Blockchain is one of the fastest-growing technologies and has paved the way for various cryptocurrencies, platforms, decentralized applications, etc. Cardano has become the fastest-growing blockchain platform. It is considered to revolutionize the cryptocurrency world with its unique features and enhanced security. Cardano has its cryptocurrency known as ADA, which ranks under the top 10 cryptocurrencies. Cardano is rapidly building a vast blockchain ecosystem and competing against some of the pioneered blockchain ecosystems.
Let’s have a look at Cardano; it’s working and its pros and cons.
What Is Cardano?
Cardano is a proof-of-stake blockchain platform offering similar characteristics to Ethereum. The distinguishing factor between Cardano and other blockchain platforms is that Cardano is based on peer-reviewed and is developed based on evidence-based methods. It is pioneered to build decentralized applications, systems, etc. Cardano is a third-generation blockchain platform with a first-of-its-kind decentralized network based on scientific, academic research designed by cybersecurity and engineering experts. It is an open-source cryptocurrency network.
Cardona is developed by one of Ethereum’s co-founders, Charles Hoskinson, who launched the blockchain platform in 2017. It is also a smart contract platform and has its cryptocurrency called “ADA.” Cardano is developed by three organizations, namely Cardano Foundation, IOHK, and EMURGO. The IOHK organization constantly operates with teams worldwide to research and review platform updates before the implementation process. Cardano promises to provide a more secure and transparent ecosystem for transactions and exchanges through science.
Working of Cardano
Compared to other blockchain ecosystems, Cardano has a different architecture. It follows a layered structure formed on two layers, a settlement layer and a computational layer. The settlement layered is wholly developed and is operating, whereas the computational layer is still in the development stage. The function of the settlement layer is to assist users in sending and receiving ADA tokens from one wallet to another. To achieve this, Cardano uses a similar method as Ethereum’s Ether. The second layer in the Cardano architecture will help users to initiate and finalize smart contracts.
Cardano’s smart contracts are considered more adaptable than others as they can be modified according to the users’ needs. Foreign countries impose different financial and monetary regulations. However, one smart contract can be written in a format that can change how the data is stored, processed, and accessed based on different rules. The computational layer being separate allows ADA users to use the same currency for other countries while following various laws.
Cardano’s computational layer allows the development team to modify using soft forks without meddling with the ADA or the settlement layer. It uses Proof-of-Stake (PoS) protocol to verify the financial transactions. Also known as validators, users are required to invest certain ADA coins to represent their stake in the operation. The validators receive some rewards according to their stake.
A consensus algorithm is a method that forms a joint agreement between the blockchain participants regarding the current state of the distributed ledger. A consensus protocol aims to constitute an agreement, collaboration, cooperation, ensuring equal rights to all nodes and necessary participation of every single node in the consensus operation. The consensus algorithm’s goal is to essentially come to an agreement that is agreeable to the entire network. To achieve consensus, Cardano uses a tailored Proof-of-Stake (PoS) blockchain protocol known as Ouroboros. This consensus algorithm ensures smooth and secured transmission of ADA and provides safety for the smart contracts on the Cardano ecosystem. Ouroboros also rewards the validators who help to maintain the network’s consensus.
What Are the Applications of Cardano? Where Can It be Used?
- Cardano can be used in identity management to streamline and simplify operations requiring a repository of data from various sources.
- It provides traceability, which helps track and inspect the manufacturing process from the initial stage to the finished set. This enables eliminating the market for fake goods.
- Cardano can be used to build a secure voting mechanism for token holders.
Advantages of Cardano
1.Proof of stake (PoS) algorithm
The proof of stake algorithm is considered more efficient than the proof of work, and Cardano has adopted the proof of stake algorithm. PoS is said to reduce the amount of computational power needed proving it to be an energy-efficient, cheaper and better alternative for the environment.
2.Third-generation blockchain platform
Cardano is branched as a third-generation blockchain and is expected to be more reliable and secure as it is built, keeping the drawbacks of other protocols into consideration. ADA is considered to be more reliable as it keeps overcoming other cryptocurrencies’ issues.
The most significant advantage of Cardano is that it has a layered architecture. The implementation of the settlement layer and computational layer provides scalability, security, and quicker transactions. It also ensures that updates are performed without disrupting the payments and transactions.
Disadvantages of Cardano
1.Currently in the development stage
Even though it is based on academic and scientific research, Cardano is currently under the development stage and is reviewing and testing phase. This has led Cardano to lose its position against Ethereum as Cardano’s smart contracts and token standards are incomplete and not functioning. It does not have decentralized application capabilities as of yet.
2.Synchronization between ledgers
According to some critics, Cardano’s promise of synchronizing ledgers at any point in time is not entirely realistic for the global blockchain ecosystem. Cardano is also considered as a platform to face double-spending or 51% attacks. Many endorsers are expected to approve the duplicate transactions for different slot holders.
3.ADA tokens are staked
According to Staking Rewards, in the present time, 74.19% of all ADA tokens are staked. The primary reason for the prices of Cardano to rise is because of the staked ADA tokens, which comprise a considerable number of tokens. With the tokens not moving, scarcity of tokens is created, making it is difficult to get a hold of the tokens, and thereby, the prices are increased as demand outweighs the supply.
Cardano is an emerging blockchain platform and has an advantage over other blockchain platforms due to its scientific foundation. Therefore, it has an ambitious roadmap and can prove to revolutionize cryptocurrency networks in the blockchain world. However, the popularity also increases the threat of cyberattacks, security and data breaches, disruption in transactions, etc. The potential cyber threat raises a vast demand for blockchain developers and experts among organizations in every sector. Over 27,000 blockchain jobs available on LinkedIn, and blockchain professionals are expected to earn an annual salary between $150,000 to $175,000. These statistics prove that now is the best time to step into the blockchain industry and climb the ladder of success. The first and most crucial step towards building a blockchain career is through a blockchain certification. Certified Blockchain Professional (CBP) is a blockchain certification offered by EC-Council that trains an individual in fundamental and advanced blockchain concepts. It helps develop skills to create decentralized applications, work on smart contracts, understand the collaboration of the latest technologies such as AI and Machine Learning in blockchain technology, etc.