Cardano is one of the cryptocurrencies, and this one aims to solve many problems that are plaguing Bitcoin in terms of scalability and energy consumption.
Cardano happens to be one of those promising cryptos claiming itself to be the better alternative in contrast to Bitcoins. The blockchain way of Cardano is getting into the eyes of the world, promising more scalability, security, and sustainability as compared to other cryptos. In this review, an attempt will be made to discuss what Cardano is in comparison to the world’s famous Bitcoin, further elaborating on the major features, technology, and differences that make Cardano a brand name in digital currency.
Takeaways
- Cardano is a blockchain network that was started by Charles Hoskinson in the year 2015, and the platform went live in the year 2017.
- It is a dApps platform that works on a multi-asset ledger that holds secure smart contracts.
- It operates on a proof-of-stake consensus protocol called Ouroboros, and its native token is called Ada.
What is Cardano?
Cardano is the blockchain network that was founded to help build an even stronger, more scaled cryptocurrency network. Founded in 2017 by Charles Hoskinson who, honestly speaking to the audience, co-founded the Ethereum project. Whose main objective was to empower humanity to build a system in which smart contracts for decentralized applications and other blockchain-based solutions could be possible. While the popular Bitcoin makes use of the proof-of-work type of consensus mechanism, the Blockchain uses the proof-of-stake type of consensus mechanism.
This is the reason behind the project Cardano, which brought to light something more sustainable, efficient, and secure than most other cryptos in the market. Its development style was different, and importantly, relies on peer-reviewed research as a strength for growth and innovation.
History of Cardano (ADA)
Charles Hoskinson was one of the co-founders of Ethereum and began working on it as far back as 2015 when he resigned after disagreements. The first block was mined way back in 2017 when it first went live.
It describes itself as a “third-generation” blockchain, building on the so-called “second-generation” Ethereum system. It also aims at banking the unbanked.
The Blockchain Foundation was established in 2017 as a not-for-profit, the governing body for the development process; it initially made use of a significant developer, IOHK, as its development company. Hard Forks To date, there have been four major hard forks on the blockchain: Shelley, Alonzo, Vasil, and Valentine.
The Shelley hard fork put Cardano into a natively more decentralized proof of stake system called Ouroboros. Alonzo had made an in-road to back smart contracts and opened up on the decentralized applications that natively can operate on Cardano. Vasil’s hard fork increased the scalability of Cardano further because of bigger blocks as well as even faster transactions. Valentine’s upgrade by February 2023 paved the way for many more cross-chain applications to become much more efficient while backing up other protocols for support.
Main features of Cardano
1. Proof-of-Stake Consensus: It uses the consensus algorithm where users can stake ADA, thereby securing the network via validation and not by a miner solving some difficult mathematical problems.
2. Smart Contract Capabilities: The ADA smart contract is called Cardano Script. Developers can develop decentralized applications with the highest security and flexibility.
3. Layered Architecture: It is a new approach towards design that involves having both the settlement layer referred to as the ADA Settlement Layer or CSL and the computation layer generally referred to as the Cardano Computation Layer or CCL. Again, it is an architecture that improves modularity as well as scalability.
How Cardano Works?
It uses the blockchain system with a consensus mechanism called Ouroboros proof of stake, replacing the miners with users “staking” their ADA tokens in order to validate transactions to help secure the network. This means ADA will use much less energy than other cryptocurrencies such as Bitcoin. The ability to run smart contracts is also supported by Cardano because it would allow a developer to create apps. Its layered architecture separates computation from the transaction process, which helps with scalability and flexibility.
What is Special in the Technology of Cardano Compartmented from Bitcoin?
Users are likely to hear some version of this when discussing the differences that exist between ADA and Bitcoin about one of the biggest differences has to do with their underlying technologies. Let’s compare them:
1. Consensus Mechanism: It uses the proof of work mechanism for which miners need to solve complex mathematical problems to verify the transactions. It consumes so much energy that it has invariably been qualified as a pollution producer.
For example, ADA uses a proof-of-stake system instead. In this system “validators” are chosen based on how much ADA each one is staking. It is also much more energy-efficient and scalable than the proof-of-work system used by Bitcoin.
