What is Cardano for Dummies | Cardano Review

What is Cardano?

Cardano is a blockchain and cryptocurrency project focused on taking a scientifically tested and peer-reviewed approach to this fast-developing sector—a philosophy that has gained it much recognition in the crypto community since the project’s inception in 2015. One of its major selling points is that rather than being run by a single team, based on a single whitepaper, it is being developed as a collaborative effort between researchers and universities worldwide, based on the latest research.

Like other cryptocurrencies, it runs on a decentralized platform that gives users high levels of privacy and security. However, they also aim to be accessible to regulators by allowing Cardano’s applications to be customized on a case-by-case basis. This provides a balance between the highly libertarian nature of most cryptocurrencies and the centralization of existing financial institutions. Users will be able to opt in to the more centralized applications, but can remain just as anonymous as they would on any other blockchain if they choose.

Cardano is not actually the name of a cryptocurrency, but the name of a larger project which has two main pieces: a cryptocurrency and a smart contracts platform. The cryptocurrency part is usable as digital cash, secured through its built-in cryptography. Its smart contracts platform is intended to be an improvement on Ethereum, with the ultimate vision of securely recording legal agreements on the blockchain.

How does Cardano work?

The project is currently being built in two layers, each of which adds different functionalities to the blockchain.

The first layer is called the “Settlement Layer,” and it is already in use. This is where you can transfer the digital cash, ADA, between accounts. You can think of this as similar to Bitcoin.

The second layer is called the “Compution Layer.” This part is currently a work in progress. Once complete, this will be where you can set up smart contracts to execute. This part is heavily based on Ethereum.

Ultimately, these two layers will work together: the Settlement Layer will act as your ledger, where coins are moved between accounts, and the Computation Layer will contain your contracts, which give the Settlement Layer instructions as to how your coins should be moved.

Think of the Computation Layer as a contract written between you and a carpenter. In this contract the carpenter guarantees construction of a table and you guarantee a certain amount of fiat currency in payment.

Once your table is finished, it triggers a legal obligation to transfer the money from you to the carpenter. This is when the transaction moves to the Settlement Layer; think of it as the banking system. You obtain the money from your bank in the form of cash, check, or electronic payment, give it to the carpenter, and the contract is fulfilled.

The main idea of this coin is to automate this process with self-executing digital contracts, as well as to separate the contract part from the payment part.

Cardano’s ledger uses the Ouroboros Proof-of-Stake algorithm to verify the transactions on the blockchain. There are plenty of other proof-of-stake coins, all of which function on the basic principle that you, as a holder of the cryptocurrency, can be randomly selected to create new blocks and validate others’ transactions. The Ouroboros PoS protocol stands out as being the first to incorporate tested security measures into its system.

In a nutshell, this project works along many of the same lines as other cryptocurrencies, but is attempting to evolve and improve upon previous systems. In its current form, it is essentially a more cryptographically secured version of other coins; its main potential is in building upon Ethereum’s work by implementing a smart contracts layer that keeps transactions separate from contracts.

Recent major developments

ADA has recently broken into the top ten cryptocurrencies by market capitalization (total value measured in USD) and is, as of this writing, ranked fifth.

Several major exchanges, including Binance and Bittrex currently support it. Bitmex listed ADA on January eighth.

Cardano’s roadmap for 2018 has been released: it is mostly focused on improving their Settlement Layer architecture. The roadmap also details plans to implement a rewards system for coin holders that use their wallets to validate transactions, implement multisignature transactions, and many smaller goals. They also continue to create partnerships and research opportunities, ranging from London to Vietnam.

How to buy Cardano

Cardano’s coin is mostly bought and sold on Binance. You can’t buy it with fiat currency yet (USD), so here is a quick guide on how to buy Cardano starting with fiat:

1. Buy Bitcoin or Ethereum at an exchange that uses your fiat currency on Coinbase.
2. Transfer your BTC or ETH to an exchange that supports Cardano. Currently, Binance is the best choice. (Tip: if you bought BTC/ETH on Coinbase, look into using GDAX to avoid transfer fees)
3. Buy Cardano by trading your BTC/ETH for their coin, and you’re done!

Fun fact

In Japan you will soon be able to withdraw the cryptocurrency from ATMs. About 95% of Cardano’s initial investment actually came from Japan, and now, starting in 2018, about 25 of Cardano’s own cash machines will be placed in various Japanese cities. There are also plans to implement debit cards that can be loaded with cryptocurrency, but which will be usable as fiat currency.

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