Co-founded by Charles Hoskinson, Cardano is a public blockchain platform that provides developers and users with a scalable and secure architecture that builds upon its predecessors (bitcoin and ethereum). It’s open-source and decentralized, with consensus achieved using proof of stake. What does all of this mean?
In short, Cardano is better suited to handle the future adoption of blockchain technology by governments and enterprises. It’s not the cryptocurrency (ADA) itself that is valuable, though there is some utility, but rather the architecture of Cardano’s blockchain.
What is Cardano?
Cardano is the first blockchain to be founded on peer-reviewed research and developed through evidence-based methods. Hoskinson and his team have published over a hundred peer-reviewed papers in the most well-respected computer science journals. They’ve intelligently built Cardano from the ground up to do what bitcoin, ethereum, and other blockchains cannot.
The Cardano coin, Ada is named after Ada Lovelace, a 19th-century mathematician considered the first computer programmer. The currency (ADA) on the Cardano blockchain allows for the exchange of value as well as the development of future programs and smart contracts to be built on the blockchain. Imagine the blockchain as a street, and on that street, you can build different storefronts that offer different products and services.
The evolution of blockchain technology
What most people have yet to understand is that the cryptocurrency itself is not where the value is. It’s in the underlying blockchain technology. The blockchain is capable of being the backbone of internet 3.0, providing enhanced security, accessibility, verifiability, etc. to almost every aspect of our lives.
For example, Cardano recently partnered with the country of Ethiopia to bring the people a blockchain-based ID system. These people are having legal identities for the first time. This allows Ethiopia’s Ministry of Education to establish a secured database of educational performance for 3,500 schools, 5 million students, and 750,000 teachers. Every student will have verifiable digital grades and qualifications.
Imagine a decentralized online system where you can complete all of your legal dealings with speed, accuracy, and security. Cardano is best positioned to bring this technology to the ballot box with its ability to securely handle votes. No longer will elections flow through the hands of human error, but rather be secure, quick, verifiable, and decentralized.
Unfortunately, people are in a frenzy over valueless cryptocurrencies like Dogecoin and are likely to invite further regulation which will slow the progress of globally valuable projects like Cardano.
First and Second Generation Blockchain
What’s currently happening with the first mover’s bitcoin and ethereum is that the average person is now aware of their existence. It doesn’t matter that the technology behind them is already outdated and limited in utility compared to newer projects like Cardano. The first coins are enjoying the first mover spoils that define the first-mover advantage, but will it last?
Third Generation Blockchain
Cardano is the third generation of blockchain technology as it aims to solve the scaling, infrastructure, and centralization problems found in the first blockchain generations. Not only does Cardano solve problems of the previous blockchain technologies, but it builds upon them.
Cardano Blockchain Technology
According to the official website of IOHK, the development company working on Cardano, the blockchain platform has more advanced functionality than any other protocol on the market.
The Cardano team is working to create "one of the fastest and most scalable blockchain projects on the market." Cardano's vision is to create an Internet of blockchains. Imagine an ecosystem where Bitcoin flows through Ethereum, ripple through Litecoin, and there is no need to go through a central exchange.
Transactions Per Second
In the cryptocurrency industry, scalability is about how many transactions a blockchain can handle in a given timeframe, and it's often presented as transactions per second. With Cardano's hydra scaling layer, transactions per second could reach millions.
A transactions per second comparison:
Cardano: 7 (currently) up to 1 million (hydra layer theoretical)
Advanced Proof-of-Stake Technology
Cardano uses Ouroboros, an algorithm that uses proof-of-stake (PoS) protocol to mine blocks. Thanks to their advanced proof-of-stake (POS) technology, ADA is far more efficient than BTC and ETH.
While ethereum is transitioning from Proof-of-Work (mining) to Proof-of-Stake (staking), Cardano created Ouroboros, the first provably secure Proof-of-Stake blockchain protocol. They’re years ahead of any other coin attempting to make the switch from POW to POS.
Proof-of-Stake is the future of minting new coins because it’s far less energy-intensive compared to mining. Nowadays, cryptocurrency miners are large, warehouse-owning corporations that are using as much energy as entire countries to mine. Electricity largely comes from coal which has been in the spotlight concerning climate change.
Proof-of-Stake is when the owner of the currency delegates their coins to a stake pool. With cardano, it’s essentially casting a vote as your ADA doesn’t leave your cryptocurrency wallet. These stake pools are selected based on several factors to mint new blocks on the blockchain. Rather than requiring hardware to mine the cryptocurrency, it’s using a software solution that further decentralizes and strengthens the entire network.
A smart contract is a computer program that is intended to automatically execute, control, or document legally relevant events and actions according to the terms of a contract or an agreement.
Developers can use Ada to create smart contracts and applications that run on the Cardano blockchain. The Cardano smart contracts are greatly upgraded and offer much more agility for developers and further expands the potential utility of Cardano. Unlike many other coins and tokens on the market, Cardano has many real-life applications that make it valuable.
The Internet Generations
It’s no doubt that the internet is probably the greatest innovation in the history of mankind. All of the knowledge (good and bad) available to us at our fingertips. The internet has gone through several generations of improvement and we’re now on the cusp of Internet 3.0.
With the first iteration of the internet, users were primarily content consumers.
This ushered in an era of building applications on top of the web. This gave rise to social media, blogging, etc. Ultimately allowing the users to become content creators as well as consumers.
This generation of the internet will remove the power from Web 2.0’s centralization, surveillance, and exploitative advertising. Web 3.0’s decentralized blockchain protocol will enable individuals to connect to an internet where they can own and be properly compensated for their time and data
Is Cardano (ADA) Worth Owning?
One of the most important things to consider when deciding whether a crypto project will be successful is its scalability and utility. Cardano (Ada), is currently the only cryptocurrency asset I currently own and it makes up maybe .001% of my investment portfolio. Nonetheless, it's the most interesting crypto project out there and one that actually builds on blockchain technology in a way that I believe will be truly revolutionary.
Cardano is already one of the top cryptocurrencies by market capitalization. While it still has room to grow in value, it’s valued at over $40 billion without much business to support the valuation. I believe the entire sector will see extreme growth in the future, and the winners will likely be the first companies to reach $2 trillion in value. It’s not unreasonable to believe that Cardano can 10x from its current valuation, but that shouldn’t be the basis for an investment.
Consider staking your ADA to support the network
If you do decide to own ADA, I suggest staking your coins within the Yoroi mobile wallet. It’s so simple to use and you will earn a 5% average annual return on your stake (like dividends), but they’re paid out every 5 days.
Obviously, picking a winner for internet 3.0 is akin to winning the lottery and the risk of a total loss of investment should be understood.
How to Buy Cardano
If you do choose to purchase Cardano (Ada), consider using Coinbase, it’s so easy to use and is one of the largest, most trusted crypto brokerages. Here’s my affiliate link (I’ll earn $10 from Coinbase if you open a Coinbase account and fund it). Once I bought ADA, I sent it to my Yoroi wallet app downloaded on iOS, and from the wallet, I was able to delegate my coins to a staking pool of my choice.