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What is Cardano (ADA)?
Cardano is a third-generation decentralized proof-of-stake blockchain platform. While it shares features and applications with other blockchain platforms like Ethereum, Cardano distinguishes itself from others through a commitment to peer-reviewed scientific research as the building blocks for updates to its platform.
Three organizations are responsible for the development of Cardano: IOHK, Fundação Cardano and EMURGO. The first two are non-profit foundations and the third is a for-profit entity. IOHK, which is responsible for building Cardano, works with a team of academics around the world to produce research and review platform updates before implementation to ensure they are scalable.
MAIN ADVANTAGES
Cardano is a trading platform blockchain and smart contracts with a cryptocurrency called “ada.
Cardano launched products for identity management and product traceability.
Cardano uses Ouroboros - a bet-proof algorithm - to create blocks and validate transactions that take place on his blockchain.
Understanding Cardano
Charles Hoskinson, co-founder of Ethereum, started developing Cardano in 2015 and launched the platform in 2017. 3 Cardano positioned himself as an alternative to Ethereum. Both platforms are used for similar applications, such as smart contracts, and are intended to build a connected and decentralized system. Cardano considers himself an updated version of Ethereum and has proclaimed himself a third generation platform on Ethereum's second generation credentials. The blockchain platform also aims to provide banking services to people without a bank worldwide.
Cardano's main applications are identity management and traceability. The first application can be used to streamline and simplify processes that require data collection from multiple sources. The latter application can be used to track and audit a product's manufacturing processes, from origin to finished products, and potentially eliminate the counterfeit market.
“Ada” is Cardano's digital currency and is named after Ada Lovelace, a 19th century countess and English mathematician who is recognized as the first computer programmer.
Examples of Cardano
The organizations behind Cardano launched three products: Atala PRISM, Atala SCAN and Atala Trace. The first product is marketed as an identity management tool that can be used to provide access to services. For example, it can be used to verify credentials for opening a bank account or eligibility for government assistance. The other two products are being used to track a product's journey through a supply chain.
Cardano is also developing a smart contract platform that will serve as a stable and secure platform for the development of enterprise-level decentralized applications. In the near future, Cardano's team plans to use a chain-based democratic governance system called the Catalyst Project to manage project development and execution. They will also renew their treasury management system to finance future costs using Project Catalyst.
Cardano Requirements
The heart of any blockchain platform is the algorithm it uses to create blocks and validate transactions. Cardano uses Ouroboros, an algorithm that uses Proof of Stake (PoS) protocol to mine blocks. The protocol is designed to minimize energy expenditure during the block production process. It does this by eliminating the need for hash power, or massive computing resources, which are central to the functioning of the proof-of-work (PoW) algorithm used by Bitcoin.
In the Cardano PoS system, stakeout determines a node's ability to create blocks. The knot bet is equal to the amount of ada, Cardano's cryptocurrency, held by him in the long run.
How Ouroboros works
On a broad level, Ouroboros works as follows. It divides physical time into times made up of slots, which are fixed periods of time. Slots are similar to work shifts in a factory. Currently, a season lasts for five days and a slot lasts for a second, but these numbers are configurable and can be changed after an update proposal. The seasons work in a circular way: when one ends, the other begins.
Each slot has a slot leader chosen by a "lottery" system. In this system, the higher the bet, the greater the chances of winning the lottery. Slot leaders are responsible for the following tasks:
1. Validating transactions
2. Creating transaction blocks
3. Adding newly created blocks to the Cardano blockchain
Ouroboros requires a small number of ada holders to be online and maintain good network connectivity. To further reduce energy consumption, the algorithm contains the concept of betting pools. Ada holders can organize themselves into betting groups and elect some to represent the group during the execution of the protocol, facilitating participation and ensuring the creation of blocks, even if some of them are offline.
Mining Considerations
A participation pool is a trusted server node that is committed to running the protocol 24 hours a day, 7 days a week, on behalf of contributing contributors. Equity pools hold the combined interest of multiple stakeholders in a single entity and are responsible for processing transactions and producing new blocks.
In a Proof of Work (PoW) system, the economic incentives for miners to join the network and create blocks are cryptocurrency rewards and transaction fees. Ouroboros collects rewards from an era and distributes them among betting groups and stakeholders. Each is rewarded based on the proportion of their bet contributed during the season, which means that a higher bet will receive more rewards.
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