Cardano – All You Need To Know

Written by Austine Tracy

Forbes recently reported that Cardano’s price had surged up by 2000%.

Cardano, one of the top five largest cryptocurrencies, just launched the Alonzo hard fork that introduced smart contracts to the Cardano Ecosystem. The ADA token has experienced a huge surge in price movement —-  moving from $0.2 in the beginning of the year 2021, making an all time high of $2.96 on the 3rd of September.

Since the launch of the smart contract, Cardano has seen massive adoption and partnerships.

If you are looking to invest in Cardano, this guide was written to help you understand more about Cardano beyond the Fud and that the price is going up or down.

Cardano is a third-generation blockchain that uses the constraint of the first and second-generation blockchains to enhance its functionality. It is a layered blockchain technology that uses blocks to store data and validate transactions. It uses ADA as its native cryptocurrency.

Cardano is the third-largest cryptocurrency, with Bitcoin leading and Ethereum as the second according to coinmarketcap.com. It is a public blockchain platform and the largest cryptocurrency to use a proof-of-stake consensus mechanism.

According to Cardano’s website, Cardano was created to restore trust to global systems by availing a new standard in technology that is inclusive and open source.

Cardano is named after Italian mathematician and polymath Geralamo Cardano, since the project utilized rigorous scientific methods based on mathematical proofs to ensure flexibility and interoperability.

Its native cryptocurrency ADA,’ is named after English mathematician Ada Lovelace, who wrote the first algorithms used in computers, making her the first computer programmer. The creators of Cardano decided to honor her by naming its native Cryptocurrency ‘ADA’ and Its smallest subunit (0.000001 ADA) is called a Lovelace.

Cardano’s Founders/Team

Cardano, unlike most blockchain projects, did not start with a white paper but rather focused on embracing a collection of design principles, and engineering the best avenues for exploration. It was founded by Charles Hoskinson, an Ethereum cofounder.

After a dispute with Vitalik Buterin( Ethereum founder) in June 2014, Hoskinson left Ethereum on a six-month leave and was contemplating going back to mathematics. He was however approached by his former Ethereum colleague Jeremy Wood to form a new project called IOHK, an engineering company that builds cryptocurrencies and blockchains for corporations, government entities, and academic institutions. Cardano is IOHK’s key project. It designs, builds, and maintains the Cardano platform.

Cardano has support from EMURGO which is the official commercial and venture arm of the Cardano blockchain protocol.

Another supporter of Cardano is the Cardano Foundation. It is based in Zug, Switzerland and its core mission is to standardize, protect and promote the Cardano Protocol technology. 

At the Cardano Summit held on the 25th of September, 2021 Cardano announced a strategic partnership with DISH network(an American television broadcast provider and satellite network). The partnership would ensure maximum flexibility putting DISH in the driver’s seat of innovation. The partnership also aims at improving the identity, security, and privacy of the consumers. Several other partnerships trickled in during and after the summit. Including partnership with Chainlink.

Although Cardano’s development began in 2015, it was officially launched on the 29th of September, 2017.

Investment

Cardano was funded through an Initial Coin Offering(ICO). The currency debuted with a market capitalization of $600 million. By the end of 2017, it had a market capitalization of $10 billion and reached a value of $23 billion briefly in 2018. A general tightening of the crypto market however dropped its value back to $10 billion.

Having that most of Cardano is held by the public, not any private investors, Cardano is said to be one of the most decentralized blockchain.

What Problem is Cardano Solving

According to Coinbase, Cardano aims to be the most environmentally sustainable blockchain. It solves the problem of speed, flexibility and scalability present in Bitcoin and Ethereum.

 Cardano chain is able to process more than 250 transactions per second, whereas Bitcoin can process about 4.6 transactions per second and with Ethereum 1.0 it was slightly higher with about 15-20 transactions per second. Cardano can process higher transaction volumes than the first and second combined.

Bitcoin was the first cryptocurrency to be launched in 2009. Its downside is that it is energy-intensive and it is not turing complete and has an incomplete programming language, thus every attempt to modify it failed.

Vitalik Buterin taking note of these challenges Bitcoin has launched an alternative coin called Ethereum in 2015. This coin was less energy-intensive and allowed developers to create, publish and use applications on the platforms while securing transactions through a smart contract. Ethereum however uses a Proof-of-Work blockchain and this limits its flexibility and scalability.

