Previously, the Ethereum blockchain was unique in being able to offer smart contracts that allowed developers and service providers to deliver anything they wanted to consumers, from financial services to retail sales and engineering. However, there is a new project on the block(chain) that is in the process of developing a next-generation smart contracts platform.
Cardano is one of the world’s biggest blockchain projects to date, based upon scientific philosophies and peer-reviewed academic research. The Cardano platform is designed to offer decentralised applications (dApps) and allow for the deployment of smart contracts with unrivalled security and scalability, compared with the likes of Ethereum. The Cardano crypto coin (ADA) has seen its price rise significantly since launch to become one of the top ten cryptocurrencies on the market. Subsequently, many of the world’s top crypto trading brokers and exchanges now allow investors to buy Cardano ADA.
- A smart contracts platform to rival Ethereum
- A platform to build and power dApps
- The world’s leading blockchain project underpinned by scientific and academic research
- Cardano (ADA) in the world’s top ten cryptos by market capitalisation
What is Cardano?
Cardano is widely regarded as the most popular third-generation blockchain platform. This open-source project is designed to facilitate the deployment of smart contracts and dApps in an unprecedented way.
While Ethereum has long since struggled with network congestion, Cardano has been built from the ground up using scientifically proven research to offer an exciting alternative to Ethereum (ETH). There are striking similarities between Cardano and Ethereum. Just like Ethereum’s Ether, Cardano’s ADA crypto token acts as a fuel for the Cardano network. However, it is not just a cryptocurrency. It is a platform in its own right that, when fully-fledged, will be able to facilitate financial applications used daily by consumers, businesses, high street banks and governments worldwide.
What is its purpose?
ADA is the cryptocurrency that powers the Cardano blockchain. Owners of ADA can send it to other crypto users and it can also be used as a legitimate payment method for goods and services, or to deposit funds into a cryptocurrency exchange account.
ADA is also required to finalise a financial transaction through Cardano’s settlement layer, which we will go into in greater detail shortly. Any decentralised application built on the Cardano network will also utilise ADA as its native token for in-app purchases etc.
Cardano is unique in that its multi-layered architecture enables smart contracts to be deployed on an alternative layer to where the initial transaction is made. This architecture will hopefully facilitate a host of advanced smart contracts on the Cardano blockchain.
The team behind Cardano
At the time of writing, three leading organisations contribute heavily to the development of the Cardano blockchain. The Cardano Foundation is a not-for-profit organisation based in Switzerland, which aims to educate and develop the number of Cardano users. IOHK is the second integral organisation behind Cardano as it is contracted to develop the overall Cardano platform until 2020 at the earliest. Emurgo is the third and final partner, providing venture capital for fintech start-ups and commercial ventures to build dApps on the Cardano blockchain.
How does Cardano work?
The Cardano platform comprises two layers – the Cardano Settlement Layer and the Cardano Computation Layer. Both of which are designed to offer flexibility for businesses to tailor smart contracts for their internal requirements and those of their consumers.
Cardano Settlement Layer
This is the Cardano network’s balance ledger. A proof of stake (PoS) algorithm is adopted here to create new blocks on the Cardano blockchain and authorise new transactions. It was designed and built by IOHK in conjunction with the University of Edinburgh, the University of Athens and the University of Connecticut. There are similarities between Cardano’s Settlement Layer and Bitcoin, which we will explore in greater detail shortly.
Cardano Computation Layer
The Cardano Computation Layer is the extra layer upon which smart contracts can be deployed. Cardano’s development teams are currently hard at work to design a unique programming language that can build and execute smart contracts. This will be known as Plutus. Side chains have also been incorporated to link transactions between the Settlement and Computation Layers. Cardano’s multi-layer architecture should also make it simpler for soft fork updates than its predecessor, Ethereum.
What is Cardano and how does Cardano work for real life uses? The Cardano whitepaper stated when the project began to gather momentum that the “overall focus” was to “provide a more balanced and sustainable ecosystem that better accounts for the needs of its users as well as other systems seeking integration”.
It is hoped that as the months and years go by and the Cardano blockchain’s userbase expands, Cardano will offer the following real-life uses:
- As a next-generation payment protocol, designed to offer swift and economical transactions between cryptocurrency users
- The creation and deployment of second-generation smart contracts, which could incorporate a plethora of decentralised applications made to enhance a wide range of industries
- The building and resources of dApps released on the Cardano blockchain
- The digitisation of physical assets
How does Cardano compare to Bitcoin?
