Follow Us

Blockchain Cardano, Cardano Is a Smart Contract Platform Like Ethereum

Share on facebook
Share on twitter
Share on linkedin

Share

Share on facebook
Share on twitter
Share on linkedin

Over the last few months, cryptocurrencies have gained more popularity and demand. Thanks to this increase, people started to talk about whether it is a scam or the future form of money that we will use in our daily lives. We have already seen some companies like Tesla, fine arts gallery Sotheby’s, and some online Bitcoin Casinos accepting cryptocurrencies as a payment method until now. 

Also, the increase in demand created massive gains for cryptocurrency investors. Although the market faces harsh corrections, people are still bullish for cryptocurrencies. As Bitcoin dominance is going down and Bitcoin is making a range, altcoins like Ethereum (ETH), Cardano (ADA), ChainLink (LINK) and Binance Coin (BNB) are creating more profits. Now let’s have a look at one of the Ethereum’s biggest rivals, Cardano.

What is Cardano?

Cardano is a public blockchain platform like Ethereum. It is open-source decentralized and it works with proof of stake principle. Its cryptocurrency is called ADA, and it can be used for peer to peer transactions. It was founded in 2015 by the co-founder of Ethereum Charles Hoskinson. The project is supervised by Cardano Foundation based in Zug, Switzerland.

Cardano has a more complex and superior system compared to its peers, and it has a strong community. Input-Output Hong Kong is the research lab behind Cardano and its development team consists of academicians and scientists. It is currently in the sixth place in the cryptocurrency market value list after Bitcoin, Ethereum, Binance Coin, Ripple and USD Tether; and it is more likely to see an upwards movement after its range between $1 – $1.5.

Cardano Blockchain Architecture

The Cardano blockchain has two components. The Cardano Settlement Layer (CSL) is the unit of account, balance of ledger, and it is the place where ADA holders can send and receive the token instantly with low transaction fees.

The Cardano Computational Layer (CCL) is the base of the blockchain, and it helps to run smart contracts and ensure security and compliance. Cardano’s open source code is written using a secure programming language called Haskell.

It works on a special proof of stake blockchain protocol called Ouroboros. Cardano is considered as the third generation blockchain while Bitcoin being the first and Ethereum second. In the first generation, a decentralized network is able to validate transactions without needing a trusted third party.

In the second generation, like Ethereum, there is a smart contract where programs can fulfill transactions when certain conditions are met. In the third generation, Cardano and Polkadot, there is a system based on proof of stake blockchain, not proof of work.

Proof of Work vs. Proof of Stake

In the cryptocurrency realm, the transactions need to be validated in order to make them accountable. In order to validate the transactions, miners need to solve a complex equation that is provided by cryptography. The miners who manage to solve the equation first get the reward crypto. It is like solving a Rubix cube. Whoever solves it first gets the reward for their effort. This process is like a mutualistic loop.

The transactions need to be validated, and the miners want to earn money as the value of cryptocurrencies are growing rapidly. But, as the number of transactions go higher and more miners want to record it, miners start to need a higher level of technology, and it requires more energy.

Unfortunately, this makes it harder and harder for miners and reduces cryptocurrencies’ sustainability. Back in 2015, Bitcoin transfers required the amount of electricity needed to power 1.57 American households per day, nowadays Bitcoin consumes more electricity than Argentina.

On the other hand, proof of stake rewards the miners with the transaction fee, not by a block and it requires no complex equation to be solved. Because of this, the individuals are not called miners but forgers.

The Cardano system puts your tokens into a wallet and freezes them. During this time, you can’t sell your tokens, but when you hold the tokens in your wallet, it creates a chance for you to win any transaction fee. This process is called staking and the more you hold tokens in your wallet, the more you have the chance to win a transaction fee.

For example, if you stake 10 coins and there are 100 coins being transferred, you have a 10% chance to win a transaction fee. The best thing about this method is it doesn’t require that much gas in contrast to Ethereum, thus it is more sustainable.

Why Cardano can Replace Ethereum

Cardano is a smart contract platform like Ethereum. Some people believe that Cardano will replace Ethereum thanks to its low transactions costs, high speed and sustainability. Ethereum’s value increased rapidly as more systems started to build upon it.

Ethereum is the home for non-fungible tokens (NFTs), which became really popular in the last couple of months, and it is also making profits from decentralized finance (DeFi) projects since they are built on Ethereum’s blockchain, but it is expensive to use Ethereum. On the other hand, unlike other cryptocurrencies, Cardano doesn’t have a white paper since it is rapidly updating itself against the problems that cryptocurrencies face.

So Cardano intends to offer more suitable places for those projects. As the demand for cryptocurrencies increases, they are being used more, and therefore, some problems which didn’t happen before, like lag or sustainability issues occur. Because Cardano doesn’t have a white paper, where simply the mission of the project is declared, it can easily update itself against those problems.

Conclusion

As a result, the cryptocurrencies made their way to our world in 2009 with Bitcoin and then continued with the existence of Ethereum. Cardano is meant to be the third generation of blockchain system which is trying to eliminate the problems that blockchain technology faces.

These problems occur since the cryptocurrencies are pushing the limit of today’s time and related to the increasingly developing technology. However, the development in technology creates the solution for its problems and Cardano is basically aiming to eliminate the problems in the older generations of the cryptocurrency realm.

Join The Coin Republic’s Telegram Channel for more information related to CRYPTOCURRENCY NEWS and predication.

Leave a Reply

Your email address will not be published. Required fields are marked *

Download our App for getting faster updates at your fingertips.

en_badge_web_generic.b07819ff-300x116-1

We Recommend

Top Rated Cryptocurrency Exchange

-
00:00
00:00
Update Required Flash plugin
-
00:00
00:00