Developed alongside Cardano is a native scalability solution, called Hydra. Hydra is a Layer 2 scaling arrangement that is built to run on top of the existing Layer 1 blockchain on Cardano. It uses state diverts to handle exchanges off-chain and uses the main chain ledger as the secure settlement layer. 

It introduces the concept of isomorphic state channels as it is loosely coupled to the main chain. The isomorphic state channels would use the same ledger representation again to provide uniform, off ledger siblings that are interconnected to the main chain. 

Each of these chains called Heads, can easily be created and provide native assets, NFTs, and Plutus scripting. According to a blog post from IOHK, the Hydra head protocol is currently being extensively tested and will soon become a solid and stable foundation for developers to build real-world applications. Each Hydra head can process 1,000 transactions per second and Cardano can handle 1,000 TPS per stake pool. Utilizing this innovation, Cardano can measure over 1,000,000 transactions per second making it the fastest blockchain.

Cardano was created to provide a more interoperable, and sustainable blockchain. It uses Ouroboros, an algorithm that uses Proof-of-Stake(PoS) protocol to mine blocks. The protocol is designed to reduce energy expenditure during the block production process to the minimum. 

Ouroboros replaces miners with validators. It requires a few ADA holders to be online and maintain good network connectivity. This means that transactions can be validated cheaply and quickly.

Seeing the advantage of the Proof-of-Stake mechanism, Ethereum 2.0 intends to move from Proof-of-Work to Proof-of-Stake Model. Since Cardano is the first mover in this field, It is at an advantage.

Cardano has an academic backing, each of its developmental phases is supported by a research-based framework. Many academic institutions work for IOHK and write papers on what they propose would improve the project. This makes Cardano credible and creates a strong foundation for progress.

Cardano is energy efficient. Its energy usage per year is estimated to be 6 gigawatts hours, whereas Bitcoin uses about 90 000 gigawatts hours, and Ethereum uses 45 000 gigawatts hours.

Developmental Eras Of Cardano

Cardano has gone through five eras of developmental phases namely; the Byron era, the Shelley era, Goguen era, Basho era, and Voltaire era.

1.) Byron Era (Foundation Era): The Byron era began when the first version of Cardano was shipped in September 2017. It allowed users to buy and sell ADA cryptocurrency on a federated network, running the groundbreaking Ouroboros consensus protocol. It also saw the delivery of Daedalus wallet (IOHK’s official desktop wallet for ADA), as well as Yoroi (a light wallet from EMURGO designed for quick transactions).

2.) Shelley Era (Decentralization Era): Shelley’s Era was officially launched on July 29, 2020. It was a transition to better decentralization. It decentralized the core of the system. This era saw the introduction of delegation and incentive schemes. The delegation and incentive scheme will allow and encourage users to delegate their stake to stake pools and be rewarded for their honest participation in the network.

3.) Goguen Era (Smart Contract Era): The Goguen era was expected to launch in March 2021. Mary’s hard fork was a huge update in this era that was deployed on March 1st, 2021 thanks to HFC ( Hard Fork Combinator). Usually, a hard fork results in the death of the previous protocol but with HFC, Cardano would retain Byron and Shelley blocks. This era adds the ability to build decentralized applications (Dapps). Another goal of this era is the use of Marlowe language to create Plutus, a purpose-built smart contract. It would enable those without technical expertise to craft their Smart contract.

The Basho era and Voltaire era however are yet to have a launch date.

Is Cardano truly decentralized

Decentralization in crypto entails the transfer of control and decision-making from a centralized entity ( individual, organization, or group) to a distributed network.

Cardano is a decentralized public blockchain. Through its Shelley update, it made efforts to be better decentralized, showing an evolution from a centralized ledger to a fully decentralized ledger. The core advantage of a decentralized ledger like Cardano is that no central authority is needed to verify a transaction of value between two parties.

Cardano’s team is hoping to be 50-100 times more decentralized than other networks through an incentive scheme that can support 1,000 stake pools. It also promised the technical capability to create decentralized apps for better function.