What is Cardano about and how does it compare to original cryptocurrencies such as Bitcoin? There are similarities regarding Cardano’s Settlement Layer and Bitcoin. The Settlement Layer stores and accounts for value and is a standalone blockchain powered by a crypto token known as ADA. Crypto experts suggest that the Settlement Layer is what Bitcoin would look like today if it was to be rebuilt from scratch.
At an objective level, Cardano has significant potential to outsmart Bitcoin. Bitcoin transactions cost more, take longer and its network requires far more resources to process just seven transactions per second. Cardano’s proof-of-stake offers faster, cheaper transactions and it’s little surprise given that Cardano’s development team has proven scientific and academic research – and several years of industry learning – on its side.
How can you get Cardano?
Even though Cardano (ADA) is a burgeoning cryptocurrency token and many people are still unclear as to how Cardano works, there are already several ways you can get your hands on ADA tokens.
You can buy it
What is Cardano (ADA)? Even if you are unconvinced of how Cardano works and the potential benefits of its multi-layer architecture, there is no doubt that the price of Cardano will be subject to plenty of interest in the coming months. That’s because organisations are likely to grow increasingly accustomed to the benefits of Cardano’s smart contracts platform in comparison with Ethereum’s original infrastructure.
Given that Cardano is already one of the top ten cryptocurrencies by market capitalisation, several cryptocurrency exchanges already offer ADA markets to buy ADA tokens. Meanwhile, contracts for difference (CFD) brokers enable crypto traders to profit on the price moves of ADA without having to physically own or store ADA tokens in a software or hardware crypto wallet. If the idea of trading the price action alone appeals to you, be sure to read our review of eToro, which is our recommended CFD crypto broker.
You can trade it
If you are still unsure how to get Cardano online, it is also possible to make short-term trades on ADA tokens using CFD brokers such as eToro. It’s no secret that the price of burgeoning cryptocurrencies like Cardano are exceptionally volatile. However, that volatility is welcomed by day traders that get the chance to make small, consistent profits by buying and selling the price of ADA each day. If you are familiar with the concept of retail or day trading via the forex markets for example, trading Cardano and other leading altcoins could work well for you.
You can mine it
The Cardano network permits the cryptocurrency mining of ADA tokens via its new proof-of-stake algorithm known as Ouroboros. This algorithm negates the need for resource-heavy proof-of-work protocols, which acts as a barrier to scaling mining operations for many other blockchain-based cryptocurrencies.
Get it for free!
Those new to investing in emerging altcoins such as Cardano can claim tiny percentages of ADA tokens for free using Cardano faucets. Some websites dish out fragments of ADA tokens every hour, simply for completing straightforward captchas, downloading mobile apps and completing short surveys.
How to store Cardano
If you are keen to know how to get Cardano and store your ADA tokens physically, you will be required to open and set up a cryptocurrency wallet to house your altcoins. There are ‘hot’ crypto wallets which are web-based. Coinbase is one of the leading hot wallets, but does not currently support altcoins such as ADA. ‘Cold’ crypto wallets such as the Trezor or Ledger Nano S are devices that help to protect your digital assets offline.
If the idea of forking out for a cryptocurrency wallet and stressing about the security of your digital assets seems too much to bear, you can always trade the price of Cardano using one of our approved CFD brokers. Of all the leading brokers we’ve reviewed and rated, our review of eToro rates it as the most regulated and liquid platform for buying and selling the price of ADA and hundreds of other cryptocurrencies.
Cardano advantages & disadvantages
- Wholly open-source
- Platform built using impregnable Haskell language
- Smart contracts infrastructure capable of handling commercial level usage
- Proof-of-stake mechanism allows for Cardano mining
- Still a largely unproven platform
- IOHK only contracted to develop network until 2020
Should you invest in Cardano or not?
Hopefully, this comprehensive guide has made it easier to understand what is Cardano about and how Cardano works. There’s no doubt that the “Japanese Ethereum” has great potential for those interested in smart contracts functionality. However, there is still a long way to go for the Cardano project. Many people outside the crypto space are still unaware of what Cardano is about. Given its growing exposure in Japan – where cryptocurrencies are warmly embraced – it’s a good time to consider adding to your crypto portfolio, see eToros platform to copy expert investors crypto portfolios.