Cardano is one of the well-performed virtual currencies and decentralized networks based on blockchain technology in the world. You might just be familiar with the performance of Cardano cryptocurrency. Still, it is interesting to know that the network is perfect for running smart contracts and decentralized apps or dApps. Stick around to find out how Cardano works and how you can participate in this community.
What is Cardano?
Cardano is one of the biggest names of the third generation of blockchains developed by Input Output Hong Kong (IOHK). The company was founded by Charles Hoskinson, the co-founder of Ethereum.
Cardano was launched as an open-source, decentralized blockchain run through a proof of stake consensus system. If you don’t know anything about proof of the stake, read as it is explained later in this article.
Proof of stake provides an edge over the proof of work of the Ethereum network because it uses less energy and needs less hardware requirement. That is precisely why many traders know Cardano as the ‘Ethereum-killers.’ Other Ethereum killers are known as Binance Smart Chain (BSC), Solana (SOL), and Polkadot (DOT).
Cardano is an excellent solution for scalability, interoperability, and sustainability problems in other blockchain networks. The PoS networks like Cardano are not limited by the infrastructure burden of high costs, excessive use of energy, and slow transaction time.
The most important thing about the PoS protocol that has been used in Cardano is that it runs on the Ouroboros consensus protocol. It was created first by Cardano. The Ouroboros protocol has been proved to be secure and the first protocol based on scholarly academic research.
How does Ouroboros Works?
Ouroboros divides time into shorter periods, called epochs, made of slots. Slots are a fixed period and are similar to the factory’s shift. Slots are equal to five days right now.
Every slot needs a leader. The reader is chosen through a lottery system. Holders with higher stakes have a better chance of winning the lottery, and they are responsible for validating transactions creating blocks, and adding newly-created blocks to the blockchain.
What is ADA?
The native cryptocurrency of Cardano is ADA. As the native token of the Cardano blockchain, ADA has a supply limit of 45 billion coins.
It is named after Ada Lovelace, a countess and English mathematician known to be the first computer programmer. ADA is used to pay transactional fees. ADA, compared to other cryptocurrencies, is more environmentally friendly.
How to mine Cardano?
If you were thinking about mining Cardano like Bitcoin, you should know that you cannot mine ADA to create new coins. The network runs based on the Ouroboros protocol and PoS system.
There is no need for miners to solve complex problems to verify new blocks of information in this concept. The verification of the new block depends on the state participants controlling the Cardano net worth. ADA Holders can delegate their asset to stake pools, select a stake leader for block creation, and be rewarded.
What are the advantages of Cardano over Ethereum?
Although the rollout time for Cardano is longer than Ethereum, it still benefits from the proof of stake consensus system. Ethereum, just like bitcoin and many other cryptocurrencies, have problems in terms of scalability and congestion.
The need for excessive energy consumption and miners to verify transactions and solve complex mathematical problems in proof of work network is a significant downside.
In Cardano, a few miners are responsible for authenticating transactions. So the network requires less energy for verifying transactions.