What Is Cardano (ADA) And Should It Be In Your Crypto Portfolio?

Key Takeaways

• Cardano (ADA) is a decentralized blockchain platform designed to be more efficient and scalable than existing options, particularly Ethereum.

• The project tackles scalability challenges through a unique proof-of-stake consensus mechanism called Ouroboros, which is considered more energy-efficient than the proof-of-work system used by Bitcoin.

• Charles Hoskinson, a co-founder of Ethereum, envisioned Cardano as the next-generation blockchain platform to address the limitations of previous technologies.

Cardano (ADA) is a public blockchain platform designed to be a more efficient and scalable alternative to other blockchains like Bitcoin and Ethereum. The project prides itself on its foundation built on academic research and peer-reviewed development.

Cardano was founded in 2015 by Charles Hoskinson, who was also a co-founder of Ethereum. He envisioned Cardano as a next-generation blockchain platform that would address some of the limitations of existing technologies.

How Does Cardano (ADA) Work?

Cardano (ADA) functions as a blockchain platform with its own cryptocurrency, similar to Ethereum. Here’s a breakdown of how the project works:

Two-Layer Architecture

Cardano uses a two-layer architecture to separate transaction settlement from smart contract execution, enhancing security and scalability.

• Settlement Layer (Shelley) – Based on Ouroboros proof-of-stake, this layer handles block validation and transaction settlement. ADA holders can stake their tokens to participate and earn rewards.
  
• Computation Layer (Voltaire) – This layer, which will be updated in the future, will run smart contracts and dApps and ensure scalability for complex applications.

Ouroboros Proof-of-Stake (PoS)

Unlike Bitcoin’s energy-intensive proof-of-work, Cardano uses Ouroboros PoS. Here’s how it works:

• Stakeholders lock up their ADA tokens to become validators.
• The protocol randomly selects validators to create new blocks.
• Selected validators validate transactions and add them to the blockchain.
• Rewards are distributed to validators based on their stake.

Smart Contracts (Future)

While still under development, Cardano will eventually support smart contracts, allowing developers to build decentralized applications (dApps) on the platform.

Ongoing Development

Cardano is constantly evolving through a research-driven approach. The platform undergoes rigorous peer-reviewed testing before implementing new features.

Cardano (ADA) Token And Tokenomics

Tokenomics

The ADA token is Cardano’s native cryptocurrency. It is used for:

• Transaction Fees
• Staking
• Governance

Token Details

Total Supply 45,000,000,000 ADA

Circulating Supply 35,320,160,901

Current Price $0.4425

Market Capitalization $15,740,465,521

This information is current as of May 14th, 2024, and the token’s price, market value, and available supply may fluctuate.

Distribution

• Initial Coin Offering (57.6%)
• Staking Rewards (30.9%)
• Foundational Entities (11.5%)
  • Cardano Foundation – 0.648 billion ADA
  • IOHK – 2.46 billion ADA
  • Emurgo – 2.07 billion ADA

Where Can I Buy Cardano (ADA)?

Binance – Binance is a major exchange offering a wide range of cryptocurrencies. It offers multiple ways to buy crypto, including credit cards, debit cards, and peer-to-peer (P2P) trading.

Bybit – This exchange is known for its derivatives and margin trading features, but you can also use the platform for spot trading.

Coinbase – Coinbase is an American-based cryptocurrency exchange that allows you to buy cryptocurrencies using various payment methods, including bank transfers, debit cards, and wire transfers.

Is Cardano (ADA) A Good Investment?

Pros

• Security – Cardano’s development emphasizes peer-reviewed research, leading to a more secure blockchain foundation. Its layered architecture enhances security by separating transaction settlement from smart contract execution.

• Active Development – Cardano has a dedicated team that continuously researches and implements improvements to the platform.

• Energy Efficiency – Unlike Bitcoin’s energy-intensive proof-of-work system, Cardano utilizes a proof-of-stake consensus mechanism called Ouroboros.

Cons

• Slow Development – While thorough research is a plus for security, Cardano’s emphasis on peer-reviewed research can lead to slower development than some competitors. This might delay the launch of new features and functionalities.

• Competition – The cryptocurrency space is crowded, and Cardano faces competition from other smart contract-enabled blockchains, such as Ethereum, Solana, Polkadot, and among others.

• Difficult For Developers – Cardano’s smart contract development uses a programming language called Haskell. While powerful, Haskell is not as widely used as other languages like Solidity, which is used in Ethereum. This can make it harder to find developers familiar with the language and create a steeper learning curve for those wanting to build on Cardano.

Final Thoughts

Whether Cardano (ADA) is a good investment depends on your risk tolerance and goals. Remember, this guide only provides a starting point for your research. Always conduct your due diligence before making any investment decisions.