What is Cardano (ADA)? A 2024 Guide


As the world of cryptocurrencies continues to evolve, Cardano (ADA) has emerged as a significant player, offering a unique approach to blockchain technology. With its scientifically driven development and a strong focus on security and sustainability, Cardano stands out among other cryptocurrencies. Whether you're a seasoned cryptocurrency enthusiast or new to the space, this guide aims to provide a comprehensive understanding of Cardano (ADA), its objectives, and what the future holds for this promising platform.

What is Cardano (ADA)?

Cardano is a decentralized, open-source blockchain platform designed to provide a more secure and scalable infrastructure for the development and execution of smart contracts and decentralized applications (dApps). Launched in 2017, Cardano's native cryptocurrency ADA is named after Ada Lovelace, a 19th-century mathematician recognized as the first computer programmer.

Key Features of Cardano:

  • Layered Architecture: Cardano is built on a unique layered architecture that separates the network's settlement layer (where transactions occur) from its computation layer (where smart contracts are executed). This design enhances security and scalability.
  • Ouroboros Protocol: At the heart of Cardano's blockchain is the Ouroboros protocol—an innovative proof-of-stake consensus mechanism that ensures the network's security while being energy-efficient.
  • Scientific Approach: Cardano's development is guided by rigorous academic research, peer-reviewed papers, and formal verification methods, ensuring a robust and reliable platform.

Who founded Cardano (ADA)?

Cardano was founded by Charles Hoskinson, one of the co-founders of Ethereum. Hoskinson's vision for Cardano was to create a blockchain platform rooted in scientific philosophy and robust engineering principles. The project is developed by three main entities:

  • IOHK (Input Output Hong Kong): A technology company focused on peer-to-peer innovations, responsible for Cardano's development.
  • Cardano Foundation: A non-profit organization dedicated to advancing the Cardano ecosystem, fostering adoption, and ensuring legal and regulatory compliance.
  • EMURGO: An entity tasked with driving commercial adoption of Cardano and supporting businesses that want to leverage blockchain technology.

What is Cardano (ADA)’s objective?

Cardano aims to create a more balanced and sustainable ecosystem that addresses the limitations of existing blockchain technologies. Its primary objectives include:

Interoperability: Facilitating seamless interaction between different blockchains and traditional financial systems.

Scalability: Ensuring that the network can handle a high volume of transactions without compromising performance.

Sustainability: Creating a self-sustaining ecosystem where resources are allocated efficiently, and the network can evolve without centralized control.

Is Cardano (ADA) Proof-of-Work (PoW) or Proof-of-Stake (PoS)?

Cardano uses a proof-of-stake (PoS) consensus mechanism, specifically the Ouroboros protocol. Unlike proof-of-work (PoW) systems, which require significant computational power and energy consumption, PoS relies on validators (stake pools) to create new blocks and secure the network. This approach is more energy-efficient and promotes decentralization by allowing more participants to engage in the consensus process.

How does Cardano (ADA) get burned?

Token burning refers to the process of permanently removing tokens from circulation, typically to reduce supply and increase scarcity. As of now, Cardano does not have a built-in mechanism for burning ADA tokens. However, proposals and community discussions around token burning mechanisms have occurred and may be implemented in the future through governance and protocol updates.

Is Cardano (ADA) inflationary or deflationary?

Cardano's tokenomics are designed to be inflationary in the short term to incentivize network participation and reward stakeholders. However, the total supply of ADA is capped at 45 billion tokens, meaning it will eventually transition to a deflationary state as the maximum supply is reached and no new tokens are minted.

Inflationary Mechanisms:

Staking Rewards: Newly minted ADA tokens are distributed as rewards to incentivize staking and secure the network.

Treasury System: A portion of transaction fees and newly minted tokens fund the Cardano Treasury, which supports ongoing development and ecosystem growth.

Deflationary Transition:

Once the maximum supply is reached, ADA will become deflationary, with transaction fees and treasury contributions continuing to support the network without increasing the total token supply.

When you own Cardano (ADA) what exactly do you own?

Owning ADA tokens grants you several rights and benefits within the Cardano ecosystem, including:

  • Participation in Consensus: By staking your ADA, you can participate in the network's consensus process and earn rewards.
  • Governance: ADA holders can participate in the governance of the Cardano network, voting on proposals and protocol upgrades.
  • Utility and Transactions: ADA tokens can be used to pay for transaction fees, deploy smart contracts, and interact with dApps on the Cardano blockchain.

How can I stake Cardano (ADA)?  

Bitbuy has introduced a secure and regulated way for Canadians to stake ADA. By simply holding ADA in your account, you can earn up to 2.25% in rewards. These rewards are automatically deposited back into your account and paid out every 1-2 days. Calculate your staking rewards with Coinsquare's Rewards Calculator.

What is on the Cardano (ADA) roadmap?

Cardano's development is structured into five distinct phases, each focusing on different aspects of the network's capabilities and functionality. The phases, named after renowned figures, include:

  1. Byron: Foundation phase, focusing on establishing the core network and initial release of ADA.
  1. Shelley: Decentralization phase, introducing staking and delegation mechanisms to enhance network security and decentralization.
  1. Goguen: Smart Contract phase, enabling the development and deployment of smart contracts and dApps.
  1. Basho: Scaling phase, focusing on improving network scalability and interoperability with sidechains.
  1. Voltaire: Governance phase, implementing a decentralized governance system and treasury for sustainable network development.

Key Upcoming Developments:

Hydra: A layer-2 scaling solution designed to increase Cardano's transaction throughput and reduce latency.

Plutus and Marlowe: Enhanced smart contract capabilities and domain-specific languages for financial contracts.

Interoperability: Integrations with other blockchains and traditional financial systems to facilitate seamless cross-chain transactions.

What risks does Cardano (ADA) have?

Like other crypto assets, there are some general risks associated with investing in ADA.  

We describe many of these general risks in Cardano’s Crypto Asset Statement including risks relating to: volatility; access, loss or theft; control of processing power; settlement of transactions on crypto asset networks; momentum pricing; private keys; internet disruptions; faulty code; network development and support; regulatory risk; network forks; air drops; voting rights; cybersecurity incidents and other systems and technology problems; unforeseeable risks.  

While we tried to describe the key risks associated with ADA here and in our risk statement, these aren’t all the risks associated with trading in ADA. You should also always do your own research on ADA to make sure you are comfortable investing in it.

How to buy Cardano (ADA) in Canada

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