What Is Cardano (ADA)?

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by Beatrice Mastropietro · 11 min read
What Is Cardano (ADA)?
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The guide provides a complete picture of Cardano, Ethereum’s rival that brings a new standard in technology, open and inclusive, to challenge the old and activate a new age of sustainable, globally distributed innovation.

If you’re looking for a blockchain platform with a vision, look no further than Cardano (ADA). This unique platform is focused on making the world work better for everyone, and it has the potential to change how we interact with the digital world.

Cardano (ADA) is a public, open-source blockchain for building and running smart contracts and other decentralized protocols. Cardano seeks to address scalability, interoperability, and sustainability issues that plagued the earlier generations. The Cardano blockchain offers smart contracts which allow the creation of decentralized applications and protocols.

Cardano’s Mission and Philosophy

Cardano is a project that aims to change how people interact with money, information, and assets in the digital age. Its mission is to create an open financial system that is accessible to everyone. To achieve this, Cardano’s team is building a platform that allows people to move money and other assets seamlessly, securely, and cheaply. Besides, it promises greater control over their data.

Cardano aims to solve many of the current problems that plague the blockchain industry using mathematics to provide a provably secure blockchain that is less prone to attacks and acts as an infinitely scalable consensus mechanism. It is built for a target future and helps people work better together, trust one another, and build global solutions to global problems. The project targets a global society that is secure, transparent, and fair, which can serve the many as well as the few. Cardano has made individuals’ control of their data, interaction, and transaction possible. Additionally, businesses have the opportunity to grow independent of monopolistic and bureaucratic power structures.

Cardano’s philosophy differentiates itself based on its blockchain project. It has unique design principles and employs engineering best practices, creating avenues for continued exploration to achieve its goals. It is an open-source project that has been gaining traction since its introduction.

Cardano’s functioning is based on five principles: people, purpose, technology, research, and opportunity. The project team believes that collaboration brings more achievement. It brings people towards the project thinking that every ADA holder holds a stake in the Cardano network. ADA stored in a wallet can be delegated to a stake pool to earn rewards, to participate in the successful running of the network, or pledged to a stake pool to increase the pool’s likelihood of receiving rewards. In time, holders can use ADA for various applications and services on the Cardano platform.

Cardano’s Founders and Major Stakeholders

Charles Hoskinson, the co-founder of Ethereum (ETH), is the brain behind the creation of Cardano. He saw the need for improvement in blockchain activity. Hoskinson leveraged his mathematics background to develop a standardized blockchain. Subsequently, he connected to a like-minded Jeremy Wood, his co-worker at Ethereum, interested in an improved blockchain and Smart Contract platform. The duo founded Cardano in 2015 and pushed the project to where it is today.

The team comprises a large international group of experts in mathematics, cryptography, engineering, and software development. Besides, the project is overseen by three organizations: IOHK, the Cardano Foundation, and Emurgo.

Cardano Foundation is a nonprofit organization acting as a custodian for the entire project to help market and ensure the security of the blockchain. It is responsible for helping to grow the Cardano community by encouraging adoption and participation. IOHK is another major stakeholder. Charles Hoskinson and Jeremy Wood founded this company in 2015 as a research and development company that helped with the design and engineering of the Cardano blockchain. Further, the Emurgo company is a venture capital firm that acts as a large funding entity to support Cardano and assist with its development financially.

Meanwhile, Hoskinson and Wood are the masterminds and major stakeholders behind the core principles and smart contract platform that make up Cardano. They do not own or operate the Cardano blockchain.

Cardano’s Blockchain Architecture

Cardano brings a new standard in technology, open and inclusive, to challenge the old and activate a new age of sustainable, globally distributed innovation. It builds a better future – secure, sustainable, and governable by the many. It is a blockchain platform with unparalleled performance that supports global applications, systems, and real-life business use cases.

Practically, the Cardano blockchain has two major components: the Computational Layer and the Control Layer. Using two separate layers to power the network allows for a more scalable and sustainable network that can be easily upgraded over time.

