What is the Cardano Project (ADA)?
Cardano is a third-generation decentralized blockchain platform that uses a Proof of Stake mechanism.
Cardano shares characteristics and applications with other blockchain platforms such as Ethereum.
Cardano differentiates itself from others by sticking to the scientific research that researchers and developers review as the building blocks for updates to the platform.
There are three organizations responsible for the development of Cardano, namely:
The first two are non-profit organizations and the third is a for-profit entity.
IOHK, building Cardano, works with a team of academics spread around the world to produce research and review platform updates prior to implementation to ensure they are scalable.
Understand Cardano more:
Charles Hoskinson, the co-founder of Ethereum, started the development journey of Cardano in 2015 and launched the platform in 2017. Cardano has positioned itself as an alternative to Ethereum.
Both systems are used for similar applications, such as smart contracts, and have goals to build a decentralized connected system.
Cardano considers itself an updated version of Ethereum and has established itself as a third generation platform on the credentials of the second generation of Ethereum.
The Cardano platform also aims to provide banking services to the unbanked in the world.
Cardano's main applications vary, most notably identity management and traceability.
Cardano can be used to simplify and simplify operations that require data collection from multiple sources.
Cardano can also be used to trace and audit a product's manufacturing processes from source to finished and finished goods, possibly eliminating the market for counterfeit goods.
“Ada” is Cardano’s digital currency and is named after “Ada Lovelace,” a nineteenth-century Countess and English mathematician recognized as the first computer programmer.
Application examples from Cardano:
The organizations behind Cardano have released three products:
"Atala PRISM, "Atala SCAN" and "Atala Trace".
The first product is marketed as an identity management tool that can be used to provide access to services.
For example, it can be used to verify credentials to open a bank account or eligibility for government assistance.
Other producers are used to track a product's journey through the supply chain.
Cardano is also developing a smart contract platform that will serve as a stable and secure platform for developing enterprise-grade decentralized applications.
In the near future, the team at Cardano plans to use a democratic on-chain governance system called “Project Catalyst” to manage project development and implementation.
They will also revamp their treasury management system to fund future costs using Project Catalyst.
Cardano business requirements:
The core of any blockchain platform is the algorithm it uses to create blocks and validate transactions.
Cardano uses Ouroboros, an algorithm that uses the Proof of Stake (PoS) protocol to mine blocks.
The protocol is designed to minimize energy expenditure during the block production process.
It does this by eliminating the need for hash power, or massive computing resources, that are central to the functioning of the Proof of Work (PoW) algorithm that Bitcoin uses.
In Cardano's PoS provisioning system, the pooling determines the ability of a node to create blocks.
A node's share is equal to the amount of ada, which is Cardano's cryptocurrency, that you hold for the long term.
How does Ouroboros work?
On a broad level, Ouroboros operates as follows:
Time is divided into slots consisting of specific time periods.
Slots are like factory shifts.
Currently, the epoch lasts five days, and the time period lasts one second, but these numbers are configurable and can be changed after an update is suggested.
The vents operate in a circular fashion: when one ends, the other begins.
Each slot contains a slot leader who is chosen by the lottery system.
In this system, the higher the bet, the better the chances of winning the lottery.
Slot commanders are responsible for the following tasks:
Create transaction blocks:
Add newly created blocks to the Cardano blockchain
Ouroboros requires a few Ada holders to connect to the Internet and maintain a good network connection.
To further reduce power consumption, the algorithm contains the concept of cryptocurrency pools.
Ada owners can organize themselves into stakeholder groups and select a few of them to represent the group during the implementation of the protocol, facilitating participation and ensuring that the block is created even if some are offline.
The contributor pool is a trusted server node that commits to running the protocol 24/7, on behalf of the contributor ada holders.
Cryptocurrency blocks own the common stake of the different stakeholders in a single entity and are responsible for processing transactions and producing new blocks.
In a Proof of Work (PoW) system, the economic incentives for miners to participate in the network work and create blocks are rewards with cryptocurrency and transaction fees.
Ouroboros collects rewards from an era and distributes them to stakeholder groups.
Each of them is rewarded based on the percentage of stake contributed by the users, which means the higher bet will get more rewards.
What is a Cardano wallet?
Cardano wallet is basically a tool that enables interaction with the Cardano blockchain.
This way you can send, receive, store and share the original ADA Cardano cryptocurrency.
Some wallets have exchangers built in so that you can also buy or exchange ADA.
With so many security threats in the cryptocurrency world, it is very important to use a secure Cardano wallet.
Leaving the ADA (₳) in the trading platforms is not a smart idea as it puts them at risk of theft or hacking.
SteveThere is also the opportunity to get free ADA rewards by stacking and stake them.
How does the Cardano wallet work?
When setting up a new Cardano wallet, a pair of keys is generated - a public key and a private key.
Your ADA wallet address is generated with the public key and you can share it to receive ADA.
When the ADA is sent, the private key is used to digitally sign the transaction which can then be added to the Cardano blockchain ledger. This means that the private key must remain secret.
Depending on how the wallet handles your keys and other functions, we can distinguish between hot and cold Cardano wallets.
Hot Cardano Wallets vs. Cold Cardano Wallets:
A hot Cardano wallet is basically any wallet that can manage ADA and is connected to the internet.
These can also be trading platforms or custodians that control both keys, which means control of the cryptocurrency.
There is a saying that says:
If you don't own the private keys to your cryptocurrency, you don't own them.
Cold wallets are hardware wallets. Examples of physical hardware include:
"Ledger Nano X" or "Trezor Model T".
These wallets store your private keys and secure them offline.
They are usually judged as cool wallets.
Ledger Nano X and Trezor Model T hardware wallets work perfectly with Daedalus and Yoroi wallets.
You can also share your ADA safely and earn passive income for it.