Cardano is another promising cryptocurrency

Cardano is considered a third-generation cryptocurrency. It aims to resolve bitcoin’s scalability problems and improve Ethereum’s smart contracts.

What is Cardano?

The idea of Cardano was initiated in 2015 by Charles Hoskinson (a co-founder of Ethereum and BitShares) and was available on the market in 2017. 


Cardano is considered a third-generation cryptocurrency. It aims to resolve bitcoin’s scalability problems (Bitcoin is considered the first generation crypto) and take to another level the smart contracts of Ethereum (second-generation crypto). 

Unlike its rivals Bitcoin and Ethereum that use a proof-of-work protocol, Cardano is based on a proof-of-stake one. (Learn more about protocols in our other article). It also has its own token named ADA, which can be traded like any other coin, or used inside the platform. For example, to become a validator, you will need 5 ADA.

How does it work?

The blockchain of Cardano is divided into two layers:

  • The Cardano Settlement Layer (CSL), which serves to make and record transactions that use ADA between accounts.
  • The Cardano Computation Layer (CCL), is utilized for smart contracts. It serves developers to programmatically transfer funds.


The Cardano software is run by computers called nodes, which are divided into three types:

  • Core nodes, the ones that stake ADA and engage in blockchain governance.
  • Relay nodes, those that transfer data between Core nodes and the internet.
  • Edge nodes, which serve to make crypto transactions.


Ouroboros is a proof-of-stake algorithm that is used by nodes of the Cardano software to validate transactions, mine coins, and make the network secure. Usually, in proof-of-stake algorithms, nodes with the highest stakes create the blocks in a blockchain. In the case of Ouroboros, the algorithm works a little differently.

Ouroboros separates time into:

  • Epochs are periods of time made of slots. They work in a circular model: when one epoch ends, then another begins.
  • Slots are time frames within epochs. A slot leader is randomly picked within each slot, and it will be the one that chooses the block that gets added to the blockchain. This slot leader is selected from stakeholders or Core nodes. 

When an epoch ends, the previous slot leader picks the slot leader of the next epoch. The votes occur via a “coin tossing” mechanism, which makes the election more random.

Two types of blocks can be added to the blockchain:

  • Genesis blocks are made of all the slot leaders of an epoch and hold several main blocks.
  • Main blocks that hold the entire transaction information, proposals, and the list of votes of these proposals. 


  • Has a very prepared team that makes sure there are no problems in the protocol.
  • Open-source platform.
  • Uses multiple layers, ensuring scalability and fast transactions.
  • Using a proof-of-stake algorithm makes Cardano very secure. 
  • Can provide digital identity to unbanked people around the world. 


  • Has complications with synchronization between ledgers. 
  • Implements on-chain voting that can be problematic and may pressure changes on full nodes.
  • Cardano is still in development and trying to keep up with its competitors. 
Leave a Reply

Your email address will not be published. Required fields are marked *

Previous Article
pow pos

Proof-of-work vs proof-of-stake: which one is best?

Next Article

Atari is now launching a crypto casino

Related Posts