For a while, crypto technology and cryptocurrency were shrouded in mystery and misinformation. Was it a scam? Was it a currency to be used for the dark web? Is it actually real money or just some imaginary money with no intrinsic value? Arthur C. Clarke, a science fiction writer, once said, “Any sufficiently advanced technology is indistinguishable from magic.” Blockchain technology, which encompasses cryptocurrency, has seen a surge of adoption since its inception with the Bitcoin white paper to recent times with major hedge funds such as BlackRock and Vanguard establishing crypto ETFs. This video shows the rapid expansion of crypto adoption among American adults:
As of December 2024, hundreds, if not thousands, of blockchains exist, and in this article, we will delve into one of the top 10 active blockchains.
Cardano, ticker $ADA, is a blockchain created by Charles Hoskinson. Hoskinson is an American entrepreneur who co-founded IOHK, a blockchain engineering company, and the Cardano blockchain platform. In addition to co-founding Cardano, he is also a co-founder of Ethereum, a Solidity-based blockchain that stores and executes smart contracts. Although Mr. Hoskinson is credited as a co-founder of both blockchains, they are different in many regards, while also sharing similarities.
Ethereum and Cardano are both decentralized platforms that allow developers to create and run smart contracts. Ether (ETH) is Ethereum’s native token. It is used to compensate participants who perform computations, validate transactions, and serve as “gas” to power smart contracts. ADA is Cardano’s native currency. Like ETH, ADA is used to facilitate transactions on its network and as a stake in the PoS consensus mechanism. Both Ethereum and Cardano stand as titans in the world of decentralized platforms, underpinned by their native transactional coins—ETH for Ethereum and ADA for Cardano. These coins not only represent value within their networks but also play instrumental roles in network operations.
At their foundation, both are “Layer 1” blockchain technologies, offering fertile grounds for developers to cultivate decentralized applications (dApps) and bring to life self-executing smart contracts. Although Cardano is a top 10 blockchain, it is often overlooked in favor of its counterparts Bitcoin and Ethereum. This article will familiarize you with Cardano, how it works, and what makes it such a huge player in the blockchain space.
Cardano’s Unique Features
Cardano uses a unique PoS mechanism known as Ouroboros. It was one of the first PoS protocols to be mathematically proven as secure. Its energy efficiency and scalable design make it a formidable alternative to PoW systems. Adopting what’s called a “first principles” approach, Cardano’s development is rigorous, systematic, and rooted in academic research. Every update undergoes extensive peer review, ensuring robustness and long-term stability. With all the different protocols available, the question arises: “Why choose Cardano?”
Cardano offers many reasons why users might choose to utilize the protocol, and, surprisingly, many are unaware of these benefits.
1. Native Assets
Compared to the typical ERC-20 style smart contract for managing secondary tokens in a network, native assets are a superior solution.
Native assets provide a much better user experience as they are treated as first-class citizens of the chain and don’t require setting approvals, which is a common annoyance with ERC-20 tokens. They are also much cheaper to use than ERC-20 tokens since they are just a field in the UTXO instead of a smart contract requiring interaction.
2. Easy Verification (High Decentralization)
It’s very easy to verify the Cardano blockchain. Block sizes are small and occur roughly every 20 seconds. To verify that the correct staker posted the block, you just need to validate a simple verifiable random function. This means you can run a Cardano node on lightweight and accessible hardware, enabling high decentralization.
Currently, the node specifications might actually be too low. One of Cardano’s main selling points is its use of the UTXO model, which allows for parallel transactions. However, nodes only require a 2-core CPU. Parallel processing isn’t much of an advantage with only 2 cores, so node specifications are expected to increase in the future.
3. Designed for Robustness
Cardano uses a consensus method called Ouroboros, which is based on the longest chain style of consensus. Longest chain methods tend to be more robust than BFT-based methods as they don’t need to receive votes from every single participant to stay live. Instead, they use probabilistic finality based on how recent participants have voted with their blocks.
BFT-style methods will shut down if more than 34% of participants are offline, but longest chain methods will keep operating even if 99% are offline, albeit at a slower speed.
Challenges for Cardano
Despite the many reasons to choose Cardano as a blockchain of preference, there are some notable disadvantages:
- Limited Adoption: Cardano is a relatively new platform and has yet to achieve widespread adoption. This means there are fewer dApps and smart contracts available on the Cardano platform compared to Ethereum.
Conclusion
Whether you choose to use Cardano or not, one thing is certain: Charles Hoskinson is on a mission to make cryptocurrency a household asset class. With his knowledge and capabilities, he is well-positioned to achieve this goal. As crypto enthusiasts, we can all appreciate his efforts to advance the blockchain ecosystem.
Written by : @drrobotnik_aoc on X (formerly Twitter)
