In recent years, the cryptocurrency industry has experienced the advent of many new and exciting projects. One of them is Cardano and its coin. If you are new to the crypto world, you must have been hearing lots of stuff about the Cardano coin – ADA. Perhaps you are already beginning to wonder why so much buzz about the coin.
Well, many things make Cardano and its coin unique among the several cryptos that exist today. Apart from having a brand new technology backing it up, Cardano also has some amazing features that make it catch lots of attention in the crypto community.
In this post, we will be showing you everything you need to know about Cardano and its coin. If you are not sure what ADA really is, this guide will also provide excellent answers to your secret questions.
Some Light on What Cardano Really Is
Cardano was created in 2015 by a Honk Kong company called Input-Output Hong Kong (IOHK). The company is managed by Charles Hoskinson who is also a co-founder of Ethereum and BitShares. The basic idea behind Cardano’s creation was to create a blockchain that will be able to perform much better than other blockchains like Ethereum.
That means the big picture in the mind of the IOHK company was to make a blockchain that will process more transactions more quickly and with lower transaction fees. So, IOHK had to create something entirely new if they would be able to achieve these goals.
According to Charles Hoskinson, Cardano is a third-generation blockchain, while other blockchains like Bitcoin and Ethereum are first and second-generation blockchains. Like the Ethereum blockchain, the Cardano blockchain will also allow people to create smart contracts, which is a form of agreement between two or more people without the involvement of a third party. Once the predefined condition for the agreement has been set, everything else works automatically.
Cardano and ADA; Are the Two the Same?
It is not uncommon to see people confuse these two. Many think Cardano and ADA are the same. But the truth is that there is a slight difference between the two – they are not exactly the same. While Cardano is the name of the blockchain that allows people to send and receive funds, the name of the cryptocurrency they send and receive is ADA coin.
To understand this better, think of how Ripple works. Ripple is also the name of the blockchain while the cryptocurrency is XRP. So, if you are proposing to buy Cardano, what you are actually saying is that you want to buy ADA coin.
How Does Cardano Work?
Like we earlier mentioned, Cardano is slightly different from existing blockchains in the way it works. The blockchain works in two different layers. The first is the computational layer and the second is the settlement layer. This is entirely different from the conventional single layer common in the crypto world. That came as a plus for Cardano users.
Presently, only the settlement layer has been built. This allows people to send and receive ADA coins from one wallet to another – just the way users can transfer BTC between themselves. On the other hand, the computational layer is still being developed. Once it’s finally launched, it will allow users to create and enter into smart contracts.
Real-World Example of How Cardano Works
Let’s make this easier for you to understand how the two layers work by providing some real-world scenario. Let’s consider this example below:
Bernard needs the service of a pool cleaner to clean his swimming pool and get it ready for an upcoming event. Bernard enters into a smart contract agreement with a pool cleaner and the agreement is stored on the computation layer. The agreement is that the fund be automatically released to the pool cleaner as soon as the pool is cleaned.
When the smart contract is set, it is then transferred to the settlement layer, which allows the pool cleaner to be paid in ADA cryptocurrency once the job is done.
How Are ADA Coin Transactions Verified?
Cardano is a decentralized platform, which means it is not controlled or maintained by any one single authority. That means, like other blockchain networks, Cardano is also operated by miners. However, unlike some blockchains like Bitcoin, Cardano uses the Proof-of-stake (PoS) consensus mechanism to validate transactions. That makes validation and creation of new blocks on the blockchain more environmentally friendly, as it consumes less energy, and is also less costly because it doesn’t require expensive computing power to make it happen.
Instead, the PoS consensus requires people who want to validate transactions – called validators – to stake some of their ADA coins to help validate transactions. Upon completion of the task, they get a reward for the job by receiving additional ADA coins.
Validators are chosen at random but chances of validators are increased depending on the amount of coin staked. Because this type of system is more environmentally friendly and less costly, transaction fees are also lower.
Where is ADA Stored?
Like other cryptocurrencies, ADA coins can be stored in various crypto wallets. However, Cardano has its own official wallet designed to store ADA coins. It calls it Daedalus. But there have been some complaints lately about the functionality of the wallet. Some of them include being unable to connect to the network, transactions not reaching the receiver, and sync blocks.
That way, it is recommended you store your ADA somewhere else if you are not comfortable using Daedalus. You can consider some cold wallets like Trezor and Ledger NanoS because they seem to be more secure and reliable since they are operated offline.
What Can You Do with ADA Coin?
Like other cryptocurrencies like Bitcoin, ADA coin can also be used as a global payment system. The Cardano team promises to have tens of thousands of transactions processed per second on the platform, which will make it much more valuable than Bitcoin which only processes 7 transactions per second.
Also, apart from serving as a global payment system, ADA coin also allows people to create smart contracts and decentralized applications (dApps). This is one feature that is made available to everyone, and anyone – from governments to corporations, and even individuals.
Where Can You Buy Cardano?
The Cardano ADA coin can be purchased from any exchange platform that offers it. Some exchanges that come recommended are Coinbase and AnyCoinDirect. You can check them out first to see which of them will work best with your needs.