Cardano is an open-source, public blockchain that enables you to build decentralized protocols and run smart contracts. Cardano was founded in 2017 by Charles Hoskinson, a co-founder of Ethereum, and Jeremy Wood, a technologist.
Currently, Cardano is overseen by three separate and independent organizations, which are the Cardano Foundation, IOHK, and Emurgo. The Cardano Foundation is responsible for managing the development of the protocol, IOHK designed the proof-of-work algorithm used to operate the Cardano network, while Emurgo is helping enterprises and large organizations to adopt the Cardano blockchain.
In contrast to many protocols, Cardano did not issue a whitepaper pre-development. Instead, the blockchain was peer-reviewed and developed by a team of experts using an evidence-based methodology. The blockchain is considered to be unique because it was developed to address some of the shortcomings of current blockchain networks. This is done by adopting unique design principles, engineering best practices, and creating new exploration channels.
One of Cardano’s core specialties is said to be its consensus protocol. It has been developed in-house and goes by the name of Ouroboros. As one of the first projects, Cardano went for a two-layered approach early on. There is a settlement layer handling all the transactions with the Cardano asset (its cryptocurrency ADA, which is the blockchain’s native coin) and a computational layer that hosts smart contracts. The maximum supply of ADA tokens is hard-capped at 45 billion.
Cardano created approximately 31 billion tokens during its launch, of which 26 billion were sold to investors by a third-party company. Participants were able to access vouchers that could be redeemed upon the launch of the Cardano protocol. The project did its initial coin offering (ICO) back in 2017 and raised more than $60 million, mainly from Japanese investors. This also earned Cardano the name “Japanese Ethereum”.
The remaining 5 billion tokens out of the 31 billion created were distributed to the Cardano Foundation, IOHK, and Emurgo. Cardano started trading at 0.025 at the beginning of 2017. The price remained at this level until late November when it began to rally as part of the wider crypto bull market of 2017. The price temporarily peaked at $1.18 on January 5, 2018, then start to regress slowly, and by the end of the year, the project’s price was trading below $0.05. For the next few years, ADA traded under $1 until 2021.
Echoing the price moves of other altcoins, ADA surpassed the $1 mark again in the 2021 bull run to reach a new all-time high of $2.96 in September 2021. Although it has pulled back from this level during the current bear market in 2022, the price of ADA has been consolidating around the $0.35 mark at the time of writing. To this day, Cardano (ADA) is the 8th largest crypto network in terms of market capitalization and is valued at $12,033,853,219 in mid-October of 2022.
Like many other smart contract blockchains, Cardano was developed to solve the scalability challenges that plague second-generation blockchains like Ethereum. Cardano was also meant to enhance sustainability and interoperability.
Cardano deploys a Proof-of-stake (PoS) consensus algorithm to create new blocks and validate new transactions. The Proof-of-stake algorithm also known as the Ouroboros protocol is less energy intensive and reduces transaction fees. The Proof-of-stake model also offers mathematical security in choosing network validators, a secure voting process for token holders, and a scalable consensus system.
Its overall blockchain setup is divided into two layers, the Cardano Settlement Layer (CSL) and the Cardano Computational Layer (CCL). This layered infrastructure is critical to ensuring higher throughput and larger data storage capability.
The CSL layer built on top of the Proof-of-stake protocol is essential for peer-to-peer transactions and the transfer of value within the network. This is the layer where Cardano transactions are settled. Equally important is the CCL layer that powers the computational requirements of the Cardano protocol, enabling the seamless execution of smart contracts.
In terms of accounting, Cardano uses the extended UTXO accounting model, which is similar to Bitcoin’s normal UTXO model. Most other smart contract platforms are based on the account model, which makes Cardano fairly unique among them in that regard.
Cardano’s proponents believe that the blockchain is poised to be a promising alternative to Ethereum’s overloaded smart contract blockchain. Admittedly, it does not have the user base and developer community as Ethereum, neither in size nor in proficiency most likely, but the project is still committed to solving as many issues as possible that the current second-generation blockchains are faced with.
ADA can be considered a good investment when you take into consideration its roadmap, strategic partnerships, and loyal community. Still, the project needs to continuously deliver to justify its current position among the top cryptocurrencies. Readers should do their own research (also referred to as DYOR in the space), to make sure they know what they are investing in.
According to experts, should the ADA/BTC ratio increase during the next crypto rally because of Cardano’s upgrades and its growing adoption among institutions, many predict the long-term ADA price forecast could range between $10 to $20. Should crypto continue its success story and Cardano become one of its key players, prices could even go higher. Nonetheless, as an investor, one should always remember to never invest money one can’t afford to lose.
Some believe ADA could surpass the double-digit threshold. Cryptopolitan predicts the price of ADA will increase up to $21.35 on average, with a minimum price of $20.55. Others are more conservative, predicting that a price of $6.53 by 2030 could be realistic. In the end, no one knows the price it could reach in the future and as with any cryptocurrency, it is plausible that such price targets won’t be reached.
Recently, several critics of Cardano have been labeling the project a so-called ghost chain. They have been implying that although Cardano’s network is live and functioning as a staking blockchain, it does not have any actual development of applications on it and therefore lacks future utility. Within the Cardano community, many have stepped up, trying to refute this criticism by pointing to the activity and upgrades happening on the protocol from 2021 to 2022. As a matter of fact, some have reported that Cardano is one of the leading blockchain networks, with a lot of activity on Github.
Because Cardano’s founder has also been co-founding Ethereum, the project is oftentimes positioned to be a core alternative to Ethereum. In principle, both protocols are used for similar functions, such as smart contracts, and aim to build decentralized ecosystems. However, Cardano outperforms the current version of Ethereum, especially when it comes to transaction speeds and throughput.
In terms of updates, Cardano recently released its highly anticipated Alonzo upgrade. Since the release of the upgrade, the blockchain network can now support a wide range of decentralized applications, including NFTs and smart contracts.
The upgrade puts the Cardano protocol in the same class as Ethereum, the world’s leading smart contract platform. Furthermore, sometime in 2022, Cardano is expected to implement the Basho upgrade. This will be intended to enhance the scalability of the protocol by adding sidechains to ease the transactional load on the mainchain.
Thereafter, Cardano expects to introduce the Cardano Vasil hard fork. This upgrade will serve to lower transaction costs. The final stage of the upgrades following the Basho era will be the Voltaire phase. This will see Cardano move from its current setup, whereby IOHK is still managing the blockchain in some areas, to a new form that will introduce a voting and treasury system that enables holders to have a more direct say in the running of the Cardano network.