Cardano is a blockchain system with ADA as its native token. Cardano aims to provide a secure, scalable, and decentralized infrastructure for developing smart contracts and applications (dApps).
The development of Cardano started in 2015, but it was officially released only in September 2017. Behind Cardano is Input Output Hong Kong (IOHK), whose CEO is Charles Hoskinson.
In this guide, we will tell you everything essential about Cardano, after which you can evaluate whether Cardano could fit into your crypto portfolio.
Cardano, in a nutshell
- Cardano is a blockchain platform with ADA as its primary token.
- Charles Hoskinson, a founder of Cardano, was also a co-founder of Ethereum.
- Cardano’s growth approach varies from many cryptocurrencies, rooted in academic research, which some critique for its pace.
What is Cardano (ADA)?
Cardano is a blockchain platform and cryptocurrency designed to provide a secure and efficient way to exchange digital assets. Cardano is often compared to a ledger that tracks transactions and allows users to send and receive money or other digital assets.
Cardano’s development has focused on three main points: security, scalability, and durability. Its goal is to be a platform that can process many transactions quickly and securely while paying attention to environmental friendliness.
Cardano backs smart contracts, independently executed contracts with terms embedded in their source code. Smart contract support allows developers to build decentralized applications (dApps) on the Cardano blockchain.
Decentralized applications can have different uses in the blockchain, such as identity verification, DeFi services, or supply chain tracking.
One of Cardano’s unique features relates to its development work: Cardano’s developers are committed to academic research. The goal of this approach is to use scientific methods to improve blockchain technology and ensure that blockchain technology will continue to do well into the future.
Understanding Cardano is essential for anyone interested in the future of blockchain technology and its potential to transform various industries.
ADA, the Cardano Cryptocurrency
ADA is a native cryptocurrency of the Cardano blockchain that is used for various purposes within the blockchain. For example, the ADA token can be used for transaction fees and participation in Cardano’s consensus mechanism.
There are currently around 35 billion ADA tokens in circulation, and the maximum supply of ADA is 45 billion tokens. As of 2023, approximately 77.5% of ADA tokens were in circulation.
So far, the highest price of ADA has been $2.94, reached in August 2021. The substantial rise in the value of ADA started with the Mary Hard Fork made in March 2021, and the price peak was experienced just a few days before the Alonzo update that happened in September 2021.
After the Alonzo update, ADA’s price has been steadily declining. A major reason for this decline is the bear market, which began shortly after the Alonzo update.
During 2023, the ADA price hovered between $0.60 and $0.36.
Did you know that ADA is named after Ada Lovelace, who is considered the world’s first computer programmer?
History of Cardano
Development work around Cardano started in 2015 by Charles Hoskinson and Jeremy Wood. Cardano was officially brought to the attention of crypto investors in 2017.
Cardano’s development team comprised engineers, mathematicians, and academics united by an interest in cryptocurrencies and blockchain technology.
The aim of this group was to develop a blockchain system that could surpass the limitations and issues current cryptocurrencies encounter.
From the beginning, Cardano’s development has been guided by the philosophy of ensuring security, scalability, and sustainability. It used a rigorous peer-reviewed research process and a layered architecture to achieve these goals. This unique approach set Cardano apart from many other blockchain projects at the time and contributed positively to its strong reputation.
In its processes, Cardano emphasizes formal authentication, which is used to verify the correctness of the software. By utilizing formal authentication methods, Cardano aims to improve the security of its network, reduce the likelihood of errors and vulnerabilities, and provide reliability to its users.
Since its inception, Cardano has undergone several significant upgrades and milestones. In 2020, it reached the expected Shelley phase, which marked the decentralization of the Cardano network. The Goguen phase that came next introduced smart contract functionality that allows developers to create and deploy decentralized applications on the platform.
Charles Hoskinson
A pivotal figure in Cardano’s founding team has always been Charles Hoskinson. Hoskinson is a prime reason numerous crypto enthusiasts and experts considered Cardano a compelling venture from its outset.
Charles Hoskinson played a significant role in the early days of Ethereum, one of the largest and most prominent blockchain platforms. He co-founded Ethereum along with Vitalik Buterin and several others in 2013. However, he left the Ethereum project in 2014 due to differences in vision and direction.
As of 2023, Hoskinson is the CEO of IOHK, the company that develops and maintains Cardano.
Cardano’s Technology
One of Cardano’s most significant technological advantages is its use of the Proof-of-Stake consensus mechanism. Unlike the Proof-of-Work consensus mechanism, which requires more computing power, the PoS mechanism relies on user input to validate transactions.
Cardano’s PoS consensus mechanism is based on the Ouroboros algorithm, designed to be more secure and energy efficient than other PoS algorithms. In addition to this, Cardano uses the Haskell programming language, which is known for its security and reliability.
Another significant technological advantage for Cardano is its layered architecture (a layered blockchain system). This allows the Cardano network to be divided into different layers, each with its own functions.
These layers are called Cardano Settlement Layer (CSL) and Cardano Computation Layer (CCL).
This approach improves the scalability and flexibility of the platform, allowing even major updates without disrupting the entire Cardano ecosystem.
