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Cardano is a blockchain that uses a proof-of-stake system. Miners can mine or verify block transactions in PoS systems based on the amounts they own. The cryptocurrency was launched in 2017 and is denoted by the symbol ADA, which is named after Ada Lovelace, a 19th-century mathematician and the daughter of poet Lord Byron. Cardano is named after Gerolamo Cardano, an Italian polymath.
Cardano is a cryptocurrency and open source project that aims to create a shared blockchain platform for smart contracts. ADA is Cardano's internal cryptocurrency. The Cardano Foundation, based in Zug, Switzerland, oversees and supervises the project's production.
Cardano uses sidechains to enable users to conduct cross-network transactions. A sidechain is a blockchain that is connected to the main chain. The relation establishes a longer link between blockchain networks, allowing digital tokens to be transferred between them.
Cardano is a network, or a Blockchain project, as its developers refer to it.
The Cardano project involves three organizations, each of which plays a unique role:
- The Cardano Foundation: which is a non-profit organization based in Switzerland that aims to extend the Cardano network by working with governments and institutions.
- IOHK: a Hong Kong-based blockchain software company.
- Emurgo: a company created to help companies who want to use Cardano's technology develop and succeed.
Technical Aspects
Cardano is built on several layers, allowing for soft forks to be used to make changes and updates while reducing the chance of fragmentation.
The first layer, known as the Settlement Layer, is a Blockchain network that contains the balance LEDGER and confirms simple transactions. The Settlement Layer includes the ADA cryptocurrency.
Decentralized applications, or Dapps, would be built in the second layer, called the Computation Layer. These applications could be used by institutions or businesses, and they could be easily modified to suit specific financial needs. This feature will allow Cardano to become more popular while still protecting the privacy of its users.
As previously mentioned, Cardano employs the Ouroboros algorithm, which is a proof-of-stake algorithm. Proof denotes the validity of a block of transactions, while Stake denotes the relative value owned by addresses on the node.
Distributed consensus is achieved by a blockchain network using the PoS algorithm, in which the maker of the next block is chosen at random. Blocks in a network using the PoW algorithm, on the other hand, are generated by users solving extremely difficult problems, resulting in significant electricity consumption.
To create a new block, each node with a probability equal to the number of coins it has is chosen. A stakeholder is a node that has a positive (> 0) stake.
A slot leader is a node chosen from a group of all stakeholders to mint a new block. Fairness is one of the major issues in the slot leader election process. A certain amount of randomness is needed for the election process to be fair and the results to be valid.
So, how does randomness come into play? Each stakeholder follows a procedure to conduct an action known as "coin tossing," and then shares the results with the electors. The stakeholder who receives a predetermined number is known as the Slot leader.
