In somewhere a large number of different cryptocurrencies exist, what separates the best from the rest? Or better yet, how will be the crypto newcomers challenging the well-established mainstream players like Bitcoin and Ethereum? A simple answer: third-generation blockchain. This guide will explore the real history and current and future use cases of Cardano (ADA).
What Is Cardano? A Brief History
In 2017, the Ethereum co-founder Charles Hoskinson launched Cardano (ADA). Debuting with a market capitalization of approximately $600 million, ADA drew significant traction through the 2017 and 2018 crypto hype. During this period, ADA achieved a peak market capitalization of over $30 billion. A market-wide contraction after this saw ADA pull back to a market capitalization of $10 billion.
Regarded as a third-generation blockchain, ADA improves on prior generations by implementing a layered design architecture. This architecture addresses the key issues plagued by second and first-generation blockchains, specifically that of provisions for scalability, security, and interoperability. Having contributed to the development of Ethereum, Hoskinson understood these technical limitations and sought to handle them in Cardano.
In achieving this, the Cardano blockchain implemented two core components. Firstly, a settlement layer acts as where token holders can send and receive ADA with minimal transaction fees. Secondly, a computational layer contains some protocols. These protocols will be the backbone of the blockchain and help facilitate smart contracts and ensure security.
Unlike other cryptocurrencies, Cardano emphasizes a research-driven approach to create, having enlisted the aid of cryptographers and mathematicians for development purposes. The developers of Cardano believe this strategy will propel the adoption of its technology.
What Is Cardano? The Use Of Ada
Cardano is designed to be the perfect platform for large-scale, mission-critical decentralized applications (DApps) that may underpin the planet economy in the future. As a result, the platform is created to reach the necessary high-assurance functions, such as scalability and interoperability, needed for real-world applications.
Besides utilizing it as a store or transfer of value, you can find two primary use cases of ADA. Firstly, holders can delegate their stake to a pool permitting them to donate to the network and be rewarded proportionately. The amount of stake delegated to a pool is why the protocol elects who should add the following block to the chain.
Secondly, holders can also use their ADA in voting. Unlike other mainstream blockchain networks, token holders vote and decide on alterations to the protocol – not miners. To this effect, holders may use their ADA to vote on such protocols, ensuring all holders have a say.
In the foreseeable future, ADA will also be used to use smart contracts on the Cardano blockchain. Currently, smart contract development for Cardano has begun and is anticipated to be finalized in the very first half of 2021. Once complete, developers will utilize ADA to generate smart contracts and applications that operate on the blockchain.
Is Ada Safe To Invest In?
ADA is just a token that has received significant attention and quickly positioned itself as a high ten cryptocurrency by market capitalization. In employing a distinctive layered architecture as a third-generation blockchain, there is no doubt this attention has been warranted.
Compared to other mainstream cryptocurrencies such as Bitcoin and Ethereum, Cordano remains relatively new to the crypto scene. Although having implemented several features that improve upon second-generation blockchain, development continues to be continuing. Given these factors, investing in ADA continues to be largely speculative and would be appropriately held within a diversified crypto portfolio.
Besides this, it is refreshing to visit a blockchain project that takes an academic approach to develop new technologies.