Table of Contents
What is Cardano / Ada?
How does Cardano’s blockchain work?
Cardano’s founders and mission
Cardano vs. Ethereum
The bottom line
Jun 21, 2022
5 min read
Cardano is a crypto network founded by Charles Hoskinson, who previously served as a co-founder of Ethereum. The Cardano network allows people to send and receive funds using its own internal crypto, called Ada (named for Ada Lovelace, a 19th-century mathematician considered to be the first computer programmer).
Cryptocurrencies have gone mainstream in recent years, led by the rapid rise of Bitcoin. But though the largest crypto is the one that grabs the most headlines, there are plenty of others with large market capitalizations and unique features.
Cardano was built on a “scientific philosophy” detailed in dozens of peer-reviewed research papers by its founders and engineers. The Cardano network allows people to send and receive funds using its own internal crypto, called Ada (named for Ada Lovelace, a 19th-century mathematician considered to be the first computer programmer). Like other crypto networks, Cardano relies on blockchain technology, but it aims to be more sustainable and scalable than other platforms like Bitcoin.
Cardano is a crypto network founded by Charles Hoskinson, who previously served as a co-founder of Ethereum. He split off in 2015 to create his own crypto network, writing of his plans “to change the way cryptocurrencies are designed and developed.” Cardano touts that unlike other networks, it’s founded on evidence-based methods of development and solicits peer feedback before implementing each new change to the network.
The Cardano Foundation site states that the group’s goal is to restore “trust to global systems—creating, through science, a more secure, transparent, and sustainable foundation for individuals to transact and exchange, systems to govern, and enterprises to grow.”
Beyond supporting decentralized apps and decentralized financial services, the Cardano platform was also created to support its crypto Ada. While Ada isn’t accepted as widely as Bitcoin, it can be used to make purchases through some merchants who take cryptocurrencies, including digital art and non-fungible token marketplaces.
At the heart of that goal is Cardano’s infrastructure, called Ouroboros. Like other blockchain technology, it’s a decentralized system spread across thousands of computers around the world, and every transaction is recorded via a distributed ledger that anyone can view. The system leverages complex cryptography to record and validate transactions, and users are identified only by the ID numbers of their digital wallets.
Cardano’s Ouroboros uses a newer technology called proof-of-stake blockchain (PoS), and the founders say it’s the first “provably secure” version. In the simplest terms: Users earn rewards, paid in Ada, to stay on the network and help verify transactions. It’s designed to be “greener” and more scalable than the traditional proof-of-work (PoW) algorithm that Bitcoin and other cryptos use. That’s because PoW requires lots of electricity: New tokens are created, or “mined,” by using banks of high-powered computers to solve arbitrary, complicated math problems.
PoS chains like Ouroboros, by contrast, don’t rely on the vast scale of mining to expand. Instead, users can opt to validate the transactions on the network in exchange for a reward that’s paid in newly minted Ada. It’s done through a mechanism called a stake pool, or a server node that can hold the combined Ada of many users.
The stake pool operator is responsible for setting up and running the pool—which requires owning or renting a server, as well as validating transactions—while other users can also pledge their own Ada to the pool to increase the rewards the entire pool will share. Those rewards are paid to the account of the operator, who divides up the winnings based on a predetermined agreement among the group members.
So trust in the pool operator is crucial, not only for payout but for accuracy: Errors in validation mean the pool will be penalized, rather than rewarded.
Three independent organizations support the Cardano ecosystem. The first is the nonprofit Cardano Foundation, an independent standards body that owns the brand and oversees the network’s development and governance. EMURGO is the for-profit arm of Cardano, driving commercial adoption and partnerships. The final piece is IOHK, a technology and engineering company created by Cardano founder Hoskinson with crypto entrepreneur Jeremy Wood, which designs, builds, and maintains the platform based on peer-reviewed research.
Cardano’s mission boils down to two words: scalable and sustainable. Throughout Cardano’s whitepapers and official site, the community talks at length about facilitating the benefits of DeFi while reducing some of the disadvantages of traditional mining.
Like other crypto networks, Cardano allows users to bypass intermediaries like banks and transact directly through the trading of Ada. It can facilitate traditional financial services like lending and asset management. It also powers a marketplace of decentralized applications (dApps), giving developers a place to launch their apps without handing over hefty fees to the likes of Apple and Google, which take a large cut for purchases made in their app stores.
Cardano also permits smart contracts, a concept launched on the Ethereum network. Smart contracts are programs that self-execute when predetermined conditions are met. They can be used for DeFi, apps, games, and more, making processes and transactions quick and cheap because there’s no need to pay intermediaries to spend time on paperwork to make the deal happen. Smart contracts can also smooth processes in business contexts like supply chains, signaling the next action to begin automatically when the previous step’s conditions are met.
