After the successful introduction of Ethereum, one of its co-founders, Charles Hoskinson, found himself at odds with the direction the project was taking. Seeking to realize a different vision, Hoskinson set out to create something new. The result was Cardano, a blockchain platform powered by its native cryptocurrency, ADA.
From Bitcoin & Ethereum’s Foundation to Cardano
Cardano represents the “third generation” in the evolution of crypto assets, building upon the foundational concepts introduced by Bitcoin and later expanded by Ethereum. Known as Crypto 1.0, Bitcoin pioneered the first decentralized digital currency but faced limitations in scalability and speed. Ethereum, or Crypto 2.0, introduced smart contracts that allowed for more complex applications but still grappled with network congestion. Cardano, launched in 2017, aims to resolve these issues by offering a blockchain that is scalable, efficient, and environmentally sustainable, setting a new standard for what digital currencies can achieve.
Charles Hoskinson & the Foundation of Cardano
Hoskinson founded Cardano in 2015 with Jeremy Wood, another former colleague from Ethereum. Together, they established IOHK (Input Output Hong Kong), a company committed to using peer-reviewed academic research to build the Cardano platform. This approach ensures that all upgrades and new features are innovative and are also scrutinized by experts in various fields, including cryptography, economics, and social sciences. This thorough vetting process helps prevent potential vulnerabilities and ensures that Cardano remains at the cutting edge of blockchain technology.
How Cardano Works
Proof of Stake and Ouroboros Protocol
Cardano introduces a unique proof of stake (PoS) consensus mechanism called Ouroboros, which is designed to be much more energy-efficient than the proof of work (PoW) systems used by earlier cryptocurrencies like Bitcoin. Ouroboros allows ADA holders to participate in the network by staking their coins to become validators, fostering a more secure and scalable network.
Cardano’s Dual-Layer Structure
Cardano is structured in two layers to enhance functionality and user experience. The Cardano Settlement Layer (CSL) handles all transactions that involve ADA, ensuring secure transfer of funds with minimal transaction fees. The Cardano Computing Layer (CCL), on the other hand, deals with all the computational tasks and is where smart contracts are executed. This separation allows for flexibility in updates and maintenance, supporting a wide array of applications without congesting the network.
Smart Contracts and Decentralized Applications
Cardano's implementation of smart contracts is designed to enable developers to build complex decentralized applications (dApps) that can run autonomously on the blockchain. This functionality opens up for creating decentralized finance (DeFi) apps, new crypto assets, and even digital games. This makes it potentially an attractive platform for developers looking to push the boundaries of what can be achieved with blockchain technology.
ADA: Cardano’s Native Currency
ADA, the native cryptocurrency of the Cardano platform, has multiple functions. It can be used to pay transaction fees on the Cardano network, ensuring that all operations are processed efficiently. ADA is also staked by network participants who wish to become validators, playing an important role in maintaining the network's security. This staking mechanism incentivizes honest network participation and also offers ADA holders a way to earn rewards for their involvement. Additionally, as Cardano continues to evolve, ADA holders can be key players in the network governance, allowing holders to vote on upgrades and changes within the ecosystem.
The Future of Cardano & ADA
As Cardano continues to develop and integrate new features, it remains a potentially exciting opportunity for those interested in this crypto asset. For individuals looking to explore ADA, iTrustCapital offers the possibility to buy and sell ADA within a tax-advantaged Crypto IRA.
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DISCLAIMER
This article is for information purposes only. It does not constitute investment advice in any way. It does not constitute an offer to sell or a solicitation of an offer to buy or sell any cryptocurrency or security or to participate in any investment strategy.
iTrustCapital is a cryptocurrency IRA software platform. It is not an exchange, funding portal, custodian, trust company, licensed broker, dealer, broker-dealer, investment advisor, investment manager, or adviser in the United States or elsewhere. iTrustCapital is not associated with and has no direct relationship with Cardano (ADA). iTrustCapital is not affiliated with and does not endorse any particular cryptocurrency, precious metal, or investment strategy.
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