A lot of third generation cryptocurrency projects are rolling out smart contracts and Consensus mechanisms in a bid to offer a more scalable, secure and energy efficient blockchain than the first and second generation cryptocurrencies Bitcoin and Ethereum who use the Proof of Work consensus mechanisms.
One of these innovative blockchains is Cardano, a blockchain that uses the Proof of Stake consensus mechanism to validate transactions.
This Post Contains
- What Is Cardano?
- Brief History Of Cardano.
- How Cardano Works.
- Cardano (ADA) Tokenomics.
- Cardano (ADA) Statistics.
- Is Cardano An Eth Killer?
Cardano aims to offer a more scalable, secure and energy efficient blockchain compared to Bitcoin & Ethereum and has been vetted as an “Eth Killer” (A term used for cryptocurrency projects that have the potential to overthrow Ethereum and take its place as the leading blockchain) by both cryptocurrency investors and media. While also becoming one of the biggest blockchains for crypto currency investors and developers since its launch.
Without further ado, let’s take a deep dive into an analysis of one of the best blockchains in the cryptocurrency space.
What Is Cardano?
Designed to be a more scalable and secure alternative to the traditional Proof of Work blockchains, Cardano is an open-source decentralized public blockchain that uses the Proof of Stake consensus algorithm to validate transactions.
Cardano is used for the deployment of decentralized applications (DApps) and launching of cryptocurrency projects.
Brief History Of Cardano
Launched in 2017, Cardano was founded by Charles Hoskinson, who was also one of the co-founders of the Ethereum network. He is the CEO of IOHK, the blockchain engineering company that built Cardano’s blockchain.
The Cardano project initially began development in 2015, after Charles Hoskinson left Ethereum due to a dispute with Vitalik Buterin (One of the founders of the Ethereum blockchain).
Cardano is currently the largest cryptocurrency to use a proof-of-stake blockchain.
The protocol aims to aid the development of smart contracts and decentralized applications on the blockchain with the ‘Alonzo’ hard fork (Launched in 2021) bringing smart contract functionality and deployment of DApps to the Cardano blockchain.
How Cardano Works
The Cardano blockchain was written using Haskell, a universally recognised and secure programming language. Here are the structural features of the protocol.
What Is A DAO (Decentralized Autonomous Organization)? — How To Create A DAO
- Consensus mechanism: Cardano uses the Proof of Stake consensus mechanism, a more environmentally viable alternative to the Proof of Work consensus algorithm used by Bitcoin and Ethereum (Though Ethereum is transitioning from Proof of Work to Proof of Stake).
Cardano uses the Ouroboros version of the Proof of Stake mechanism, which ensures the security and safety of the blockchain.
The PoS consensus rewards users who stake their ADA token (the governance cryptocurrency of Cardano blockchain) for their participation in the network’s consensus.
Here’s how the consensus process operates:
- The network randomly nominates a few nodes ( Also known as Slot leaders) to create new blocks. The higher their stake, the higher their chances of being selected as Slot leaders.
- The blockchain is split into epochs each of which consists of slots.
- Once selected, Slot leaders can mine their specific epoch or a part of their epoch. The Slot leaders earn rewards for each Epoch or slot that they mine.
- Blockchain Structure: The Cardano blockchain structure has two layers, The Cardano Settlement Layer (CSL) and The Cardano Computational Layer (CCL).
The Cardano settlement layer manages the sending and receiving of transactions among ADA token holders at low transaction fees.
The Cardano computational layer ensures the security and functionality of smart contracts and the blockchain as a whole.
Cardano (ADA) Tokenomics
The ADA token has many Use cases, it can be used to facilitate peer-to-peer transactions as well as vote and decide on the development of the blockchain.
The most vital utility of Cardano is its use in the Proof of Stake consensus protocol; it can be staked on the blockchain and used to validate transactions and also create new blocks while earning more ADA tokens as a reward for the stakes.
Cardano (ADA) Statistics
Current Price: $0.85
All Time High: $3.10
All Time Low: $0.017
Market Cap: $28,761,040,867
Total Supply: 34,220,542,617
Circulating Supply: 33,700,419,713
Max Supply: 45,000,000,000
Is Cardano An Eth Killer?
The Proof of Stake consensus algorithm is currently the best alternative to the Proof of Work consensus. And Cardano is the leading blockchain to have used the Proof of Stake protocol. Therefore, there’s the possibility that Cardano might take advantage of Ethereum’s shortcomings and take its place as the leading blockchain for smart contracts.
However, nothing is certain. The Ethereum blockchain still remains the best blockchain and is itself transitioning from the Proof of Work consensus to Proof of Stake and there are a few other projects with potential to surge in popularity in the future.