What is Cardano (ADA)?
Cardano (ADA) is a decentralized proof-of-stake (PoS) blockchain designed to be a more efficient alternative to proof-of-work (PoW) networks. It is managed by the people who have staked their cryptocurrencies and is intended to evolve into a system with multiple use cases.
Cardano's cryptocurrency is named Ada after Augusta Ada King (1815-1852), Countess of Loveless, who is generally considered the first computer programmer. Ada is used in her PoS consensus mechanism of blockchain. They can be given as rewards for work done on the blockchain or purchased on exchanges.
Important points
- Cardano is a blockchain platform founded in 2015 by Charles Hoskinson. It was released in 2017.
- Cardano aims to be a decentralized application (dApp) development platform with a multi-asset ledger and verifiable smart contracts.
- Cardano runs on the proof-of-stake Ouroboros consensus protocol using its native token, Ada.
History of Cardano (ADA)
Ethereum co-founder Charles Hoskinson started developing Cardano in 2015 and launched the platform in 2017. Cardano is positioning itself as an alternative to Ethereum. Both platforms are used for similar applications such as smart contracts and are aimed at building connected, decentralized systems.
Cardano considers itself to be an updated version of Ethereum, designating itself as a “3rd generation” platform compared to Ethereum’s “2nd generation” credentials. Blockchain His platform also has the goal of providing banking services to the world's unbanked people.
cardano vs bitcoin
There are some important 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 other uses that a scalable blockchain network can host.
The Cardano platform runs on the Ouroboros consensus protocol. Created in its founding phase by Cardano, Ouroboros is the first Proof of Stake (PoS) protocol designed to reduce the energy consumption required for Proof of Work (PoW) mining. This is achieved by eliminating the large computing resources used by proof-of-work algorithms.
Cardano does not reward cryptocurrencies as incentives in a competitive mining process like Bitcoin. This reduces energy and waste emissions by eliminating the need for large amounts of electricity to power computers designed specifically for mining. Cardano users can install compatible wallet software on their computer or device, stake Ada, and start earning rewards for their participation.
Ada is Cardano's digital currency, named after Augusta Ada Lovelace, a 19th century countess and British mathematician credited as the first computer programmer.
What is Cardano staking?
In Cardano's PoS system, staking determines a node's ability to open blocks on the blockchain. A node's stake is equal to the amount of Ada it holds over time. Stake is the interest held by pool participants, secured in pledged Ada. Pledged Ada is held as collateral for a bona fide act of verification and cannot be used or spent by the owner. Users who pledge Ada will be rewarded based on the amount of Ada they stake.
Users join or create staking pools (groups of Ada holders who have pledged their coins) and work together to update the ledger, open new blocks, and earn rewards.
How do Cardano staking pools work?
Cardano uses a PoS consensus mechanism where users “stake” coins for the chance to become validators. Users can participate in the staking and verification process in two ways: You can stake Ada in a pool or create your own Ada. A stake pool is a trusted server node that performs transaction validation work. These pools can be either public or private. The public pool distributes rewards to its members based on the amount of Ada they wager. Private pools, as the name suggests, reward their owners.
Stake pools must be run by operators who have the knowledge and skills to maintain the stake pool by renting servers, monitoring nodes, holding pool keys, and performing other pool management tasks.
smart contract
Cardano implemented smart contract support in 2021 with the Alonzo update. This testnet update was the first iteration to deliver the promised scalability and use cases to our users. With this update, users can now create smart contracts and non-fungible tokens (NFTs) and manage multiple assets. Future releases and forks will add more features to the mainnet.
Where is the best place to stake Cardano?
There are several staking pools you can choose from to stake your Ada. To make sure you're joining a pool you can trust, it's important to carefully read the pool's website, user reviews, complaints, and issues.
You can also select a pool using the community-built tools ADApools.org, Cardanoscan.io, Pool.pm, Poolstats.org, or Pooltool.io. You can also stake Ada using Yoroi, Exodus, or Binance wallets. You can also use Daedalus, a complete desktop application developed by IOHK to download a copy of the blockchain. Daedalus is a complete node that acts as a wallet that validates every transaction in its history and allows you to choose which pools to join.
The future of Cardano
Cardano is designed to be developed in “eras” named after prominent figures in the history of poetry and computer science, such as Byron, Shelley, Goguyen, Basho, and Voltaire. Basho is an era of scaling and optimization, aimed at bringing more features to Cardano. As of 2023, Cardano predicts a transition from Basho to Voltaire.
Voltaire is the last era of Cardano development and aims to enable blockchain and network voting and financial management through previously introduced smart contract features and system improvements. Once Voltaire is complete, IOHK's goal is to release the blockchain and network to the community, as it will be fully decentralized and can be developed, maintained, and secured.
Where can I get Cardano (ADA)?
How can I mine Cardano (ADA)?
Cardano cannot be mined like other cryptocurrencies. Instead, you have to buy or earn it on a cryptocurrency exchange.
What is Cardano (ADA) market capitalization?
conclusion
Cardano is a decentralized PoS blockchain founded in 2015 and launched in 2017. It is positioning itself as an alternative to PoW blockchains like Bitcoin as it is more energy efficient and scalable.
The plans behind Cardano's development are ambitious. Developers see Cardano adding blockchain voting and financial management to its functionality in the future, and eventually becoming fully decentralized.
Comments, opinions and analyzes expressed on Investopedia are for online informational purposes only. Please read our warranty and disclaimer for more information. As of the date this article was written, the author owns no cryptocurrencies.
