What is Cardano?

Cardano's "ADA" tokens are named after Augusta "Ada" King, a 19th-century British countess known for her work on a theoretical computation engine. She is widely regarded as the first computer programmer. 

The token launched under the supervision of Charles Hoskinson, the co-founder of etherum.Hoskinson parted ways from his fellow co-founder Vitalik Buterin after the latter wanted ethereum to remain a non-profit project. Hoskinson, however, wanted to accept venture projects to advance ethereum. Thus, Cardano was born and remains under development by the for-profit Cardano Foundation. 

Cardano is the first cryptocurrency based on a proof-of-stake network instead of proof-of-work . In PoW networks such as Bitcoin, miners are responsible for validating transactions on the public blockchain ledger by solving complex algorithmic puzzles via graphics processing units. However, the mining difficulty increases exponentially over time, so miners need to purchase more advanced GPUs as time progresses, consuming more electricity. 

Anyone who had multicore central processing units (CPUs) could mine Bitcoin at about 50 per block in the early days, which should be worth about $2 million this present day. Now, however, you would need a processor that is 2.2 billion times more powerful to keep up with the mining difficulty. All of this has severe environmental implications. One Bitcoin transaction currently uses as much power as about 1.2 million Visa transactions. By the end of the century, Bitcoin's energy consumption could surpass worldwide power production. 

This isn't supposed to be an issue with Cardano's PoS system. In this setup, those who own the token, known as stakeholders, validate transactions instead of miners. Large stakeholders can earn an "interest" of 6.59% per year by running a stake pool. Those with smaller stakes can also delegate their Cardano tokens to a stake pool, earning roughly the same gross return before a commission of 3.91%. But keep in mind that there are 32.9 billion Cardano tokens in circulation out of a total of 45 billion. So the inflation-adjusted return is lower less than 2%.  

Investors can both earn passive income from staking and capital gains from price appreciation. At the same time, the network probably uses as much power as a town of a few thousand people compared to Bitcoin, which eats up the equivalent of the entire power supply of Chile.

The token is becoming steadily more innovative. Last year, the Cardano Foundation launched sharding for the tokens, which allows the partitioning of the network into local nodes (stakeholders). This enables faster processing times of 1,000 transactions per second per node. By the end of the year, Hoskinson plans to integrate smart contract functionality, allowing Cardano to match the utility of Ethereum. 

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