Over the past few years blockchain and cryptocurrencies have attracted considerable attention among people across the world. A blockchain is a distributed ledger that is run in a decentralized manner spread across various computer systems known as the nodes in the network. Cryptocurrencies are virtual currencies designed by employing cryptographic techniques which are used primarily as the means for paying the service fee involved in the network. This mechanism incentivizes users to run nodes (that validate transactions/blocks) by providing a reward, of which fees contribute toward.
Blockchain technology and cryptocurrencies in particular have evolved since the implementation of Bitcoin back in 2009. Since then there have been various blockchain protocols released with differences in the features and performance. Cardano was ideated in 2015 and was intended to mitigate many of the perceived deficiencies of blockchain implementations till then. Cardano follows Proof of Stake (POS) for its consensus mechanism which is orders of magnitude more energy efficient and environmentally friendly compared to blockchains which use Proof of Work (POW) as the consensus mechanism (eg. Bitcoin). Cardano also uses the extended UTXO model for maintaining its ledger. This approach is an improvement over the model used by Bitcoin, as it adds the ability to include additional logic in the form of scripts. Compared to Ethereum’s account based model, the eUTXO model by virtue of its local nature of transaction validation, is better for performance, scalability and privacy.
Fast forward to 2022. If you are new to Cardano and its native currency ADA, here are the salient features that you should be aware of.
Cardano
-
Cardano is a 3rd generation blockchain designed to tackle shortcomings of prior protocols like Bitcoin and Ethereum.
-
Cardano is a collection of open-source, patent-free protocols. Further it is built from the ground up based on peer reviewed research which assures that security and performance guarantees work as expected.
-
Cardano supports smart contracts. In a simple sense, you can think of this as small programs that can be run on the various nodes that sustain this decentralized blockchain. Bitcoin for example does not have support for smart contracts and allows only to make transactions of value, namely Bitcoin. Support for smart contracts opens up the ability to cater to real world use cases. Cardano aims to be a sustainable financial and social operating system for the world rather than merely a payment system. This is evident from the diversity of sectors for which Cardano is being employed already. For eg. Telecom sector with collaborations with World Mobile and Dish and work with nation states like solutions in Ethiopia. On the technology front Cardano stands out from other blockchains with innovative tools like Decentralized Digital ID through Atala Prism and DSL based drag drop smart contract development with Marlowe.
ADA
-
ADA is the native cryptocurrency for Cardano and it is named after Ada Lovelace, the 19th-century mathematician often referred to as the “world’s first computer programmer”. Fees for all transactions on Cardano are computed and released in terms of ADA.
-
Every holder can stake their ADA in the Cardano ecosystem without having to lose control of their funds and earn rewards for delegated ADA.
-
ADA can be stored in digital wallets. There are wallets endorsed by IOG (the company that develops Cardano) like Daedalus and Yoroi. At the same time, there are many community developed wallets as well like Nami, Eternl, Flint to name a few.
-
ADA has a deflationary monetary policy since it has a fixed supply of 45 billion and it cannot be minted or burned.