Looking ahead, Hoskinson and the Cardano Foundation have split the network’s roadmap into five “eras” named after great thinkers: Byron (the creation of the network), Shelley (decentralization), Goguen (smart contracts), Basho (scaling), and Voltaire (governance and self-sustainability). Each era is delivered sequentially, even as work on each one is happening simultaneously.
Because Cardano was created by an Ethereum co-founder, the two platforms share a number of key features. Both facilitate trading of their own cryptocurrencies, allow developers to create dApps on their marketplaces, and host smart contracts, for example.
But there are important differences.
Cardano already operates on the much more energy-efficient PoS protocol, while Ethereum was built on PoW. Ethereum does plan, though, to transition to PoS.
While Cardano offers smart contracts and plans to expand that functionality, it was Ethereum that launched the concept on its blockchain.
Ethereum is the No. 2 cryptocurrency with a longer track record, while Cardano is newer.
Cardano’s Ada is one of the largest cryptocurrencies by market capitalization, and the platform aims to make cryptos more scalable and sustainable. Its Ouroboros infrastructure leverages a newer and less energy-intensive technology called proof-of-stake blockchain, in which Cardano grows by letting users earn newly minted Ada for staying on the network and helping verify transactions.
Cardano’s creators see it as a tool to bypass the intermediaries that slow and add costs to transactions of all kinds. Beyond that, the blockchain supports an ecosystem that can facilitate traditional financial services, features a marketplace of decentralized applications (dApps), and permits smart contracts—with more functionality planned in the future.
At Titan, we are value investors: we aim to manage our portfolios with a steady focus on fundamentals and an eye on massive long-term growth potential. Investing with Titan is easy, transparent, and effective.
Get started today.
Certain information contained in here has been obtained from third-party sources. While taken from sources believed to be reliable, Titan has not independently verified such information and makes no representations about the accuracy of the information or its appropriateness for a given situation. In addition, this content may include third-party advertisements; Titan has not reviewed such advertisements and does not endorse any advertising content contained therein.
This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any strategy managed by Titan. Any investments referred to, or described are not representative of all investments in strategies managed by Titan, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results.
Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see Titan’s Legal Page for additional important information.
You might also like
Understanding the Different Types of Cryptocurrency
How many cryptocurrencies are there? Answers vary but in short: a lot. As many as 70,000, by one estimate.
What Is Digital Currency? Types, Advantages, and Examples
Digital money isn’t necessarily new. Today, thanks to the rise of digital payments and cryptos, individuals may be more likely to buy and spend virtual currencies.
What Is a Crypto Token and How is it Different From a Coin?
Developers can launch a crypto token to build on top of an existing blockchain’s features and popularity. Learn how they also can focus on creating, promoting, and updating it.
Can You Short Crypto?
There are many ways for investors to bet against Bitcoin and Ether and sell them short. Learn how these often involve derivatives such as futures contracts.
© Copyright 2023 Titan Global Capital Management USA LLC. All Rights Reserved.
Please refer to Titan's Program Brochure for important additional information. Certain investments are not suitable for all investors. Before investing, you should consider your investment objectives and any fees charged by Titan. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested, including principal. Brokerage services are provided to Titan Clients by Titan Global Technologies LLC and Apex Clearing Corporation, both registered broker-dealers and members of FINRA/SIPC. For more information, visit our disclosures page. You may check the background of these firms by visiting FINRA's BrokerCheck.
Various Registered Investment Company products (“Third Party Funds”) offered by third party fund families and investment companies are made available on the platform. Some of these Third Party Funds are offered through Titan Global Technologies LLC. Other Third Party Funds are offered to advisory clients by Titan. Before investing in such Third Party Funds you should consult the specific supplemental information available for each product. Please refer to Titan's Program Brochure for important additional information. Certain Third Party Funds that are available on Titan’s platform are interval funds. Investments in interval funds are highly speculative and subject to a lack of liquidity that is generally available in other types of investments. Actual investment return and principal value is likely to fluctuate and may depreciate in value when redeemed. Liquidity and distributions are not guaranteed, and are subject to availability at the discretion of the Third Party Fund.
The cash sweep program is made available in coordination with Apex Clearing Corporation through Titan Global Technologies LLC. Please visit www.titan.com/legal for applicable terms and conditions and important disclosures.
Cryptocurrency advisory services are provided by Titan. Cryptocurrency trading is provided by Bakkt Crypto Solutions LLC ("Bakkt Crypto"). Bakkt Crypto is not a registered broker-dealer or a member of SIPC or FINRA. Cryptocurrencies are not securities and are not FDIC or SIPC insured. Bakkt Crypto is licensed to engage in virtual currency business activity by the New York State Department of Financial Services. Cryptocurrency execution services are provided by Bakkt Crypto (NMLS ID 1828849) through a software licensing agreement between Bakkt Crypto and Titan. Please ensure that you fully understand the risks involved before trading: bakkt.com/disclosures.
Information provided by Titan Support is for informational and general educational purposes only and is not investment or financial advice.
Contact Titan at email@example.com. 508 LaGuardia Place NY, NY 10012.