Cardano is the Blockchain network that is powering ADA cryptocurrency, which is now ranked top 5 on CoinMarketCap at the time of writing this. It has gained its popularity recently in the crypto market. The price of ADA spiked once in 2018 and another one very recently in 2021. What is it that people are paying for ADA? Well, it turned out that the Cardano project has some very promising solutions to the problems that the current Blockchain has.
When Bitcoin came out, it proved a concept of Blockchain. It allows people to transfer money without needing to go through a trusted thrid-party. It is a store of value that is trusted by two parties by having a contract, which is based on a proof-of-work mechanism. However, it is hard to build a decentralised app out of it. So, Ethereum, the second generation Blockchain , was created. The smart contract in Ethereum has opened up a whole new opportunity for developers to build decentralised apps for different purposes. However, it is much like Bitcoin. Ethereum cannot scale. So, if new changes need to be made, a new Blockchain need to be created, for example, Ethereum Classic and Bitcoin Cash.
In order to solve those problems, the Cardano project, the thrid generation Blockchain, was created.
The Cardano project was founded by Co-Founder of Ethereum, Charles Hoskinson, and backed by The Cardano Foundation, EMURGO and IOHK. So, this is how you know the project is pretty serious. There are three main goals that the Cardano is aiming to achieve.
Unlike other Blockchain project, the Cardano wasn't really started from White Paper. The team of Cardano focuses on engineering design principles and best practices. The source code of Cardano is made open source, which allows others to do a peer review. In contrast to other cryptocurrencies in which the code is often copied from other project which invovled anonymous contributors, the code of Cardano is written in Haskel programming language completely from scratch.
Cardano uses Ouroboros, the proof-of-stake consensus mechanism, which allows Cardano to achieve its goal of sustainability. As we all know that a proof-of-work mechanism in other cryptocurrencies such as Bitcoin and Ethereum, consumes a lot of energy. Ouroboros is also mathematically proved to be very secure.
In order to improve the cryptocurrency design, Cardano uses two layers design. One layer is called Cardano Settlement Layer for transfer of value, and the other is called Cardano Control Layer for the storage of data. Having these two separations allows basic transactions on the Blockchain that don't really require storage, which makes it more secure and preserves privacy.
The Cardano platform is named after an Italian polymath, Gerolamo Cardano, and the ADA coin is named after an English mathematician, Ada Lovelace.
There is a big potential for all decentralised applications (dApps) and decentralised finance (DeFi) to be built on Cardano Blockchain. Many Blockchain businesses are at risk of not being able to scale. So, I think Cardano holds a very big value in solving problems that Ethereum has. It is very exciting to see how Cardano will be the better and next generation Blockchain. There are 5 stages in Cardano Roadmap: Byron (Foundation), Shelley (Decentralisation), Goguen (Smart Contract), Basho (Scaling), and Voltaire (Governance). At the time of writing this, it is currently on 3rd stage, Goguen. This is the stage that they are currently integrating smart contract which allows developers to build dApps on Cardano network. In my opinion, I think more and more developers will choose Cardano over Ethereum for its scalability, interoperability and sustainability. By doing so, we will also be seeing a good performance on ADA cryptocurrency in the market (Not a financial advice).
ADA Chart from CoinMarketCap