What is Cardano?
But first, what exactly is Cardano? Cardano is a blockchain network that is powered by the cryptocurrency ADA. At the time of publication, it is the fourth largest cryptocurrency by market capitalisation, and boasts a vibrant, worldwide community. In August 2021, new all-time highs were reached as investors anticipated a crucial upgrade for the Cardano network — smart contracts.
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1. Cardano is founded by an Ethereum co-founder
After Bitcoin, Ethereum is the most active network for blockchain app developers and decentralised financial services. It was the first blockchain that featured highly accessible smart contracts, which are crypto wallets that can be programmed to hold and distribute crypto according to the users predefined rules.
Ethereum co-founder Charles Hoskinson left the Ethereum Foundation after a disagreement about the future of the network. Fulfilling Hoskinson’s vision of an ideal blockchain, Cardano was launched in 2017, just two years after its predecessor Ethereum.
Hoskinson believes that Cardano can do what Ethereum can, but in a more sustainable and user-friendly way.
2. Cardano is developed by a team of academics
Many Ethereum alternatives have already been developed alongside Cardano. Blockchain developers have their own unique ways to test and build up their network ecosystems.
Cardano uses a methodical approach to finding weakness in its system. Collaborating with the University of Edinburgh, the University of Wyoming, and several other institutions, Cardano’s network has been rigorously peer-reviewed by some of the world’s top academics.
While some critics think that Cardano’s scientific detours are too slow for a typical blockchain development cycle, Hoskinson believes that making incremental improvements is better than producing a ready-designed system in which the public can immediately participate.
This explains why Cardano does not have a single whitepaper. The network is constantly evolving as new discoveries are made, while roughly following the Cardano roadmap.
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3. Cardano attempts to solve the three blunders of early blockchains
The “blockchain trilema” states that a network can optimise at most two of the following qualities: 1) decentralised, 2) scalable, and 3) secure. Conventional networks such as the ones found in traditional finance can be secure and scalable, but only through a centrally controlled organisation (such as a bank).
On the other hand, Bitcoin is ultra-secure as it is decentralised. However, due to the heavy emphasis on security and decentralisation, Bitcoin is not as easily scalable.
Cardano attempts to optimise all aspects of blockchain technology. It has to be scalable, meaning that network speeds shouldn’t be affected by the number of participants; this could be achieved by a more refined Proof of Stake protocol (more below).
Cardano also implements a fair and decentralised network governance, where ADA coin holders can propose improvements and vote on proposals, and there is also a decentralised treasury system that is entirely controlled via the community through smart contracts.
4. Cardano is fast and economical
High transaction fees (also known as ‘gas fees’) have been plaguing the Ethereum network for a couple of years now. In October 2021, the average transaction fee on Ethereum was US$15. On other hand, it takes on average US$0.40 to transact on Cardano, which is an incredible 99.97% lower.
Granted, Ethereum has a slightly faster transaction time of 15 seconds versus 20 seconds on Cardano. However, the amount of transactions per second that Cardano can handle is much higher. Cardano is able to handle 250 transactions per second versus 30 transactions per second on Ethereum.
The transaction time on Cardano is actually modifiable; through decentralised voting, network participants in the future can even vote for a faster transaction time if the demand calls for it.
5. Cardano runs on Proof of Stake
There has been a lot of controversy around the power usage of Bitcoin and Ethereum as they use electricity hungry Proof of Work as a way to confirm transactions.
Cardano has an advantage over Ethereum in that it uses Proof of Stake right from the start, which is a different, more environmentally friendly way to confirm transactions.
Bonus: Ada coin is named after Ada Lovelace
Ada Lovelace was a mathematician who wrote the first machine algorithm in the 1840s. The cryptocurrency ADA was named after her.
Cardano is proven to be an interesting project that is likely to have a successful future. To buy, sell, or swap ADA coins easily and securely with Australian dollars, visit Easy Crypto.
Cover image source: Stanslavs/ Shutterstock