Cardano is one of the most innovative and well-known projects in the field of cryptocurrencies. The Ada token is the fourth largest cryptocurrency by capitalization and has experienced significant growth in the last year. Cardano Ada is currently competing with Ethereum and Ripple for the place of the main altcoin , which is the set of all cryptocurrencies except Bitcoin cardano blockchain.
Cardano (ADA): what it is
Cardano Ada is a third generation cryptocurrency. But I start immediately by making a distinction between Cardano and Ada. Cardano is the blockchain on which the whole project is based, while Ada is the cryptocurrency that is used within Cardano. When someone says they invested in Cardano, it means they bought Ada tokens. Same thing goes for Ethereum with Ether. Ada is the cryptocurrency that powers Cardano, allows users to transfer money and in the future to use smart contracts and applications within the blockchain.
The programming language on which Cardano is made is called Haskell. A little known but very powerful language. Haskell is also the language upon which Plutus, Cardano’s smart contract language, is based. Cardano is based on the Proof of Stake consensus protocol, and this is already a great innovation. In fact, Bitcoin and most Altcoins use Proof of Work. Don’t you know what changes between the two protocols? No problem, I’ll explain it right away.
Differences between Proof of Work (POW) and Proof of Stake (POS)
The main difference is in mining. In the POW, whoever has the most powerful computer can mine more cryptocurrencies. So if you want to mine more coins you need to upgrade your computer and use more energy. To date, with the competition that exists in mining, to earn something you need to have an extremely powerful computer and consume a lot of energy. It is no coincidence that a cryptocurrency based on POW consumes a lot in terms of energy.
In the POS, on the other hand, the mining system is completely different. In fact, miners can mine cryptocurrencies based on how many coins they hold. The more coins they have, the more they will coin. For this reason the POS is much more energy efficient, you don’t need a big computer or a lot of energy for mining.
Proof of Stake is also safer, faster and has lower fees. Therefore believe that in the future, a lot of cryptocurrencies will start using it.
More precisely, Cardano’s consensus protocol is called Ouroboros. It is extremely innovative and safe. Ouroboros makes Cardano one of the safest blockchains, as long as 51% of Ada are in the hands of honest people they will not encounter security problems.
How does Ouroboros work?
Ouroboros doesn’t allow anyone to mine a new block based on computing power, but the people (nodes) who will mine the next blocks are chosen first. To choose who will mine the block, an Ada is extracted and the person who owns it will be able to operate. The more Ada you have, the greater your chance of being chosen.
Each block chain is divided into epochs, which in turn are divided into periods. Each period corresponds to a block. One person is assigned to each period.