Cardano Computational Layer (CCL) is powered by a proof-of-stake (PoS) algorithm called Ouroboros. Ouroboros eliminates the need for energy-intensive mining rigs and allows for a more equitable distribution of rewards. Cardano also uses a new programming language called Plutus, specifically designed for writing smart contracts. CCL is the backbone of the blockchain, which makes the running of smart contracts possible, as it ensures security, and compliance and allows advanced functionality.

Meanwhile, the Control Layer is responsible for governance. It is powered by a decentralized governance system called the Cardano Settlement Layer (CSL). The CSL allows for the creation of democratically-elected stakeholders who make decisions about how the network is run. The CSL also includes a decentralized exchange (DEX) that allows users to trade ADA, the native token of Cardano.

The Cardano open source code is written using Haskell, a universally recognized and secure programming language. This layer operates separately from the settlement layer to afford flexibility if the need for changes arises. Its off-chain protocol allows it to offer greater data storage flexibility and an access model that lets users create customized rules when validating transactions.

How Cardano Works

The Cardano blockchain is powered by a proof-of-stake algorithm called Ouroboros. Ouroboros is the first provably secure proof of stake algorithm that enables users to earn rewards for participating in the network by staking their ADA coins.

Cardano also features a treasury system, which allows the network to fund itself sustainably over the long term. The treasury system is designed to incentivize network participants to contribute to the Cardano ecosystem in various ways, such as developing new features and applications or providing support and services to users.

Notably, Cardano is one of the first blockchains built on a peer-reviewed scientific approach.

Cardano Smart Contracts

When it comes to smart contracts, Cardano is similar to Ethereum. However, there are a few key differences. For one, Cardano uses a different consensus algorithm, called proof-of-stake, which is more energy-efficient than the proof-of-work (PoW) consensus algorithm used by Ethereum.

Cardano is being built in five phases: foundation (Byron era), decentralization (Shelley era), smart contracts (Goguen era), scaling (Basho era), and governance (Voltaire era).

The integration of smart contracts, the Goguen era, has been a big step forwards in capability for the Cardano network. One of the goals for the Goguen era has been the creation of Plutus, a purpose-built smart contract development language and execution platform using the functional programming language Haskell.

Goguen also saw improvements to the core Cardano offering. Most significantly, the addition of a multi-currency ledger extended the usefulness of Cardano even further, enabling users to create new natively supported tokens.

This allowed the creation of fungible and non-fungible tokens (NFTs). It also supports creating new cryptocurrencies on Cardano. The Goguen era presents a step-change in the abilities of Cardano, opening the way to the development of enterprise-level, mission-critical, decentralized smart contract applications, with even more exciting things to come during the Basho and Voltaire eras.

Voting on Cardano

In contrast to other blockchain projects where miners vote and decide on changes to the protocol, in Cardano, its ADA token holders do that.

Therefore, when a new change or development is proposed to the Cardano blockchain, Cardano crypto holders use their ADA to vote on these proposals. This way, everyone who owns the cryptocurrency has a say in its development.

ADA Token

ADA token is a decentralized cryptocurrency used to trade, stake, and loan on the Cardano blockchain. The token itself is based on the proof-of-stake consensus protocol, which means it can be used to help secure the network and earn rewards for doing so. Additionally, ADA holders can use their tokens to vote on protocol changes and funding proposals. ADA token is also one of the few cryptocurrencies that are fully decentralized, meaning no central authority or company is controlling it. This makes it an attractive investment for those looking for a truly decentralized project.

ADA token holders can loan their tokens through a process called “Proof-of-Stake Delegation” or “PoS Delegation.” This allows them to earn interest on their tickets while still being able to use them. Additionally, ADA token can be traded on exchanges, staked to earn rewards, and used to purchase goods and services.

ADA token is an important part of the Cardano ecosystem and provides holders with a way to participate in the governance of the network. Additionally, the token can earn rewards, trade, and loans. ADA token is a fully decentralized project that is attractive to investors looking for a truly decentralized investment.

Cardano vs Ethereum

Ordinarily, both the projects have similar goals and aspirations, because the Cardano co-founders have the background traceable to Ethereum. The two projects focus on becoming the world’s primary decentralized blockchain platform for building new tools and protocols. However, there are a few key differences.

