WTF is Cardano (ADA)?
Ethereum is one of the most popular cryptocurrencies in the crypto industry right now. Some people even go so far as to say that it poses a big threat to Bitcoin. But Ethereum is also the competition for many new currencies. These currencies aim to be like Ethereum. And Cardano is one of them. The advantage of Cardano is that the man behind it is Ethereum co-founder Charles Hoskinson. He had started developing Cardano in 2015 and launched it in 2017. Charles wanted Cardano to be the best alternative to Ethereum. That's why both of them have similar applications, use smart contracts, and have a decentralized system.
Many experts consider Cardano as Ethereum's updated version. It was anointed to its third-generation platform after ETH managed to reach its second-generation credentials. Its blockchain platform offers banking services to those who don't have bank accounts.
What is Cardano?
A decentralized platform is a must these days for blockchain systems. Cardano is a unique decentralized platform that uses third-generation proof-of-stake blockchain systems to make transactions safe and secure. As already mentioned, it has the same co-founder as ETH. And so, you may notice some similarities in applications and characteristics with Ethereum. However, Cardano distinguishes itself from other currencies through its peer-reviewed scientific research. It commits to this research system and uses it as its building block.
The biggest difference between Cardano and other blockchains is it did not start with a white paper. But it was also the first blockchain to have a peer-reviewed system that academic experts developed for the first time. The main applications of Cardano are traceability and identity management. You can use identity management to simplify the process of collecting data from multiple sources. On the other hand, the traceability application is useful for streamlining the tracking and auditing process to eliminate counterfeit products.
What makes Cardano exciting?
Cardano founders introduced three products after launching the blockchain platform: Atala Trace, Atala Scan, and Atala PRISM. Atala PRISM is an identity management tool that offers access to different services. Suppose you want to open a bank account. Atala PRISM will verify your credentials before you can do that to eliminate the risks of allowing a fraudster to open an account in the first place. Atala Scan and Atala Trace helps trace how a product goes from one stage to another through a supply chain.
The founders also developed a smart contract platform that serves as the foundation for developing various enterprise-level decentralized apps. They also plan to use an on-chain democratic governance system to manage the development and execution of different projects. It will lead to the revamping of the system's treasury management system to fund its future costs.
One of the reasons why experts are talking so much about Cardano is because of its algorithm that creates blocks and validates transactions. Every crypto expert will tell you that the heart of any blockchain network is its algorithm. Fortunately, Cardano has an outstanding algorithm called Ouroboros that uses proof-of-stake as its primary protocol to mine blocks. What's the benefit? First of all, it reduces energy expenditure during its block production process. It eliminates the need for the system to use hash power as it uses massive computing resources that function centrally to align with the proof-of-work algorithm.
Bitcoin also uses the same algorithm. It took only a few years for Bitcoin to become the most popular currency in the crypto industry. Cardano is also walking on the same path. Cardano's proof-of-stake system determines the respective node's capability to create blocks. Remember, each node's stake is the same as the amount of its ADA held by the user for a long-term period.
Ouroboros divides physical time into different epochs and categorizes them into various slots. These are fixed periods of time. Consider slots as working shifts in a factory. Usually, an epoch lasts for five days, while a slot lasts for only one second. However, the advantage of Cardano is you can configure these epochs and slots. But remember, Cardano's epochs work in a circular manner. When one epoch ends, another one starts automatically. Another interesting thing about Ouroboros and Cardano is that every slot has a slot leader. And a lottery system chooses the leader from the list. The advantage of this system is, the higher the stakes, the more chances a leader has to win the lottery. Some of the tasks that the slot leaders must perform are:
• Creating transaction blocks
• Validating transactions
• Adding various newly-created blocks into the Cardano blockchain
The algorithm goes the extra mile to cut down energy consumption by staking pools. But Ouroboros should have at least a few ADA holders to maintain its good connectivity. If you are one of the ADA holders, you can organize your stake pools and choose a few that can represent their respective pools during pool protocol execution. This process also makes it easier to participate in block creation.
