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What is Cardano (ADA)? A guide to the smart contract platform

What is Cardano?

Cardano is a smart contract platform that’s powered by ADA coin, which can be used to send and receive digital funds. Cardano is similar to Ethereum because it is also a smart contract-based system which can be used to develop DApps (decentralised apps).

The main aspect that differentiates Cardano from Ethereum is that Cardano offers security through its layered architecture (this will be discussed later in this article).

Cardano is also unique because unlike other cryptocurrencies, Cardano did not begin with a white paper. Instead, they put together principles, best practices and avenues for exploration.

Below, we look at a summary of 10 scientific philosophies that Cardano follows.

  • I.    Separating accounting and computation into different layers in the blockchain’s architecture.
  • II.    Cardano heavily uses interdisciplinary teams that include early usage of InfoSec experts.
  • III.    Cardano acknowledges the fact that it should account for all its assets on a single ledger.
  • IV.    Learning and adopting important features from other altcoins present in the market.
  • V.    Incorporating the ability to make improvements on their post-deployed systems without causing any alterations to the network.
  • VI.    Cardano has a long-term objective of ensuring that the current designs of cryptocurrencies are improved to make it possible for them to function with mobile devices having a secure and reasonable user interface.
  • VII.    Create a fair middle ground where regulators can interact with aids of trade without compromising the core principles inherited from Bitcoin.
  • VIII.    Making transactions abstract to include optional metadata for better conformation to the needs of legacy systems.
  • IX.    To develop a decentralised funding mechanism to facilitate future works
  • X.    Creating an avenue that brings investors closer to their cryptocurrency’s maintenance and operations.
Video by Crypto Investing University

Key elements Cardano aims to solve

Cardano key elements

1: Scalability

With the Cardano smart contracts, scalability is achieved under three aspects namely throughput, data scaling and network.

a)    Throughput; BTC and ETH lack throughput where Bitcoin only manages seven transactions per second while Ethereum manages 15-20 transactions per second. Cardano aims to create better performance in its system using its consensus mechanism, Ouroboros, which is a proof-of-stake algorithm.

b)    Network; Cardano hopes to provide more bandwidth for its users so that it can attain scalability.

c)    Data scaling; with most blockchains, the more users completes transactions, the bulkier the blockchain becomes and this is unreasonable for average users with ordinary computers as this most often slows down the network and could lead to higher fees.

To solve this, Cardano has implemented a philosophy where not network participants receive the data from the blockchain but only users involved in a given transaction get to receive all the data relating to that transaction.

2. Interoperability

In the current ecosystem, it is difficult for cryptocurrencies to communicate with other cryptocurrencies or even with banks. However, some exchanges facilitate transactions between banks and cryptocurrencies, but they are quite vulnerable to hacking, communication blackouts and miscommunication.

Cardano provides an ecosystem where each blockchain can easily communicate with other blockchains and with other financial systems such as banks.

3. Sustainability

Cardano hopes to make itself sustainable for its future growth and development.

To be sustainable, Cardano hopes to get inspiration from Dash and also create a treasury. The Treasury works by storing a part of the reward of every block in the system.

Therefore, if one wishes to make any development on the ecosystem, they can get grants from the treasury to carry out the changes. It is important to note that one receives a donation after the Cardano stakeholders have voted and agreed that the award can be issued.

The Cardano roadmap

Cardano’s roadmap consists of 5 phases;

  • Byron– The launch of the Cardano mainnet and allowing users to trade in ADA
  • Shelley– Ensuring that the right tech for making Cardano fully decentralised and autonomous is in place.
  • Goguen– Integration of smart contracts
  • Basho– This phase majorly entails making improvements on the Cardano system
  • Voltaire– The addition of a treasury system and governance for sustainability.
Cardano Ada roadmap

Benefits of Cardano

It is the pioneer peer-to-peer transaction system based on scientific philosophies. Therefore, it aims to merge the smart contract with transactional properties and the Decentralized applications system of Ethereum.

The team behind ADA is working to develop another language, known as Plutus, for smart contracts that are powered by Cardano. This language will have stringent contracts that cannot be interfered with by any party without getting the consent of all parties involved.

Cardano plutus

ardano system is highly secure compared to those of other cryptocurrencies. The high security is created by the layering of the smart contracts in such a manner that the data entering into the blocks are not altered.

Also, Cardano systems are decentralised and does not belong to any particular person or organization. Any data from a transaction performed or contract executed is stored permanently on the ledgers.

The decentralised apps that found on the Cardano platform use ADA currency in all virtual ecosystem of the application, and also use Cardano’s smart contract technology to create an interactive and virtual economy.

How to buy ADA

ADA can only be purchased from a few exchanges because it is not widely in circulation. The primary platforms from where you can get ADA include; Binance, Coinmama, Cointree, CoinSwitch, KuCoin, Cryptopia, ChangeNow and Bittrex.

How to Store ADA

ADA wallet

Currently, there is a limited number of wallets where ADA coins can be stored. Investors can get to choose from the following wallets.

I.    Atomic wallet This is a desktop wallet that allows trading of more than 300 cryptocurrencies. It also has an inbuilt atomic swap exchange where stakeholders can exchange fiat currency for cryptocurrencies.

II.    Daedalus wallet – This is the official Cardano wallet that was developed by the Cardano team. It is also a desktop client wallet and supports tokens supported by ADA.

III.    Yoroi wallet – This is a web wallet which only supports cryptocurrencies that are supported by ADA.

IV.    Infinito wallet – This is a mobile wallet that supports ADA including other major tokens and cryptocurrencies such as BTC and ETH.

When looking for a Cardano wallet, you should ensure that the wallet you are picking;

  • Supports ADA and other cryptocurrencies you wish to store
  • Provides customer support in case you experience a problem with a transaction
  • Has ongoing development
  • Has an easy user interface
  • Provides a high level of security for your coins.

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coinmag

Daniel is a determined and experienced writer with a keen eye on emerging technologies. Daniel aims at educating the crypto community on the developments within the space.

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