Cardano is an open-source blockchain project to run financial applications used by businesses, consumers and governments worldwide. It can send and receive digital money and ensure fast, direct, and cryptographically secured transfers. The project features multi-tiered development that allows the dedicated team of coders and engineers to maintain and update the blockchain with soft forks easily. ADA is the currency token of the blockchain.
Like Ethereum, Cardano aims to acquire the ability to run decentralised applications or dApps in the future. Once work on the settlement layer for ADA is complete, the Cardano team will build a processing layer for smart contracts in line with financial regulations and legal frameworks. Unlike other blockchain projects, Cardano takes a research-driven approach to solving today’s consumers’ significant problems.
Cardano is the only project to take a scientific approach to develop its blockchain, which is being built by an expert (Charles Hoskinson) and experienced team of engineers and academics. The main goal of the blockchain is to provide a scalable, robust and secure technology for running financial applications that can be used by millions of consumers every day. For this reason, the project team has taken the same meticulous approach as with mission-critical banking systems.
The long-term vision of blockchain and its cryptocurrency aligns the challenges and requirements of both users and regulators, providing an opportunity for them to engage and interact seamlessly. This innovative style of regulatory digitalisation is likely to bring financial freedom and inclusion to many millions of users around the globe who currently lack access to financial services for various reasons. On the one hand, the underlying network can bring regulatory efficiency, and on the other, the ADA token will ensure the fast and affordable transfer of funds.
How does Cardano work, and which technology is behind it?
Cardano follows a slightly different model compared to other blockchains. Its blockchain has two layers, a base layer and a computation layer. The first layer has been completed, and it is now functional. It allows consumers to send and receive Cardano (ADA) tokens from one wallet to another. It uses a similar method to that used by Ether (the Ethereum Network). The second layer is under development and will allow users to create and complete smart contracts. Although it may sound similar to the Ethereum blockchain, Cardano has some advantages over ETH.
First of all, Cardano is more adaptable as it can be modified according to the end users’ needs. For example, different countries have different financial and currency regulations. The same contract can be written to change the way information is stored, processed and accessed according to these regulations. And because the calculation layer is separate, ADA users in different countries can still use the same currency while complying with various laws and regulations.
The calculation layer also allows the Cardano project team to make changes with soft forks without using the ADA or base layer. To verify transactions, Cardano uses the proof-of-stake consensus protocol. Users who want to participate are called validators, and they have to invest a certain amount of ADA coins in showing that they are “involved” in this whole process. In addition, they are also rewarded based on their “stake” in ADA.
Cardano's Status, Fees & Costs
Although ADA offers low fees and instant transactions, the smart contract layer is still under development. This means that Cardano is still far from becoming a currency that can be used to buy products and services on a daily basis. Moreover, one should be mindful that Cardano is not just trying to be another currency substitute but a complete smart contract network that even allows countries to ensure compliance while providing affordable and convenient means of transferring money to their citizens.
For this reason, it may take two to three years to complete the second layer. Cardano has a better chance than many other cryptocurrencies and blockchains because it has opted for a scientific approach that incorporates input from engineers and industry experts. And although the effort is higher, Cardano will not have the same problems that other blockchains face.
The minimum transaction fees for Cardano (ADA) can be calculated using this formula: – x + y × size.
In the equation above, ‘x’ is a unique constant valued at 0.155381 ADA. On the other hand, y is a unique constant whose value is 0.000043946 ADA/byte and is the size of the transaction in bytes. This means that there is a fee of at least 0.155381 ADA for each transaction and an additional cost of 0.000043946 ADA per byte of the transaction size.
Since the project is still under rigorous development, the transaction fee is subject to change. And apart from the network, you also need to make room for the commissions, fees and costs associated with buying ADA and withdrawing your money from various crypto exchanges and trading services.
Can Cardano be used anonymously?
