Updated: Dec 20, 2019
Cardano is a fully open-sourced decentralized cryptocurrency public blockchain. Its native coin, called the ADA, works like any other crypto coin and can be used to send and receive digital funds. Similar to Ethereum, Cardano is a technological platform, which when complete shall be capable of running everyday financial applications.
Cardano has been in development since 2014 and as of today, not fully developed. However, the platform is expected to be a serious competitor when it does become fully functional. The Cardano token (ADA), which was launched in September 2017, has since then jumped by almost 1,520%.
Here is a quick guide to why Cardano was designed, the team behind it, how it works and the more popular applications.
What is Cardano Being Designed For?
ADA represents the future of crypto money by allowing fast and direct transfers. The process is guaranteed to be secure by employing modernistic crypto tech. While Cardano may appear similar to other decentralized applications, like Ethereum, it is very different in terms of security and scalability, employed through a layered architecture.
Unlike other cryptocurrencies, ADA is built on peer-reviewed academic research and scientific philosophy, which is highly unique and individualistic. The creators built Cardano because they understood the limitations of other existing systems in place.
It is a third-generation blockchain that is taken care of by three foundations simultaneously – The Cardano Foundation, Emurgo, and IOHK. The three elements that Cardano is designed to solve are interoperability, scalability, and sustainability.
Who Is the Team Behind Cardano?
The idea of Cardano was conceptualized by Charles Hoskinson, who also happens to be one of the founders for blockchains Ethereum and BitShares. Hoskinson along with Jeremy Woods found one of the primary caretakers (IOHK) of Cardano, which makes the network so different from its predecessors. Emurgo is in a 5-year contract with IOHK and is basically how the entire technology is being funded.
Cardano is run by a non-profit foundation that has partnered with various research and academic institutions, to review all aspects of the blockchain tech. For instance, a “reference treasury model” is being developed by researchers at Lancaster University, which aims to find a sustainable approach to funding future developments for the Cardano blockchain.
How Does Cardano Work?
The Cardano blockchain functions are split into the settlement layer and computation layer. The settlement layer is completely operational now and allows users to trade, send, and receive ADA. The computation layer when completed, will allow users to build and enter Smart Contracts. The two-layer technology is the primary differentiating factor between Cardano and other cryptocurrencies.
Cardano uses a different model from Bitcoin and Ethereum when it comes to mining, called “Ouroboros”, which is built on the “Proof-of-Stake” consensus mechanism. In this, people validating transactions are not called miners, but validators. To verify transactions, they need to freeze a part of their ADA coins as a stake. Once a transaction is verified they receive additional ADA coins as a reward, which is directly proportional to their stake.
The platform can be used the same way as Bitcoin, where the cryptocurrency segment is concerned – as a global payment system. Cardano offers a wallet where users can store their coins and transact, like with any other crypto money. However, Cardano is still working on its scalability issues to increase the speed of transactions. Hoskins claims that Cardano’s scaling efforts would be completed by the end of this year.
What are Current and Future Applications of Cardano?
Cardano is unique in itself by being built on evolutionary ideas of Hoskinson, who knew that Ethereum and Smart Contracts were no longer enough. For now, Cardano is primarily being used as a cryptocurrency. ADA, which is Cardano’s settlement layer, is made available through several debit cards and ATMs, especially in Japan.
It is the future applications and not the current uses that are fascinating, where Cardano and ADA are concerned. The creators have ambitious plans for this platform, having claimed to have solved every (current) issue faced by other blockchains.
The blockchain plans to move from the current settlement layer to the more trusted Control layer, which is expected to serve as a computation framework for complicated systems, like gaming and gambling.
Other future applications outlined in a roadmap on its website are Daedalus, credit card systems and identity management. Daedalus is a universal cryptocurrency wallet with capabilities of converting crypto into fiat currency, through an automated crypto trading facility. It is also Cardano’s official wallet.
However, Cardano holdings have still not made it clear whether they intend on giving ADA, an important role in upcoming planned systems.