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What is Cardano?

Eystein Hansen
January 11, 2023
3 min

Blockchain technology has the potential to transform the way we store and transfer data and value. One project that is leading the charge in this space is Cardano, a decentralized public blockchain and cryptocurrency platform that is focused on security and scalability. In this article, we will explore the key features and technologies of Cardano.

Cardano is a decentralized public blockchain and cryptocurrency project focused on providing a secure, scalable, and flexible platform for the development and execution of smart contracts and decentralized applications (DApps). Cardano was founded in 2015 by Charles Hoskinson, co-founder of Ethereum, and is developed by the IOHK research group. Cardano uses a proof-of-stake consensus algorithm called Ouroboros, designed to be more energy efficient than proof-of-work algorithms like the one used by Bitcoin. Cardano is also notable for its use of a formal methodology for developing its blockchain protocol, as well as for its emphasis on security and regulatory compliance.

The native token of Cardano

The native cryptocurrency of the Cardano platform is called ADA. The cryptocurrency is named after Ada Lovelace, a mathematician who is considered to be the world's first computer programmer. The creators of Cardano chose to name the cryptocurrency after Lovelace to honor her contributions to the field of computer science. ADA is created through a process called "minting," which is the equivalent of "mining" in a proof-of-work (PoW) cryptocurrency like Bitcoin. In the case of Cardano, minting occurs through a process called "staking," which is a form of proof-of-stake (PoS) consensus. 

What is the Proof-of-Stake (PoS) method, and how does it work?

In a PoS system, the blockchain is secured by "validators," who are responsible for validating the blocks of transactions that are added to the blockchain. Validators can "stake" their ADA tokens in order to participate in the consensus process. The more ADA tokens a validator stakes, the higher the likelihood they will be selected to validate a new block of transactions.

When a validator successfully validates a new block, they receive a reward through newly minted ADA tokens and transaction fees. This process helps to secure the blockchain and ensures its integrity while also providing an incentive for validators to participate in the consensus process. The total supply of ADA is limited, and the rate at which new tokens are minted decreases over time, similar to how the rate of new Bitcoin creation decreases over time.

What types of projects are being built on Cardano?

Many projects are built on or utilize the Cardano blockchain in some way. Here are a few examples:

  1. Atala PRISM: Atala PRISM is a decentralized identity management platform built on the Cardano blockchain. It aims to provide a secure and portable way for individuals and organizations to manage and verify their digital identities.
  2. Plutus: Plutus is a smart contract programming language used to build decentralized applications on the Cardano blockchain. Many projects are smart contract based, such as decentralized financing applications.
  3. Project Catalyst: Project Catalyst is a governance and funding program for projects built on the Cardano blockchain. It allows the Cardano community to vote on proposals and allocate funds to support the development of new projects.
  4. Cardano NFTs: NFT stands for a non-fungible token, which is a type of digital asset that represents ownership of a unique item or piece of content. One example of an NFT project being built on Cardano is Itis a decentralized marketplace for NFTs that aims to bridge the gap between traditional publishing and new digital media.
  5. Marlowe is a domain-specific programming language expressing smart contracts on the Cardano blockchain. It is designed to be easy to use for non-technical users and domain experts, allowing them to create financial contracts and other applications without needing to have extensive knowledge of blockchain or programming.

Cardano is an open platform, and anyone can build on it.

This text is intended to inform and is not an investment recommendation.

Eystein Hansen
January 11, 2023
3 min
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