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What is Cardano (ADA)?

Jul 29, 2020
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byNDAX Labs

What is Cardano (ADA)?


Cardano, the world’s first peer-reviewed blockchain, also stores the cryptocurrency, ADA. Envisioned to operate like the internet of blockchain, Cardano was founded to change the design and development of cryptocurrencies to provide a more balanced and sustainable network.

The Cardano blockchain was developed to solve three lingering problems - scale, energy usage, and the inability to interact with fiat currencies - through validating transactions. That means it uses decentralized software applications that run on the blockchain to employ new technologies within layers to provide security and sustainability.

Unique to the crypto world, Cardano is the first blockchain to be designed with a scientific philosophy. It is a network built through peer-reviewed scientific research and formal verification, to ensure strong standards are met and its code is verified mathematically.

Similar to Ethereum, Cardano is a platform where smart contracts can be created. Where Cardano differs is its software architecture aims to provide multiple features through a layered design.

Cardano is divided into two distinct layers, the settlement layer (CSL) which is the ledger that sends and receives ADA between accounts and records transactions, while the computing layer (CCL) moves funds and processes the smart contracts via an automated program. While both layers are separate in their functions – the process of the transaction and its accounting – this design maintains blockchain security in Cardano.

Similar to other coins, Cardano is decentralized, meaning no one computer, person or institution holds the ledger or blockchain. Cardano uses a Proof of State (PoS) consensus algorithm (how the computer validates transactions) called Ouroboros to create the next block of ADA.

By using Ouroboros, Cardano solves issues around sustainability and scalability, by eliminating the need for the energy-consuming PoW protocol that requires proof of transaction. It’s the first PoS protocol that has mathematically been shown to be provably secure.  Through Ouroboros, the creator of the next block is randomly selected, based proportionately to the size of their ADA stake. This allows the networks to increase performance for horizontal scalability by adding more powerful hardware as new blocks are created.

Similar to other cryptocurrencies, Cardano (ADA) was created to function as a form of digital money. Cardano (ADA) can be purchased at cryptocurrency exchanges that support the digital currency and can be stored on an exchange or on a wallet. In the process of producing more ADA coins, Cardano is divided into measures of time called EPOCHs. Each EPOCH then divides into slots, which are a 20-second interval.  For every slot, a leader is assigned to create one new block.

To qualify for leadership, potential candidates must hold a minimum threshold stake in the currency. If the candidates meet the required criteria to qualify, they are then considered as prospective electors for the next EPOCH. Transaction fees for each EPOCH are collected and distributed back to the slot leaders.

Carando EPOCHs contain 21,600 slots, which appear at a 20-second rate. This means, there is a new EPOCH created every 5 days. Cardano is designed to have multiple EPOCHs running in tandem. The specific number of EPOCHs in operation improves the performance and scalability of Cardano. The only limit of EPOCHs in Cardano is the specific network throughput or rate of production.

Cardano uses a five-stage “fork” or development cycle approach using nodes “eras” called Byron, Shelley, Goguen, Basho, and Voltaire. Currently, the project’s second and biggest upgrade, “Shelley” is planned to be completed by the end of July 2020, with the goal to improve Cardano’s decentralization and scalability capabilities. Within the Cardano blockchain network, Shelley will allow users to view their stake pools and receive rewards.

The blockchain and its native currency, ADA, were created by one of Ethereum’s founders Charles Hoskinson. Cardano’s blockchain is considered a third generation of the technology. The total number of Cardano as a supply limit is a cap of 45 billion ADA.

Original Author: Charles Hoskinson
Initial Release: 2015
Website: cardano.org


If you are based in Canada and looking for a Bitcoin exchange, take a look at  NDAX. NDAX is an easy-to-use, beginner-friendly exchange that can give you easy access to trade Cardano and other cryptocurrencies like Bitcoin, Ethereum, Ripple, Litecoin, Dogecoin, EOS and Stellar.