How and where to buy Cardano

  1. Identify a Cryptocurrency platform

The laws of one’s country should be considered when choosing a cryptocurrency platform. Some Countries placed restrictions on the purchase of crypto with banks, giving room for peer-to-peer trading. Some of the popular crypto exchange and investing platforms for Cardano are Coinbase, Binance, Kraken, eToro, Sofi, etc

  1. Create an account

You would need an account at the platform you choose to invest in Cardano. The platform usually asks for your full name, address, and phone number to set up an account. The platform may require that you set up two-factor authentication. Even if two-factor authentication isn’t required, it is advisable to set it up for greater protection.

  1. Verify your identity

After creating your account, you would need to verify your identity. Crypto exchange platforms do this to confirm the identities of clients and prevent illegal activities. The process of verification depends on the crypto exchange platform but you might be asked your date of birth, social security number, home address, a scan of a valid ID such as a driver’s license or passport.

  1. Deposit your currency and buy ADA

Check the payment method the exchange platform accepts and the fee you are expected to pay. The most common payment methods are Debit Cards, Credit Cards, and PayPal. For Countries with cryptocurrency restrictions, find a platform with a peer-to-peer trading option. The user can post trade advertisements to buy and sell crypto and then pay to receive cash for those transactions offline in person.

How To Stake Cardano

Shidan Gouran says, depending on how you stake Cardano, you can earn anywhere from over 1.9% to over 7%, with 1.9% requiring very little investment and a simple click of a button.

Staking Cardano can be as simple as delegating your ADA token in your wallet to a preferred pool and letting them earn passive rewards for validating blocks.

Unlike Ethereum which requires nodes to stake at least 32 ETH to run a pool, you can run a pool without owning ADA, in this case, you would just provide technical services to other users.

Staking on the Cardano network operates on a cyclical basis. To operate an independent staking pool, a staker must make sure their node is always online. Performance indicators identified by IOHK that can be used to choose staking pools are saturation rank, live stake, pool margin, pledge, cost per epoch, and produced blocks. Cardano staking can be done using Daedalus and Yoroi wallets.

According to Pool Stats, as of August 2021, ADA staking rewards can go as high as 30%( based on a 30-day average)

Where is Cardano listed?

Cardano is listed on several crypto exchanges with the ticker ADA. 

Most times, for a cryptocurrency to be listed in most reputable exchanges it has passed certain requirements for financial and regulatory viability in addition to a degree of trust from that exchange.

In trade, Cardano is commonly listed in exchange with fiat currencies ( USD, EUR) and cryptocurrency pairs like Bitcoin, Ethereum, Lite coin( BTC, ETH, LTC).

How to store Cardano

Cardano can be stored using E-wallets. If you need a highly secured and relatively convenient wallet, consider a hardware wallet like Trezor or Ledger.

If you want access to your ADA on the go, use a mobile wallet like Yoroi( Cardano only).

If you want an app-like convenience on your desktop, then consider Cardano’s desktop wallet Daedalus. It requires time and storage space to download the Cardano blockchain.

If you are considering convenience with less security, then use small amounts of your ADA with a web wallet like Ada Lite.

You can also use Daedalus to generate a free paper wallet that has similar security to a hardware wallet but with less convenience.

Price prediction for the next 2-4 years

According to Economy Watch, if Cardano’s smart contract upgrade is launched, it would have a bullish momentum and push towards the $5 mark within the next three months. It would be valued at $7-$10 if the bullish pattern continues. In 2025, it would head towards the $10 mark and in 2030, the coin would be worth $15.

According to Prime XBT, Cardano would go bearish and set up an epic short squeeze to an even higher ATH of near $10 before 2021 ends. In 2022-2023, It would first go through a bullish phase and then a bearish phase. In 2024-2025, Cardano could be on the track to take out $10.

According to Cryptoground, Cardano would reach $3.8123 in 2023 and $5.6816 in 5 years.

The truth is, no one knows what will likely happen next. For example, no one knew that Solana will move from $1.2 in January 2021 to $200 in the same year. So, who knows what will happen next? My advice is just invest in a solid project and let it be. Keep your keys safe and brace up for the future. And make sure you monitor your investment.

Conclusion

Cardano is a solid blockchain with an amazing team and one of the largest crypto communities. The price of Cardano might be low at the moment, at the time of this writing it’s under $2.3, however, I am super bullish on it, obviously, this is not financial advice as I am not a financial advisor. But I believe Cardano has so much potential and I can’t wait to be a part of something amazing.

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