• Cardano's blockchain and its cryptocurrency, ADA, were created in 2015 by Charles Hoskinson, co-founder of Ethereum (ETH) and launched in 2017.

• Cardano and ADA have overcome the existing problems of other cryptos such as the slowness and inflexibility of Bitcoin, and the security and scalability issues present in Ethereum (ETH).

This is the case of Cardano and its native token ADA, which, according to CoinMarketCap currently ranks ninth in the cryptocurrency market with a market capitalization in excess of $4.5 billion.

The creation of Cardano (ADA)

The name Cardano honors Gerolamo Cardano, a physician, mathematician and astrologer who lived during the Renaissance in the 1500s. He is known for being one of the first exponents of cryptography by inventing the Cardano Grid, a method for writing and deciphering hidden messages.

On the other hand, the name of the Cardano token, the ADA, is given in honor of Ada Lovelace, a British mathematician, computer scientist and writer who lived in the 1800s. She is recognized in the digital world as the first computer programmer in history.

Cardano, and its cryptocurrency ADA, were created in 2015 by Charles Hoskinson, known for being the co-founder of Ethereum (ETH) and BitShares. Shortly after, in 2017, the project was released to the public.

According to Hoskinson, he had resigned from the Ethereum project after a boardroom fight with Vitalik Buterin and other top developers over the issue of keeping Ethereum Labs as a non-profit foundation, and other differences over the future of ETH, such as migrating from PoW to PoS, which would allow it to improve its scalability.

After leaving Ethereum buried in the past, Charles founded IOHK, a blockchain technology engineering company, whose main business would be to develop Cardano and its cryptocurrency ADA. But, they would not do it alone, but the Cardano Foundation would also be founded, together with Emurgo.

Cardano (ADA), the vision of the perfect crypto from the co-creator of ETH.

Cardano is the first blockchain created and reviewed by pioneers of the crypto ecosystem. The Cardano Foundation, created in 2015, brought together a group of academics and scientists from several major universities around the world, including the Tokyo Institute of Technology and the University of Edinburgh, to review the protocols in the 2 years it took for the blockchain network to be presented to the public.

On the other hand, ADA is the project's cryptocurrency, which helps blockchain users to operate the network. The blockchain's native token also serves as a management token as it allows members to vote on all possible changes to the project's software rules of the game.

But this is not the only objective pursued by this cryptocurrency, since, according to the Cardano team, ADA represents the future of money, making possible direct, immediate transfers at almost no cost.

The team behind this project claims that Cardano and ADA have overcome the existing problems of other cryptos such as the slowness and inflexibility of Bitcoin, and the security and scalability issues present in Ethereum (ETH).

The Cardano team defines its platform as "A Blockchain platform for creators, innovators and visionaries with the tools and technologies needed to multiply possibilities for the many, but also for the few, and generate positive global change."

Cardano and ADA features

Like Bitcoin, the team behind the crypto decided to set a total number of ADAs that will be able to exist which 45 billion tokens.

In addition to this feature, the blockchain and its token possess other characteristics that differentiate it from other cryptos such as its consensus method, or its block creation. Let's analyze each of the qualities of Cardano and ADA.

Ouroboros, Cardano's consensus method

Cardano is an open source blockchain, which uses the Proof of Stake (PoS) consensus method when validating transactions.

Cardano's consensus algorithm is a bit different from a common PoS, first of all its scalability, security and speed is "scientifically provable" through formal review methods by different academics and universities around the world.

The PoS of this blockchain is called Ouroboros, like the symbol represented by a snake eating its own tail which symbolizes the eternal cycle of things. Ouroboros is designed to always achieve the maximum level of decentralization in the Cardano blockchain.

Creation of blocks

Block creation in the Cardano network is divided into "Epochs" and "Slots", as a method to cope with the changing ADA distribution among its hodlers and, therefore, in the computational power assigned to each of them to validate transactions.

Epochs are defined by the Cardano team as Slots in which the Stake distribution is constant. At the beginning of each Epoch, a set of leaders is chosen, and each one is assigned the right to produce a block in a specific Slot by the blockchain's preset code.

In the Cardano blockchain, the distribution of Stakes (amount of ADA in the Walllet) of all parties interested in becoming a leader is recorded. This uses the network as a decision factor when choosing the next leader. For each Slot, there will be a leader randomly chosen from a pool of ADA hodlers to validate and incorporate into the blockchain the next block.

Blockchain governance

The selection of leaders in Ouroboros, and the allocation of Slots are chosen by means of several processes, the first one, the historical Stake of each interested party and, the second one, the randomization of the allocation. In which users with more ADA retained or in possession will have more chances to be chosen as the leader for the next block.

Third, leaders who have validated blocks before vote for the election of different leaders, thus ensuring incentives for all agents with no bad intentions against the network to always validate blocks.

Once transactions are validated by these leaders, they are transmitted to a second group of ADA hodlrs, responsible for maintaining order and governance in the network. These are mainly important project developers, or even the IOHK itself.

ADA tokens are also used to vote on software policies, such as its inflation rate, giving participants an incentive to maintain ADA and ensure its future value.

Transactions and rewards

On the other hand, this consensus method allows Cardano to be able to process between 50 and 250 transactions per second. Relatively faster than BTC which can do 7 transactions per second and Ethereum (ETH) in the 15 to 20 transactions per second.

But according to Charles Hoskinson, thanks to Cardano's upcoming updates, which do not yet have a final release date, the project's Blockchain will be able to validate up to 5,000 transactions per second, still far from competing with major competitors such as Visa (24,000 transactions per second).

Financial rewards are divided among 3 groups: Leaders, Stakeholders, and the promoters of the network.

How are new ADAs created?

As previously discussed, the maximum number of ADAs that can exist is 45 million units and there are currently over 31 million ADAs in circulation. Unlike Proof of Work mineable cryptocurrencies such as Bitcoin (BTC),the creation of new ADAs is not given to miners but to Stakeholders interested in becoming leaders.

Token ownership determines who gets to be a leader and add new blocks, and who earns a share of the fees paid for transactions generated in the two layers of the blockchain, always according to the ADA percentage in hodl.

A two-layer blockchain

Cardano is a two-layer open source blockchain network, the first layer is called "Cardano Settlement Layer" (CSL), it is used to settle transactions using ADA. In a nutshell, this means that the transactions of traders and ordinary ADA users are validated here.

La segunda es “Control Layer” (CL), la cuál siempre está en desarrollo, y se utiliza para la creación de Smart Contracts, Aplicaciones Descentralizadas (Dapps). This, in turn, is composed of different elements such as: Plutus, a platform for developing, and creating smart contracts; and Marlowe, which allows those without programming knowledge to put together their own Smart Contracts, designed specifically for the financial system, and entrepreneurs.

In addition, Cardano's blockchain supports multiple cryptocurrencies, which, in the future, could enable the transfer of cryptocurrencies between wallets through its blockchain.

In addition, Cardano's public code is built in the Haskell programming language, commonly used by the banking, military and strategic defense sectors.

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