This story is addressed to people who want to enter Cardano’s cryptoworld, but do not have enough time to study the documentation.
Cardano blockchain is named after Gerolamo Cardano, who lived in the 16th century and was an outstanding scientist and researcher in many fields of Renaissance science: medicine, biology, astronomy, physics, mathematics, and philosophy. He invented a Cardan shaft with universal joints (used in contemporary vehicles) and introduced the Cardan grille, a cryptographic writing tool. In my humble opinion, the last is the main reason why his name (besides its euphony) was chosen for the new cryptocurrency platform started working in 2017.
After leaving the Ethereum project, Jeremy Wood started Input Output in 2015. He is Cardano’s co-founder and Chief Strategy Officer in IOHK. The architect, CEO, and co-founder of the Cardano platform (as well as the co-founder of BitShares and Ethereum) is Charles Hoskinson. Cardano team is truly international — there are more than 400 people across 50 countries. The team consists of developers, researchers, supporters, and management. At the moment, network is driven by IOHK, whose headquarter is located in Hong Kong, Input Output Global, and Swiss-based Cardano Foundation.
At the moment (September 2021), a key market for ADA circulation is Africa, Asia, and Latin America, i.e. developing economics. The main idea behind that is to help people in developing countries to implement simple, affordable, reliable, and secure decentralized financial services (DeFi). In such countries, most people do not have the opportunity to open a bank account or to ensure life and property.
Nonetheless, the fact that staking pools are predominantly located in developed countries is absolutely evident.
ADA cryptocurrency ticker stands for Ada Lovelace, who was the English mathematician, first computer programmer, and daughter of Lord Byron. Lovelace is a minimal part of ADA, the same way as Satoshi is a minimal part of Bitcoin, or Wei is a minimal part of Ether.
ADA’s coin_type decimal index is 1815 (the year of her birth).
One ADA is the equivalent of 1 million lovelace:
1 ADA = 1,000,000 lovelace
1 lovelace = 0.000001 ADA
One BTC is the equivalent of 100 million satoshi:
1 BTC = 100,000,000 satoshi
1 satoshi = 0.00000001 BTC
One ETH is the equivalent of 1 quintillion wei:
1 ETH = 1,000,000,000,000,000,000 wei
1 wei = 0.000000000000000001 ETH
ADA circulates on the mainnet. On the Cardano testnet, you have to pay with tADA (test ADA). There is also a faucet for tADA. Faucet’s limit is 1000 tADA a day.
ADA is considered as eco-friendly crypto because there’s no mining in traditional sense. Charles Hoskinson said that Cardano is 1.6 million times more energy-efficient than Bitcoin. Ethereum, however, promises to be green, reducing energy consumption by 99.95% by using staking instead of mining.
The following table represents what the annual worldwide energy consumption for every network is:
| Network | Energy Consumption |
| Cardano | 7 gigawatt-hours |
| Bitcoin | 119 terawatt-hours |
| Ethereum | 45 terawatt-hours |
| VISA* | 97 terawatt-hours |
*One TeraWatt is 1000 times bigger than one GigaWatt.
*VISA consumed 97 Twh a year in 2017 — according to this medium srory.
Both, banking and gold industries consume greater than 500 Twh a year.
ADA is one of the top 3 cryptocurrencies in the world. Its market cap reached $85 billion this week. At the moment, ADA has approximately 32 billion forged coins in circulation, while 45 billion is a max supply. Some of the coins that are not in circulation (in fact, it’s a public fund of Catalyst Project) will be used as incentives when the community votes for innovations in the Cardano ecosystem.
Take into consideration that the volatility of ADA, BTC, and ETH is quite high. Be smart about investing in any cryptocurrency.
| Ticker | Capitalization | Coins in circulation |
| ADA | $84 billion | ≈ 32 billion |
| BTC | $865 billion | ≈ 19 million |
| ETH | $402 billion | ≈ 117 million |
ADA can be bought not only via credit cards but also via Apple Pay.
Transactions in Cardano are approved by validators, not miners like in Bitcoin or Ethereum networks. With Proof-of-Stake, validators can process transactions and put them into new blocks based on the amount of coins they hold. In Cardano, if an attacker wants to carry out a 51% attack, he’ll need to obtain 51% of the cryptocurrency circulated in the network. So, this type of attack is monstrously expensive.
To begin staking, every new validator must freeze 2 ADA, that’s a register key deposit, and pay a small fee. To join a staking pool is simple — just delegate coins from your wallet to a pool (make a stake). You’ll get 2 ADA back when you undelegate. Staking is 100% safe. You’re using a right to delegate to a pool, which is a separate action from transferring funds, that is, for staking, you’ll have the appropriate stake-address.
