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crypto-basics

What is Cardano?

Matthew Levy
Matthew Levy

Cardano is a proof of stake¹ platform that uses blockchain to run smart contracts. The main goal of Cardano is to generate a system that is scalable and energy-efficient compared to other blockchain platforms like Bitcoin.

How does Cardano work?

Cardano does not use a proof of work mechanism to validate consensus within the network. This means that there’s no need for every node to verify a transaction. The proof of stake² concept used by Cardano requires users to stake their coins to become validators on the network. Its goal is to be a highly scalable and energy-efficient smart contract platform.³ The coin that is staked in the Cardano blockchain is ADA, which can be used for payments or storing value in the Cardano channel.⁴

Cardano has promoted the creation of several other tokens. These tokens do not run independently and use the ADA architecture for functioning. Cardano is a more sustainable approach to decentralized finance and supports several applications.⁵ It’s also efficient in establishing smart contracts using blockchain technology.

Example

Applications created in the Cardano network include digital wallets and payment systems. An example of a crypto wallet would be the Daedalus wallet that uses ADA as the underlying currency. It is an open-source platform offering secure storage services without any third-party servers.⁶

Sources

  1. Cardano
  2. Proof Of Work Vs. Proof Of Stake: Explained
  3. What is Cardano?
  4. How to Stake Cardano
  5. 3 Reasons Why Cardano is Looking Attractive Right Now
  6. Daedalus Wallet

Please note that this article is for educational and informational purposes only. The example is for illustrative purposes only.

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crypto-basics

Matthew Levy

Matthew Levy is a Chartered Financial Analyst (CFA) designation holder, a former portfolio manager for $600+ MM in assets, and started his own business writing financial analysis for clients worldwide