The Cardano token and governance model
According to experts, Cardano is slowly developing into one of the most secure decentralized governance models. It offers a voice to everyone and provides control over its future development.
Cardano's governance model shows its true democracy. Its community defines how users can play a crucial role if incentivized properly. The model allows token holders to decide the platform's future by voting on different subjects. This allows the community to dictate Cardano's treasury funds.
A huge benefit of this model and its pioneering technology is you can apply it to almost any application that comes to your mind. Experts consider it as a blueprint that redistributes power into the hands of the users and token holders.
The decentralization of Cardano starts with Shelley. However, it can achieve its objective when no single entity controls it. According to Cardano's governance model of decentralization, participants determine the redistribution of goals. This makes Voltaire a crucial part of Cardano. It makes the Cardano community more impactful when it comes to technical improvements, funding decisions, and software updates. The makers call them Funding Proposals (FPs) and Cardano Improvement Proposals (CIPs). Together, they allow Cardano to determine its community and also withdraw funds from its treasury.
Cardano's governance provides a system through which token holders can make decisions. Every Cardano token holder has a stake in the network. He is entitled to incentives and also votes on proposals to upgrade or develop the ecosystem and blockchain. There are two ways to achieve this process: using a dedicated voting app for Funding Proposals and use a CIP GitHub repository for Cardano Improvement Proposals.
For funding proposal voting, the community members submit proposals to enhance the ecosystem. Suppose you want to develop new integrations or capabilities or fund future platform development. You submit this proposal and wait for the token holders to vote. They will use a dedicated funding proposal application to voice their opinions. You don't need to have the technical knowledge to submit your proposal or vote for one. But you must make a temporary ADA deposit to vote. The most successful proposal receives funds from Cardano's treasury.
The Cardano Improvement Proposal voting system offers protocol-level changes. You must be a part of a CIP GitHub repository to submit your proposal and vote.
Who is on the Cardano team?
Three organizations came together to develop Cardano: Cardano Foundation, EMURGO, and IOHK. This is the first blockchain platform developed by a group of academics. Let's take a look at the Cardano team and how they help each department.
1. Foundation Board Members
• Theo Kocken – Chairman
• Arjan Erkel – Vice Chairman
2. Cardano Development Team
• Joost Zuidberg – CEO
• Frank Gosselink – CEO
• Caroline Noothoven – Senior Counsel
• Fleur Henderson – Senior Project Director
• Elle Leontiev – Corporate Communications Manager
• Jan Van Der Beek – Financial Controller
• Jacob Verloop – Financial Controller
• Joris Van Oppenraij – Senior Project Manager
• Maria-Pia Kelly – Business Development and Communications Manager
• Nico de Nijs – IMFact CEO
• Patricia Ouko – Office Manager
• Peter Fiala – Advisor
• Robert Timmer – Savings Project Manager
What funds Cardano?
Cardano received its first funds through an initial coin offering. It debuted with a massive market cap of $600 million. But it had such a massive potential that it managed to have a market cap of $10 billion within two years. It even reached a whopping $33 billion in 2018. As already mentioned, three organizations helped to develop Cardano: Cardano Foundation, EMURGO, and IOHK. IOHK and Cardano Foundation are non-profit foundations.
How to participate in the Cardano network?
Now that you know the benefits of Cardano, you may want to participate in the network. There are lots of ways to do this, and a few of the more popular ways are:
• Buy Cardano.
• Stake Cardano in one of the many pools.
• Run testnets for Cardano.
• Develop dApps on Cardano.
The Cardano community quietly and humbly is making major advances in bringing their tech and tools to the masses. Keep an eye on this exciting project!
Cardano is an open platform that seeks to provide economic identity to the billions who lack it by providing decentralized applications to manage identity, value and governance— Charles Hoskinson (@IOHK_Charles) August 2, 2020