What is Cardano?

Cardano is a decentralized blockchain that supports smart contracts.

Think of it as the hot new challenger in the smart contract arena, taking on the reigning champion Ethereum. And the excitement surrounding Cardano has been reflected in its token, ADA, which has become one of the biggest cryptocurrencies.

Moving forward, we will look at some of the nitty-gritty details about Cardano, but before we do that…

What's the story behind its creation?

Cardano was founded by Charles Hoskinson, a former co-founder of Ethereum. However, he and Vitalik Buterin had different visions for Ethereum.

Charles envisioned a commercial blockchain with fees to improve and grow, while Vitalik preferred a non-profit Ethereum.

In 2017, the crypto world was in need of a better blockchain solution, and Cardano answered the call. With a focus on speed, scalability, and sustainability, Cardano solved many of the problems Ethereum was facing.

How does Cardano work, then?

Cardano functions as a distributed ledger. This means that a bunch of people and systems (or nodes) around the world have to agree with each other for it to work.

So how do they reach an agreement?

Well, Cardano uses the Ouroboros Proof of Stake protocol, which is the first to be academically peer-reviewed.

In this system, the holders of the most tokens (ADA) have the most influence on the blockchain.

Unlike Ethereum's early Proof of Work protocol, which was energy-intensive, Cardano's Proof of Stake is more efficient.

What’s the difference between proof of work and proof of stake?

Proof of Work is the oldest name in the book. It's the mechanism that Bitcoin use.

On the other hand, Proof of Stake is relatively newer. It is also much more efficient than proof of work.

Think of it like this.

Proof of Work is like a bunch of miners digging for gold. It's extremely energy intensive and whoever gets it first keeps it. Everybody else who was trying to get it loses all of the energy they spent without getting anything in return.

On the other hand, proof of stake is like bidding for a government contract. You deposit your assets, ADA in Cardano's case, to show that you're serious about it.

And if you're lucky, you get chosen from the pool of people that bid on the contract.

This makes Proof of Stake much less wasteful in terms of energy spent. It is also much faster.

How does Cardano use Smart Contracts?

Like Ethereum, Cardano also supports smart contracts. These are exactly what they sound like. You program what you want the smart contract to do, specify when exactly to do it, and it does it by itself. No lawyers are necessary.

Smart contracts form the basis of automation on the blockchain and allow developers to make decentralized applications on Cardano.

Now, if you're new to the crypto world, you might be thinking, "Decentralized apps? I've got plenty of those on my phone already." But hold up, because decentralized apps on the blockchain are on a whole other level.

OK, but what is decentralization?

Cardano is among the large group of blockchains controlled by different people or nodes worldwide. This is in contrast to centralized institutions like banks.

Decentralization is at the core of the philosophy of Cardano and blockchains, in general.

So now that we know what decentralization is...

Let's get back to dapps

Decentralized apps are a big part of the decentralized vision of blockchains. In terms of who runs them, they are the polar opposites of apps like Facebook, WhatsApp, Google, Twitter, and so on.

They provide the same kind of service but without the worries of one party single-handedly controlling the network. This makes them secure, transparent, and offer an unparalleled level of control over your data and assets. Okay, so all of that should give you an overview of how Cardano works. But what about the…

Benefits of Cardano

Well, let's start with the fact that…

Deflation makes it more valuable over time

Do you know how money devalues over time because more is added to circulation yearly?

But imagine the reverse for a second. A currency can also become more valuable if it stops getting printed at a specific limit. In Cardano's case, that limit is 45 billion tokens.

That is deflation, and it is what Cardano does with ADA.

Its second benefit is that…

It's extremely efficient

Cardano uses a lot less energy than Bitcoin and Ethereum classic.

It is up to four million times more energy efficient than Bitcoin. Ethereum Classic uses the same energy-intensive protocol as Bitcoin.

That's like comparing the energy a small country uses to a single household's. That's how efficient Cardano is.

Moving on to the third benefit…

A Bridge between Blockchains

The founder of Cardano envisions it as a bridge between other networks, a.k.a. the internet of blockchains. This includes connecting competitor blockchains like Ethereum as well.

Think of it like this. If all of the cities in a country were cut off from one another, the government would not be doing all that well.

Connections across networks improve things for everybody, especially for users like you and me.

Mentioning making things better for you and me...

Privacy Protection

Usually, banks often want to know details about significant financial transactions, which can feel intrusive.

Cardano addresses this issue by allowing users to keep transaction information (metadata) private and optional. However, the platform goes beyond simply protecting privacy by offering greater financial freedom.

Cardano's dapps Selection

Dapps are Web 3's version of social apps. Web 3 is the new generation of the internet, where everybody has a stake in the system rather than just a handful of companies calling all the shots.

Blockchains like Cardano allow developers to make dapps using smart contracts.

For example, one of the biggest dapps on Cardano is MiniSwap. This is an exchange where you can trade different cryptocurrencies. Other popular dapps on Cardano include CNFT, a marketplace for non-fungible tokens, or NFTs.

So those were the benefits of Cardano.

What are some downsides for Cardano?

Cardano has a few bits which aren't exactly ideal.

It's not the fastest. 

Cardano might have been a better choice when it first came out than Ethereum. But we are not in 2017 anymore.

Many other blockchains do what Cardano does. But they are much faster in terms of how many transactions they can handle per second.

But why are transaction speeds even essential?

Well, Cardano wants to get rid of the existing financial sector's constraints. When you compare Cardano's 250 to Visa's 24,000, it becomes a problem.

Note that transaction speeds alone do not dictate how fast a blockchain is. But they do give a good idea of how things are.

Over Similarity to other Projects

Unfortunately, Cardano does have the drawback that it is becoming fairly similar to other projects out there.

The OPoS protocol is unique and may have been something when Cardano was new. But it is not all that useful anymore.

Blockchains now use a lot of other protocols that allow faster speeds, are more secure, and so on.

So while it's not the worst, it's certainly not the best.


Cardano is a top blockchain project with a mission to bring blockchain and fintech to the masses.

While it once had a technical advantage over Ethereum, recent Ethereum updates have leveled the playing field. Cardano still stands out with its unique Ouroboros Proof of Stake consensus mechanism and a focus on increasing value over time. It offers a platform for building smart contracts and decentralized apps.

Despite facing competition from faster blockchains, Cardano has a large community of supporters and investors, making it a key player in the alt-coin race. 

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