2. Scalability: Bitcoin can only execute a few transactions per second, and this is why it’s constantly experiencing congestion and pushes up fees during peak. This is a significant dilemma Bitcoin was always going to face and has become often known as the “scalability trilemma.”.
ADA directly targets scalability amplification. The PoS mechanism does lead to a higher transaction throughput and maintains maximum decentralization. Thus, the blockchain of ADA is more comparable in terms of its scalability as a platform due to its capability of processing more transactions per transaction as compared with the processing capability of Bitcoin.
3. Smart Contracts: Bitcoin actually was designed more as digital cash and does not support any kind of sophisticated smart contracts, even dApps. However, several methods were developed for creating smart contracts on Bitcoin, and such techniques are much less flexible as well as resource-intensive compared to others.
And while Cardano wasn’t exactly designed with smart contracts in mind, the Cardano blockchain still does support developing and executing apps and digital assets, obviously including complex smart contracts. So, in that regard, Cardano is a good deal more flexible than Bitcoin, which is just designed to permit peer-to-peer transactions.
How Does Cardano Differ From Bitcoin in Governance?
This refers to how decisions are made and how the network grows.
1. Bitcoin Governance: Bitcoin has the most informal governance system of all. Despite opening its development to almost anyone’s contribution, the Bitcoin Core developers are the ones making the decisions about a change in the network, as if they were leaders in the Bitcoin community. So far, the Bitcoin community has been generally unwilling to change, especially as regards scaling upward.
2. Cardano Governance: In comparison to Bitcoin, Cardano seems much more structured about governance, especially through the “Project Catalyst” concept. Thus, in this aspect, ADA holders vote directly on proposals and changes or upgrades of the network. Governance allows for decentralized use, so users have a voice directly, with a say about how the blockchain is developed.
Comparison or contrast of Cardano with Bitcoin in terms of community and ecosystem?
1. Bitcoin Community: Bitcoin is mainly dominated by the community it was designed for the users and the developers who are mostly concerned with ensuring the network’s safety and stability. Bitcoin is built and formed to be a digital store of value currency; it’s primarily guided around usage as a medium of exchange.
2. Cardano Community: – Cardano is a research and development-focused community for sustainability purposes in the long term. The Cardano Ecosystem’s growth is powered by the Cardano Foundation, IOHK, and Emurgo. All of the development of decentralized applications, the introduction of new projects, and bringing the blockchain to a wider population fall under one umbrella: the Cardano Ecosystem.
Another dimension on the use case side is whether Cardano differs from Bitcoin.
1. Use Case for Bitcoin: Bitcoin fundamentally can be viewed as an investment asset with scarcity and perceived value, also known as “digital gold,” since it lends itself to being employed not only in electronic stores of value but also in each type of business transaction in a decentralized peer-to-peer fashion.
2. Cardano Use Case: it’s much more than just a cryptocurrency in itself; behind its simple status as a store of value, this platform can be utilized for a vast number of use cases ranging from DeFi, supply chain tracking, and even digital identity verification. Being able to hold up smart contracts and dApps places it squarely on much grander par with so much greater flexibility than its peer Bitcoin in real-world applications.
Future Of Cardano
It has to go through many “epochs”, following the greats from both the world of poetry and that of computer science: Byron, Shelley, Goguen, Basho, and Voltaire. Basho is the current epoch: more scaling and better optimization; Cardano will complete the transition from Basho to the last epoch, Voltaire, before April 2024.
So, with Voltaire, it will mean voting and treasury management on the blockchain and the users’ ability to select and make new improvements in the system through smart contracts.
Conclusion: Bitcoin and Cardano can be defined in terms of differences in technology, governance, scalability, and usage. In contrast to Bitcoin, which was a purely digital currency and store of value, Cardano was designed to be more scalable, energy-efficient, and flexible. Now, while using the proof-of-stake together with smart contract support and a decentralized model, Cardano relies on a proof-of-work system.
Also Read: Crypto Regulatory Sandbox Explained: How It Works And Why It Matters