Although many people mention anonymity as one of the main features of any cryptocurrency, the truth is that it has increasingly become more of a gimmick than anything else. Yes, cryptocurrencies and digital assets are comparatively anonymous, but if you buy coins from an exchange or trading platform that applies Know Your Customer (KYC) regulations, you will have to provide personal details for account verification. Otherwise, you are forced to take a risk with a lesser-known exchange that does not have KYC procedures.
Furthermore, everything you do on the internet leaves a digital footprint, which means you are always traceable to governments and hackers who are technically able to find out. If you want absolute anonymity and secrecy, ADA or any other cryptocurrency is not the solution you are looking for. Hard money is still the best option in this regard, as there is no digital trail for anyone to follow.
How secure is Cardano?
Cardano is developed by a team of engineers who are experts in their field. In addition, the layers for ADA tokens and smart contracts are separate, which provides an extra security cushion. The cryptographic encryption ensures that the blockchain cannot be compromised and wards off cyberattacks that could violate its integrity and expose user data.
Which teams are working on the development of Cardano?
Three large teams are working on the Cardano project. Cardano is a relatively new project compared to other cryptocurrencies, which means that there are only a few sub-projects in development. The three main teams working on the project are:
This is the largest team based in Switzerland working to grow the Cardano ecosystem and launch Cardano. In addition, its responsibilities include shaping commercial standards and laws that promote the global Cardano community, ensuring stakeholder accountability and establishing long-term partnerships. The team also monitors and oversees the growth and development of the blockchain and its ecosystem.
The second team is the input-output engineering organisation that works with companies, government departments and academic institutions to build blockchains and cryptocurrencies. This team provides the necessary technical support to Cardano to ensure they are on track while meeting their goals.
Emurgo is an international blockchain tech company that provides robust solutions to governments, corporations, startups and developers. This team was tasked with developing a fully-featured crypto wallet for Cardano to provide users with a solution for securely storing their ADA tokens.
Since Cardano is an open-source project, hundreds of developers contribute to it daily, improving the codebase. This popularity among the developer community has enabled Cardano to secure tremendous growth in a short time.
Which financial institutions are involved in Cardano?
There is no indication that any financial institution or bank is financially or strategically invested in the Cardano project as of yet. As the Cardano Blockchain is still under development, making compliance functional, it is logical to believe that financial institutions are currently holding back to find out if Cardano will become a regulatory solution they seek. Moreover, as Cardano aims to ensure compliance with regional regulations, it may need to engage governments at the state and national level to become viable for its intended use. This could be another reason why banks and financial institutions are not yet invested.
Cardano is a project backed by world-class engineers and industry experts who have taken a scientific approach to build a blockchain and its ecosystem. Therefore, it has a high potential to attract investment in the future.
Since the Cardano project uses the Proof of Stake protocol, it cannot be mined. It would be best if you acquired a stake by depositing ADA to be rewarded by validating transactions.
A wallet is a hardware storage device or software used to store cryptocurrencies such as Bitcoin, Ethereum and Cardano. It enforces multiple layers of security to keep your funds safe while reducing the likelihood of you losing them. If you want to store Cardano most securely, it would be best to use one of the following wallets:
- Daedalus Wallet
- Yoroi – Cardano Wallet (Google Play)
- Ledger (Cold Wallet)
- D’CENT (Cold Wallet)
- Atomic Wallet
Is Cardano worth investing in?
Cardano (ADA) is the first cryptocurrency and blockchain-backed by a scientific approach. This is a huge benefit and means that it has a much better potential for success compared to other cryptocurrencies. However, it is still in development, and we cannot simply rule out the advantage of early market entry that other blockchains have.
In addition, prices in the market are often unpredictable, and you never know which way they will go. Therefore, you should be vigilant and ensure that you only invest in ADA if you are convinced of its potential for success. Always listen to what experts say and keep an eye on the news. Never invest more than you can and try a dollar-cost-averaging strategy.