Since the advent of Bitcoin, we have seen a spate of crypto coins with unique attributes. With little variations in internal structure and system, they all help us deal with digital assets. One such innovation is Cardano, an open-source and decentralized public blockchain platform. It deploys a proof-of-stake consensus mechanism and facilitates peer-to-peer transactions seamlessly. One major differentiator of Cardano is that it executes trades with its cryptocurrency called ADA.
So Many factors about Cardano make it stand out among the rest. So let’s dig deeper into this groundbreaking crypto mechanism step by step.
A Peep into the History of Cardano
In 2014, Charles Hoskinson, one of the co-founders of Ethereum, fell out with Vitalik Buterin and withdrew all involvement from the project. The dispute happened due to a difference of opinions between Hoskinson and Buterin. While the former wanted to create a company with the help of venture capital, the latter intended to keep it a nonprofit organization. However, both co-founded IOHK, which developed blockchains for governments, private organizations, and educational institutions.
In 2017, a preliminary release of Cardano got public. The same year, IOHK partnered with the University of Edinburgh to establish a blockchain laboratory. By 2021, Cardano reached a market cap of $77 billion and became the fourth-highest cryptocurrency. In 2022, Cardano was ranked 26th out of 600 companies for brand intimacy.
Understanding the Mechanism of Cardano
Cardano was never introduced with its whitepaper. Its design primarily focused on addressing issues faced by existing cryptocurrencies. It uses the UTXO ledger model compatible with scripting languages and smart contracts. At the same time, it rids the system of the issues of scalability, interoperability, and regulatory compliance.
It uses a particular proof-of-stake (POS) protocol called Ouroboros. It eliminates the computing resources that are required in the proof-of-work algorithm. As per Hoskinson, the Cardano network used 6 GWH annually in 2021. It is less than 0.01% of the 110.53 TWh consumed by the Bitcoin network. He also says Bitcoin is very slow and inflexible, while Ethereum is unsafe and non-scalable.
The ADA cryptocurrency is stored on Cardano’s native digital wallet to facilitate transactions. And although it sounds protected, Investopedia found some security issues in the blockchain. It highlighted that the wallet downloads a full copy of the transaction, exposing the users to the risk of lost or stolen funds. Also, it lacked support for mobile phones and other tokens.
In 2018, the Ethiopian government partnered with IOHK to use Cardano for its coffee supply chain.
In 2019, the government of Georgia signed an MOU to use Cardano in the Free University of Tbilisi to build a credential verification system.
In 2019, sports footwear and apparel manufacturer New Balance announced a pilot program on the Cardano blockchain to assess the authenticity of its flagship Kawhi Leonard basketball shoes.
In 2021, EDM DJ Paul Oakenfold associated with Hoskinson to release his album exclusively on Cardano Blockchain.
In 2021, Dish Network announced its partnership with IOHK to investigate the use of distributed ledger technology.
In 2012, Decentralized Finance (DeFi) services were implemented into the Cardano blockchain to enable smart contracts to sync with decentralized apps.
The journey of Cardano, has been quite promising so far. It has undoubtedly established itself as one of the major contenders in the crypto space in real-life applications. Its use cases indicate the high adaptability of the network for so many domains. With DeFi, it has become open to many more possibilities.