What is Cardano?

What is Cardano?

What is Cardano?

If you’ve been thinking about asking your virtual assistant, “Cortana, what is Cardano?”, but ended up being dissuaded by the tongue twister, fear not; we’ve got you covered. It is by no means a new thing – it’s been around since 2015.

Since more than 90 % of the participants in the initial ADA public coin offering were from Japan, those who have followed its development from the start might recognize it under the nickname “the Ethereum of Japan”. But we feel that perhaps the title “the smart man’s coin” would fit it better.

Confused? Read on to find out what we mean by that.

Cardano in short

Much like Ethereum, it’s is a blockchain technology platform which utilizes smart contracts. First envisioned by Nick Szabo (who some believe to be the real-world Satoshi Nakamoto), smart contracts are computer protocols with the intention to facilitate or enforce the performance or negotiation of a contract. Smart contracts enable a certain level of regulation by establishing business practices.  

There is one important distinction to keep in mind. Cardano blockchain is the name of the specific blockchain technology, while the cryptocurrency itself is called Cardano ADA, or more commonly, just ADA. When we talk about the coin exchanged on the cryptocurrency market, we use the term ADA, while the name of the platform is Cardano.

Cardano Basics

Cardano Basics

History and development

One of the key figures in the development of this crypto is former Ethereum CEO Charles Hoskinson, now in charge of Input Output Hong Kong (IOHK). The other two major organizations cooperating with Hoskinson on this project are the Cardano Foundation and Emurgo.

The development of ADA (the cryptocurrency) and the underlying blockchain technology relied heavily on scientific research, whereby a global network of scientists and scholars carefully studied blockchain technology and the cryptocurrency market to determine precise factors that make a coin successful. This approach still remains at the center of Cardano’s philosophy.

Cardano Organizations

Cardano Organizations

How does Cardano work?

The currency is separated in two layers. One layer keeps track of account values, while the other layer keeps track of the reasons why said values get moved around from one account to another. The first layer is called the Cardano Settlement Layer (CSL) and acts as an account balance ledger. The second layer, called the Cardano Computation Layer (CCL), stores the information on why transactions take place.

Cardano also uses KMZ sidechains, an innovation which enables certain data from CSL to remain private if necessary.

Cardano’s Technological Innovation

The Cardano blockchain is the only platform on the cryptocurrency market which uses Haskell, a very flexible programming language boasting a considerably high degree of fault tolerance. Seeing how fast blockchain technology is changing, Haskell allows for a margin of error to mitigate the apparent unpredictability.

Another innovation that the project blockchain introduces is that, to reach consensus on the state of the ledger, it implements the Ouroboros Proof-of-Stake (PoS) algorithm as opposed to a Proof-of-Work (PoW) consensus algorithm. There is no need to manually verify every transaction. Nodes automatically verify transactions when Cardano ADA slot holders are selected by the algorithm to become slot leaders and publish new blocks.

Conceptual Innovation

This is the first blockchain technology project based on scientific philosophy and peer-reviewed, academically backed findings. As a cryptocurrency, cardano blockchain adheres to the principles of privacy and decentralization. However, unlike other players on the cryptocurrency market, cardano recognizes the need for regulation. With that in mind, the main idea behind cardano is trying to find a middle ground between the two.

It does not have a grand, ambitious mission like revolutionizing the financial system. It focuses, rather, on using advances in cryptocurrency to make banking systems easier to implement in the developing world and other places where the cost of something similar used to be too high. 

How do Cardano fees work?

Fees are transaction fees which are collected and distributed among appropriate slot leaders. The Cardano ADA fees are calculated based on a simple mathematical formula as follows:

fee = a + b * size

In this formula, both a and b are constants (a = 0.155381 ADA, b = 0.000043946 ADA/byte), while size means the size of the transaction, expressed in bytes.

Where can I buy and trade Cardano (ADA)?

Cardano ADA hit the open cryptocurrency market in October. Before it became a part of the cryptocurrency exchange, it was available for purchase from September 2015 until January 2017 during the Initial Coin Offering (ICO) period. Now it can be obtained only from a couple of major cryptocurrency exchange platforms.

Binance and Bittrex are currently the two platforms on the cryptocurrency market with the highest ADA trading volume. However, they only offer the Cardano ADA coin coupled with Bitcoin or Ethereum. So, you will need to first buy Bitcoin or Ethereum on a different cryptocurrency exchange platform, say GDAX or Gemini, and transfer it afterwards.

Other platforms that offer the ADA coin are Upbit and Coinnest. It is expected that the coin will soon be available on an ATM network in Japan. It will incorporate as many as 25 ATMs within the next 10 months.

Cardano Exchanges

Cardano Exchanges

How to store it?

The team behind this currency created a special wallet: Daedalus. For now, the Cardano wallet supports just the one cryptocurrency, but will soon offer support for other cryptocurrencies, as well.

The development of Cardano is an ongoing process, with much of the implementation (especially when it comes to trading and integration with mobile technology) still being rather incomplete. In part, that may explain why among the rising cryptocurrency prices, the Cardano price remains relatively low. The infrastructure simply isn’t quite there yet, and the popular exchanges are flooded with Bitcoin forks. But the unimpressive price belies the true nature of Cardano – a grounded, science-based and evidence-based fetus borne of a diversity of scientific and philosophical ideas and notions. Judging by its illustrious conception and the platform being constructed in layers to avoid any faults, this little seed is sure to flourish and prosper, with surging cryptocurrency prices in tow.

Author's overall rating:
Author: Ben Prescott

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