Firstly, Cardano is built on a Proof-of-Stake consensus algorithm, while Ethereum still uses a Proof-of-Work algorithm. This means that Cardano is more energy-efficient than Ethereum.

Another key difference is that Cardano uses a new programming language called Plutus, whereas Ethereum uses Solidity. Plutus is designed to be more secure and easier to use than Solidity.

Finally, Cardano has a governance model that allows for on-chain voting on protocol upgrades. With Ethereum, which has a more centralized governance model, it is not possible.

Overall, Cardano and Ethereum are both strong platforms for building smart contracts. However, the key differences between them should be considered when deciding which one to use.

Use Cases

Cardano’s main use case is a platform for building dApps and smart contracts. The platform is more scalable and flexible than other blockchain platforms, such as Ethereum. Cardano also has a built-in programming language, called Plutus, which makes it easier to develop dApps on the platform.

Another use case for Cardano is as a cryptocurrency. The native currency of the Cardano network is called ADA, and it can be used to send and receive payments on the network. ADA can also be traded on cryptocurrency exchanges.

Cardano has some other potential use cases, including as a platform for Identity Management, KYC/AML compliance, and supply chain management. The Cardano team is continuing to develop the platform and its applications, and more use cases will likely emerge over time.

In addition, Cardano has found its utility in education, retail, agriculture, government, finance, and health care.

Pros and Cons

Cardano boasts of being one of the market’s most advanced and secure blockchains today. However, like any other technology, Cardano has its own set of pros and cons.

Some of the major pros of Cardano include:

  • Security. Cardano is built on a robust security model that makes it one of the most secure blockchains in the market. The platform uses a multi-layered approach to security that includes a Proof-of-Stake consensus algorithm, a layered architecture, and a formal verification system.
  • Scalability. Cardano is highly scalable thanks to its unique design that uses a Proof-of-Stake consensus algorithm. This enables the network to handle large amounts of transactions without any issues.
  • Sustainability. Cardano is designed to make it sustainable in the long run. The platform has a built-in treasury system that funds the development of the network and its ecosystem.
  • Interoperability. Cardano is designed to be interoperable with other blockchains. This allows for the easy exchange of data and value between different blockchain networks.
  • Innovative features. Cardano offers several innovative features that are not available on other blockchains. These include a built-in treasury system, smart contracts, and tokenization.

The cons of Cardano worth considering are as follows:

  • Limited adoption. Cardano is still in its early stages of development and has not yet been widely adopted. The platform needs to be further developed and adopted by more users before it can reach its full potential.
  • Complicated design. Cardano has a complicated design that may not be suitable for all users. The platform’s multi-layered architecture and formal verification system can be difficult to understand for some users.
  • Slow development. The Cardano platform is still under development and is not yet fully functional. The team behind the project has been criticized for the slow pace of development.

Despite these cons, Cardano remains a promising blockchain platform with big potential. The platform’s unique features and innovative design make it one of the most promising projects in the blockchain space.

Bottom Line

Cardano is a blockchain platform that is scalable and flexible. It is built on a PoS consensus algorithm, enabling fast and secure transactions. Cardano has its cryptocurrency token, ADA, which can be used to pay for goods and services on the platform. Overall, Cardano is a promising project that has the potential to disrupt the blockchain industry.



What is Cardano?

Cardano is a public, open-source blockchain for building and running smart contracts and other decentralized protocols.

What problems does Cardano solve?

Cardano seeks to solve scalability and security issues which are challenges facing its competitor, Ethereum.

Who founded Cardano?

Charles Hoskinson and Jeremy Wood are the co-founders of Cardano.

What are Cardano smart contracts?

Cardano smart contract enables users to build decentralized applications (DApps) on its blockchain.

Is Cardano better than Ethereum?

Yes, it addresses the challenges, such as Scalability, security, and high transaction fee facing Ethereum.

What are the use cases of Cardano?

Cardano’s use cases are in education, agriculture, finance, health care, and retail.

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