. Unlike the competition, Cardano depends heavily on the academic sector. The platform’s design was built from the ground up utilizing evidence-based methods grounded in scientific philosophy, academic theory, and finalized via peer-reviewed research.
Interestingly, the name Cardano originates from the famous Italian polymath and physician, Girolamo Cardano. Cardano changed the world after he developed the first systematic computations of probabilities. His legacy lives on today.
Cardano (ADA) Use Cases
Cardano’s developers have some hefty goals for the project. This advantageous team seeks to restore trust in global economic systems via the integration of Cardano technologies. Specifically, the platform introduces a more secure, transparent, and sustainable way to conduct business internationally.
Additionally, Cardano’s developers seek to provide the world’s unbanked population access to financial services. Sadly, estimates place the unbanked population at over 1.7 billion people currently. To this extent, Cardano has projects currently underway in Africa and other parts of the developing world.
The third goal for Cardano is to help stabilize the Dapp sector. The platform has a focus on security and sustainability specifically applied to decentralized applications, systems, and societies. Speaking on their goals, Cardano developers stated they intend to:
“provide a more balanced and sustainable ecosystem that better accounts for the needs of its users as well as other systems seeking integration.”
How Cardano (ADA) Works
As a third-generation cryptocurrency, Cardano attempts to tackle some of the most common issues facing large scale blockchain adoption. These issues cover the gambit of blockchain including topics such as scalability, interoperability, and sustainability. Cardano seeks to reign these issues through the development of design principles and engineering best practices.
In its early days, Cardano could handle only around 10 transactions per second (tps). However, Hoskinson released a paper recently explaining a new scaling solution for the network – Hydra. Hydra is a Layer 2 scaling solution that utilizes state channels to process transactions off-chain. Using this technology, Cardano is able to process over one million transactions per second.
Today there are thousands of cryptocurrencies in the market, each with its own characteristics, benefits, and ecosystem. Cardano attempts to introduce standards into the market to enable interoperability across networks. These systems include blockchain governance models, system upgrade protocols, and feature sets.
Allowing blockchain interoperability introduces a new set of risks that developers must address. These security concerns are an area in which Cardano plans to reign in. Currently, the platform has standards for managing privacy, security, and decentralization.
Cardano introduced a new consensus mechanism known as Ouroboros. Ouroboros is a chain-based PoS protocol. It relies on randomly chosen leaders to approve blocks. Similar to most blockchains, the node that adds the next block receives a reward for their efforts.
At the start of each epoch period, the system selects leaders from the stakeholder pool. Epochs function as a snapshot of the blockchain from a previous date. Critically, Epochs must originate from a block sufficiently deep in the chain of transactions. Depth is necessary to ensure network security and avoid the possibility of chain alterations.
The technicalities of this system are impressive. Leaders get chosen based on the fixed stake…