Cardano – a sleeping giant of a new generation of Cryptosystems

In 2014, programmer Charles Hoskinson, one of the Ethereum team members, left the project and founded IOHK together with his partner Jeremy Wood, marking the beginning of a new Cardano platform. Hoskinson confidently positions Cardano as a third-generation blockchain (whereas Bitcoin and Ethereum belong to the first and the second generations, respectively). It is also important that the project was created entirely independently and from scratch.?

The essence of blockchains in a nutshell:

If you want to understand all the advantages of Cardano, it is necessary to understand what blockchain is.

Blockchain is a decentralized database, which is a set of sequentially connected information blocks with specific characteristics. If we physically imagine this model, then a stretched and almost infinite chain with many links will serve as an example: each element of such a system is inextricably linked to the previous one while changing one fragment will entail a response in others (for example, if we try to rock such a chain, the wave oscillation is transmitted further to the remaining links). The blockchain can also be represented as a book with the ability to add pages, and each new page is written online, and the rest cannot be edited or deleted.

A network consisting of one or more central servers will always be vulnerable. This is true even for giants such as Google, Amazon, and Apple.

The idea of blockchain is that the information stored in blocks is decentralized. It only needs another copy of the blockchain on the user's computer, as well as its consolidation with the help of the previous and its own hash. Now you don't need to have huge computing mechanisms in shared servers – the more people are involved in the information block system, the more difficult it will be to hack it because you will have to deal not with one node but tens, hundreds of thousands of similar ones. Thus, the more users are involved in the blockchain, the more powerful and safer it will become.

How will you enter data and conduct transactions on the blockchain?

It's very simple: the network consists of connected elements that can be changed until they are closed. Everything is recorded in the form of a transport code with information that is encrypted as hashes and permanently stored in each subsequent block. If you change something and do not find confirmation of this from the majority of participants, then such changes simply will not be applied, and the block will be considered invalid.

In other words, the system will no longer be able to forge documents retroactively if the shared network is controlled by millions of participants.

Cardano – a third–generation blockchain

Why is the Cardano platform considered one of the most effective and reliable blockchains now?

Cardano differs in the fact that it adheres to a specific approach – the development system includes five stages, each of which is rationally oriented by the time of implementation. However, the unique feature is that this blockchain is multilevel. The architecture is based on two main elements: Cardano Settlement Layer (SSL) and Cardano Computational Layer (CCL).

CSL regulates the Cardano unit of account. In other words, peer-to-peer transactions of blockchain cryptocurrency - ADA are conducted here.

CCL supports the security of the chain, is the basis for the deployment of smart contracts, and the basis for ensuring compliance with the regulatory requirements of various jurisdictions. One of the functions of CCL is to provide a flexible data storage and access model that will comply with any territorial laws regulating cryptocurrencies.

Smart Contracts and Dapps

Cardano was formed to unlock the full potential of smart contract technology. The improvement of smart contracts will allow the platform to conclude agreements that do not require external supervision. Due to their help, any member of the Cardano network can easily assign any specific condition that must be met, and this condition can be fulfilled automatically without the need for user participation.

The deployment of smart contracts in the Cardano system allows supporting decentralized applications (DApps). DApps function as computer programs and are designed to perform certain user tasks. Network participants can use them, among other things, to interact with the blockchain through any convenient user interface. Today, most of the existing blockchain platforms work with only one level, which often leads to network congestion, slowing down transactions, and increasing fees. The presence of a multi-level block system in the Cardano system opens up the possibility of the stable existence of such programs, as well as the possibility of their continuous improvement.

As a result, the goal of the creators of Cardano is quite real. Due to the help of innovative blockchain-based solutions, they can make services that were once offered exclusively in the traditional financial space more accessible.

A little more about speed and safety…

There is a separate network of new block producers in Cardano. Their task is to add new blocks to the system by introducing fresh transactions into the chain. Candidate blocks are selected by individual validator nodes based on the size of their bid and lot. The draw is based on a system of calculations and does not depend on the voting of participants, which simplifies the task, increases security, and decentralizes the choice. Considering also that the documents describing the network model and plans are publicly available, new experienced engineers and developers can join each era of development.

Speaking of a multi-level system, it is also worth mentioning the speed of transfers between users. When the Cardano chain was first tested in 2017, it could process 257 transactions per second (TPS). For comparison, Bitcoin can handle only 4.6 TPS, Ethereum 1.0 – slightly higher than 15-20 TPS, and Tron – 2000 TPS. Obviously, ADA can handle a larger volume of transactions than Ethereum and Bitcoin but is inferior to TRON. The superiority over the “first” blockchains became possible due to the identification of transactions in a separate information slot: so the blockchain is not overloaded and has much more opportunities to update the protocol. It is worth mentioning that after entering the BASHO era, Cardano will be able to easily overtake Tron by TPS.?

Conclusion

In the 2010s, Bitcoin and Ethereum largely dominated in the era of the systematic development of the first cryptocurrencies. Bitcoin became the very first blockchain-based asset, and Ethereum expanded the boundaries of the system's capabilities by introducing smart contracts and placing thousands of new tokens on the ERC20 protocol, which continue to move the industry forward to this day.?

In 2022, the TRC20 protocol began to be used more actively since you will pay less commission than ERC20 by transferring tokens using this protocol, and the transaction will be faster.

It is impossible to deny the fact of the dominance of Ethereum and its market share. However, the time comes when it is worth considering quite successful alternatives to networks, such as Cardano. The mathematically proven Proof-of-Stake Ouroboros protocol, created in the Haskell language with a high degree of fault tolerance; significant transaction speed, existing thanks to a multi-level system; a constantly replenishing user base while maintaining full decentralization - all this shows the profitability of the new blockchain as a promising and reliable platform.