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What is Cardano (ADA)?

Several Cardano coins flying through the air with a blue background

Cardano is a decentralized application (dApp) and smart contract platform. It is one of several competitors to Ethereum. Supports believe it is the next generation of cryptocurrency. This guide will explain what Cardano is and what makes it unique. It will also explore the Cardano roadmap, look at the ADA token, and a number of use cases for Cardano.

What is Cardano?

Cardano was founded by Charles Hoskinson, one of the co-founders of Ethereum, in 2017. Cardano is a third-generation, Proof of Stake (PoS) blockchain that aims to provide a platform for decentralized applications (dApps) development with verifiable smart contracts.

According to their website, Cardano and its native coin, ADA, are being developed as “a blockchain for changemakers, innovators, and visionaries, with the tools and technologies required to create the possibility for the many, as well as the few, and bring about positive global change”. One way Cardano plans to bring about positive change is through the use of the Proof of Stake (PoS) consensus mechanism, which consumes significantly less energy than a Proof of Work (PoW) such as Bitcoin or Ethereum.

As it stands, Cardano is one of the major players in the crypto market. It is one of the 10 biggest cryptocurrencies by market cap.

Interesting Fact

The founder of Cardano, Charles Hoskinson, quit his consulting job in 2013 to start an online school called the Bitcoin Education Project. His friends and family thought he was crazy, but he believed he was on the right track. It was through his online school that Hoskinson met Vitalik Buterin, who he would go on to found Ethereum with.

What is the ADA token?

ADA is the Cardano platform’s native cryptocurrency. It is named after Ada Lovelace, who is widely recognised as the first computer programmer in the 19th century. Like other cryptocurrencies, ADA can be used as an exchange of value.

It can also be used for staking on the Cardano platform to help verify transactions. Anyone who stakes their ADA is rewarded with more ADA cryptocurrency in return. This Proof of Stake (PoS) system helps maintain the security of the network. In the future, ADA will help facilitate smart contracts and run applications on the Cardano network. 

Did You Know?

Unlike many other digital currencies, ADA is stored in its own wallet, known as the Daedalus wallet. This may be misleading, however, as Daedalus functions as its own blockchain node which users can run their own staking pool within. This way, users support the network while having the opportunity to actively earn cryptocurrency.

How does Cardano work?

The Cardano blockchain was designed by engineering and cryptography academics, built entirely off scientific and mathematical principles. It was developed through evidence-based methods and peer-reviewed research.

Cardano’s consensus mechanisms and protocols remain unique and according to Cardano means the blockchain is able to overcome a core issue of earlier gen blockchain networks: increased transaction fees as the result of greater transaction volumes.

The core consensus protocol Cardano operates off is called Ouroboros. Cardano promises that this not only offers faster processing speeds, but the potential to improve energy efficiency as processing transactions become more streamlined.

The two main parts to the Cardano blockchain

The first part acts as a unit of account, where ADA holders can send and receive tokens almost instantly with very minor fees. This is referred to as the Cardano Settlement Layer (CSL).

The second is the Cardano Computational Layer (CCL). The CCL is a series of protocols on which the blockchain operates. These protocols are responsible for executing smart contracts and verifying security and compliance. They also offer functionalities ranging from verifying identities and white or blacklisting. 

The Ouroboros protocol was designed specifically for Cardano. It is what allows for securely executing smart contracts on the network, and for securely and efficiently sending and receiving ADA.

How the Ouroboros protocol works

First, the Cardano network selects at random a few nodes, or “slot leaders”, for the opportunity to mine new blocks. These nodes could be anyone who has a Daedalus wallet and wishes to stake their ADA tokens. The blockchain is then split into slots, otherwise known as “epochs”. The selected slot leaders are then able to mine their own epoch, or partition it and allow other miners to assist who will subsequently be rewarded for their service. In theory, epochs can be partitioned infinitely. This is what allows for the ability to process a huge number of transactions at a time.

