The world of cryptocurrencies doesn’t have tutorials on where you should start and what cryptocurrencies are all the rage. In line with this, we’re here to help you learn about one of the biggest names in cryptocurrency that has loads of potential in the future—Cardano! (This is not financial advice, this post is for informational, educational, and entertainment purposes only!)
What is Cardano?
To put it simply, Cardano is a proof of stake cryptocurrency maid to tackle the looming problem of scalability, interoperability, and sustainability. For those who don’t know, PoS cryptocurrencies allow you to mine or validate block transactions based on how many coins you have.
How Cardano Counters the Three Main Problems of Cryptocurrency
Bitcoin’s network can only confirm 5-7 transactions per second due to its block size, largely surpassed by Visa’s ability to process tens of thousands of transactions per second. With this, the question for basically every cryptocurrency still stood—how will this project scale?
According to Hoskinson, it is a goal for developers to make their projects speed up as more users use a system and not slow down as many do. The network needs to speed up to be consistent for its users, meaning a blockchain should scale linearly to its usage.
Cardano solves or prevents this problem by using epochs. Epochs divide up who is responsible for validating certain blocks in the blockchain. They use slots and nodes to be more efficient. Slots can be divided up further to help the network scale. Nodes are the computers used by the people and the organizations running the blockchain. These people are suited to be nominated to become what is called a “slot leader.”
These are what allow Cardano’s proof of stake to scale, calling this system “Ouroboros.”
The concept of interoperability is a very old technological problem. Interoperability talks about the compatibility of a cryptocurrency network with other networks. Hoskinson realized that while other networks struggled with interoperability, users would find it hard to convert coins into other cryptocurrencies and vice versa.
Cardano allows people to easily bridge Cardano and cryptocurrencies under different blockchains through the KMZ sidechains protocol. The KMZ sidechains protocol makes it easier to convert one cryptocurrency into another, providing interoperability and convenience.
Since Cardano and most cryptocurrencies will be in charge of most of our finances, we will need a way to make sure that the system we are using is consistent and functional. Sustainability talks about the network’s ability to be a steady source of income to pay the bills while making improvements and ensuring that its community is continuously healthy and thriving.
Cardano resolves this problem by establishing a treasury within its system, collecting fees, and giving them to the people who contribute to their network. With this, Cardano has made a cycle of earning and paying back to its community, making them a self-sustainable cryptocurrency that also plans on improving itself along the way.
The Differences between Cardano and Ethereum
Although Cardano and Ethereum are both smart contract platforms, they have a few key differences.
Users with a lot of ADA usually have more power in the network compared to those who have less than you. Cardano has been a PoS blockchain since day one, and this means that they validate transactions according to how many coins you put at stake. Ethereum, on the other hand, is a PoW (Proof of Work) chain that is currently working on becoming a PoS chain.
Cardano is also deflationary, similar to Bitcoin. This means that there’s a fixed amount of ADA coins in the market. Ethereum, in theory, can mint an infinite number of Ether. In theory, this should mean that Cardano will increase in value in the future. Investing in crypto can be a daunting task. With how often the market fluctuates and the uncertainty of gaining a profit, a lot of new investors are reluctant to shell out tons of money.
Make small investments and test the waters on consistent cryptocurrencies like Cardano, and you’ll definitely be getting profit in the future!
Check out the video below, and be sure to watch our other trending videos on YouTube!