Cardano updates
Cardano’s roadmap is divided into five significant updates named after notable poets, writers, and programmers: Byron, Shelley, Goguen, Basho, and Voltaire. Each of these updates includes significant minor updates.
In this chapter, we’ll review all those updates and explain what they meant for Cardano.
Byron update
Byron is the first version of Cardano’s roadmap, launched in September 2017.
The Byron version of Cardano is often described as the basic version of that blockchain.
Byron enabled the following for Cardano:
- Trading with Cardano’s native token, ADA
- Integration of the Ouroboros Classic Proof-of-Stake protocol into the Cardano ecosystem
- Crypto wallets for managing ADA transactions
Shelley update
Cardano migrated to the Shelley version in July 2020. The purpose of this version was to focus on the decentralization of the Cardano blockchain.
The biggest changes Shelley brought to Cardano were:
- Staking of the ADA and staking rewards
- Implementation of the Incentivized Test Network (ITN).
- Allegra Hard Fork
- Mary Hard Fork
The Shelley update was successfully released in March 2021.
Allegra Hard Fork
The Allegra Hard Fork enabled tokens to be locked onto the Cardano blockchain. In other words, it allowed users to stake their ADA tokens and thereby participate in decision-making on the chain.
The Allegra Hard Fork update was successfully released in December 2020.
Mary Hard Fork
Mary Hard Fork installed the multi-asset ledger support to the Cardano blockchain. This standard allowed developers and users to develop native tokens for the Cardano ecosystem without implementing smart contracts. The idea is similar to Ethereum’s ERC20 tokens but without smart contracts.
Although these user-generated tokens mostly behave in the same way as the ADA token, it is good to remember that ADA is Cardano’s own cryptocurrency. It is the only currency that Cardano uses to make payments and earn rewards.
The Mary Hard Fork also brought NTFs to the Cardano blockchain.
Goguen update
The Goguen update introduced native smart contracts and decentralized applications to the Cardano blockchain for the first time.
The most significant changes that Goguen brought to Cardano were:
- Native smart contracts
- Distributed applications
- Alonzo Hard Fork
The Goguen update was successfully released in September 2021.
Alonzo Hard Fork
The Alonzo Hard Fork update activated smart contracts on the Cardano blockchain. The smart contracts gave crypto investors the anticipated clarity on the ADA token, which truly started being viewed as a “genuine” asset for investment.
The Alonzo Hard Fork gathered a lot of hype long before its release. This is partly explained by the fact that the Alonzo update coincided with the hottest time of the bull market. With the hype, ADA’s price rose to an all-time high, steadily declining once the update was released.
Basho update
The Basho update brought many updates related to Cardano’s scalability and compatibility.
The most significant changes that Basho brought to the blockchain were:
- Sidechains with the purpose of connecting several different blockchains to the Cardano network
- Vasil Hard Fork
- DJED stablecoin
Vasil Hard Fork
The Vasil Hard Fork update arrived on Cardano’s testnet in July 2022, about a month behind its original schedule. The reason for the delay was simple: the update was going to be more demanding than the Cardano team initially expected, and for it to be published successfully, its publication date had to be pushed forward by a month.
The Vasil update increased Cardano’s transaction capacity and added much-needed updates to Cardano’s Plutus programming language.
Voltaire update
The Voltaire update is currently the last update on Cardano’s roadmap. The official launch date of the Voltaire update is still being determined, but it is estimated to start in 2023.
The Voltaire update will focus on the durability of the Cardano network by bringing improvements, e.g., For voting and governance systems of the Cardano ecosystem.
The future of Cardano
Cardano’s development has finally reached the final stage of its roadmap, but what does it mean for Cardano’s future?
Since its release, the Cardano fans have titled the project the Ethereum Killer, but we haven’t reached that point – at least not yet. Historically, the main reason Cardano’s position has not been better than Ethereum’s is its small number of developers compared to Ethereum.
Cardano has also been overshadowed by its competitors. Many of Cardano’s advanced updates were missed entirely by crypto investors in the last bull market, as Solana often stole the spotlight.
Cardano’s future is currently based mainly on its DJED stablecoin and the development of DeFi services. If its DeFi services and DJED stablecoin do not fall into the teeth of regulation, Cardano can develop its DeFi services, which may bring new users to the Cardano blockchain.
If you are interested in investing in Cardano, it is essential to do your own research and stay up to date with the latest news and developments related to Cardano.
What is Cardano (ADA) — Frequently Asked Questions
How does Cardano work?
Cardano is a blockchain platform that uses two separate layers – one for processing transactions (Settlement Layer) and one for executing smart contracts (Computation Layer) – to provide a secure and scalable infrastructure for decentralized applications and digital transactions.
It aims to combine cutting-edge technology and rigorous academic research to provide a reliable and flexible ecosystem for developers and users.
How does Cardano differ from Ethereum?
Cardano aims to address scalability and governance challenges with a layered architecture, unique consensus algorithm, and formal governance model, while Ethereum has an established ecosystem and broader adoption.
Unlike the Ethereum ecosystem, no smart contracts are needed to transfer tokens on the Cardano platform. This is the result of Cardano’s advanced architecture.
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