Key Takeaway

Ouroboros is a little bit like a bounty system in the Wild West. The Sheriff’s office (Ouroboros) determines which outlaw (epoch) to put a bounty on. Then a bounty hunter (miner) accepts the bounty. If they want the whole reward to themselves they will search by themselves, if they don’t mind sharing the rewards, they will seek the help of other bounty hunters.

What makes Cardano unique?

Cardano’s multilayer architecture distinguishes it from other blockchains, alongside its security and development. What many see as the biggest upside of Cardano and the Ouroboros protocol is the security around it that lies in its mathematical and peer-reviewed development. Unlike other blockchains, Cardano can actually verify that block validators are selected at random and guarantee ADA stakeholders who participate are compensated fairly. 

You could also argue that Charles Hoskinson’s vision and mission for the cryptocurrency in itself is unique. The founder has even Tweeted, “If you see me trying to boost the price of Ada, then I’ve been compromised and sell all your Ada. Cardano will be valuable based upon hard work, real-world use and the utility of the platform. I’m not here to make day traders rich. I’m here to change the world.”

What is the Cardano roadmap?

Cardano is fairly new in the crypto world. Thus, many of the issues of the current blockchain industry were already apparent at the time of Cardano’s inception. Cardano’s means of combating these issues include the creation of a more secure voting mechanism for stakers alongside the separation of its computational and accounting layers.

Scalability has long been an issue the blockchain industry has faced, and the Ouroboros protocol offers one means to solve that through infinitely partitioned epochs.

Finally, Cardano promises a provable secure blockchain, less vulnerable to attacks, and guaranteed through mathematic security. 

Of course, none of these changes can happen overnight, so Cardano has laid out a well-defined roadmap towards its goals. This roadmap consists of five phases. Each phase is named after influential historical figures and referred to as “eras” by Cardano.

Phase 1: Byron (Foundation Era)

The first phase was to ensure the network actually ran smoothly and test its functionality, allowing users to buy and sell the ADA currency. It also saw the release of the Daedulus wallet.

Phase 2: Shelley (Decentralization Era)

The Shelley era saw a shift towards Cardano being run by network participants – working towards Cardano’s goal to become increasingly decentralized. Incentive schemes and delegation were also rolled out in this phase. The goal by the end of the Shelley era was to have Cardano be 50 to 100 times more decentralized than other major blockchains.

Phase 3: Goguen (Smart Contracts Era)

Goguen (the current era of Cardano) sees the implementation of smart contracts across the platform. This era offers the ability to begin building decentralized applications (dApps) on Cardano’s framework. Although technically phase three, much of the work on Goguen was done in parallel with Shelley.

Phase 4: Basho (Scaling Era)

The fourth phase aims to implement greater scaling solutions. This phase will see optimisations that focus on blockchain performance, mainly around scalability and interoperability (blockchains sharing information and working together). 

Phase 5: Voltaire (Governance Era)

The purpose of this era is to create a self-sustaining network. Voltaire will introduce treasury and voting systems which will give network participants the ability to influence the network’s future development.

Key Takeaway

The Cardano roadmap consists of five phases. One, network launch and allowing users to buy and sell ADA. Two, decentralization of the network. Three, smart contract functionality (current phase). Four, scalability and interoperability of the network. Five, making the network self-sustaining by introducing a treasury and an improved governance system.

What can Cardano be used for?


Cardano could potentially limit the sale of counterfeit goods, through a fortified solution that verifies the authenticity of any goods produced. 


At present, universities and other institutions hold the certifications of their students, who must request these. Cardano could potentially offer a way for students to securely control their own certifications and share them with say, employers, as needed.


Cardano may be able to offer users the ability to store important verification documents on the blockchain. This would drastically reduce time applying for bank accounts, or other financial endeavours. 


Cardano is one of several Ethereum competitors. Like Ethereum, Cardano is a decentralized application (dApp) and smart contract platform, but it claims to make several improvements over the Ethereum network. This guide looked at what Cardano is and what makes it unique. It also explored the ADA token, Cardano use cases, and explored the Cardano roadmap.

If you want to read more about decentralized applications (dApps), smart contracts, Proof of Stake (PoS), or anything else crypto or blockchain related, there is plenty of great resources on Swyftx Learn!

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