When staking, pay particular attention to saturation parameter. Beyond the 100%, rewards will decrease. It encourages other stakeholders to seek unsaturated pools — that’s good for decentralization.
At the moment, the total number of stake pools is greater than 3000.
Cardano is marked as a third-Gen network, whereas the first-Gen network is Bitcoin and a second-Gen one is Ethereum, respectively. Cardano inherits the advantages of many existing blockchains and offers scalability, interoperability, sustainability, and the capability of storing metadata of each transaction.
It seems to me that Cardano’s Byron Era metaphorically reflects the poet’s bad temper during his lifetime and worldwide fame after his death. And we see that before moving to Shelley Era, the network suffered from a lack of decentralization, impossibility of staking, and a lack of smart contracts. At the same time, we understand that it was the Byron Era that started everything Cardano now has.
Cardano is based on peer-reviewed academic research, and unlike Bitcoin and Ethereum, network architects use formal verification throughout.
Cardano employs a different type of elliptic curve for public key cryptography compared to Bitcoin and Ethereum. Edwards curve edwards25519 is implemented in Cardano. But Bitcoin and Ethereum use secp256k1. Edwards curves are offering a better performance among all elliptic curve families.
Cardano network implementation is divided into nine eras. Yesterday, 12th Sep 2021, the Goguen era launched. This era allows developers to create Smart Contracts and Dapps. Below is a list of eras with short descriptions:
- Byron-Era, named after Lord Byron, brought foundation of the network
Byron era combines epochs 0 to 207 in the mainnet
- Shelley-Era, named after Percy Shelley, brought full decentralization
Shelley era combines epochs 208 to 235 in the mainnet
- Allegra-Sub-Era, named after Allegra Byron, introduced a token locking mechanism
Allegra hard fork combines epochs 236 to 250 in the mainnet
- Mary-Sub-Era, named after Mary Shelley, introduced a way to create unique tokens for transactions
Mary hard fork combines epochs 251 to 289 in the mainnet
- Goguen-Era, named after Joseph Goguen, introduced smart contracts, Dapps and DeFi capabilities after the Alonzo hard fork
- Alonzo-Sub-Era, named after Alonzo Church, brings smart contracts
Alonzo era has started from 290 epoch in the mainnet
- Babbage-Sub-Era, named after Charles Babbage, will eliminate flaws of Alonzo (development’s in progress)
- Basho-Era, named after Matsuo Basho, will bring a scalability (development’s in progress)
- Voltaire-Era, named after “Voltaire” or François-Marie Arouet, will bring a governance (development’s in progress)
Goguen-Era has brought a long-awaiting capability of developing smart contracts, allowing us to send Plutus scripts. Smart contracts are simply short programs stored on a blockchain that run when predetermined conditions are met. Cardano and Ethereum are Turing-complete blockchains. Bitcoin isn’t fully, so in Bitcoin network, you’re able to use just a rudimentary form of smart contracts.
Moreover, do not forget that Cardano uses a payment model called Extended Unspent Transaction Output, or EUTxO. This model is an evolutionary continuation of the UTXO model found in Bitcoin network, which is completely different from the Account-based model used in Ethereum.
Pay attention, in Bitcoin script, sees just a Redeemer that contains all the logic necessary to verify Tx. In Ethereum, the script sees the whole blockchain, and that’s not good due to security reasons. In Cardano, a script sees all the Tx-ins and Tx-outs, and this makes the transaction, on the one hand, more secure than in Ethereum, and on the other hand, more far-sighted than in Bitcoin.
Cardano network uses Proof-of-Stake (PoS) consensus mechanism instead of a notorious Proof-of-Work (PoW), found in Bitcoin and Ethereum. The difference between the two protocols is huge.
When ASIC equipment is mining (i.e. using PoW), to prove that a work was done, it’s trying to find an SHA-256 hash number with several leading zeros. At the moment of writing this Medium story (September 12, 2021), the Bitcoin ledger keeps its records in 700,175 blocks. The last block’s hash has 19 leading zeros. To brute-force such a hash value is extremely difficult.
With Proof-of-Stake, however, validators don’t need significant processing power, like in Bitcoin or Ethereum networks. Cardano validators, depending on their stake’s size, are randomly selected to add a submitted transaction to their proposed block. Unchosen validators must attest to that block.
By the way, at this time, the Ethereum team has been changing the consensus mechanism from PoW to PoS.
The definition of ouroboros word, found on web, is as simple as this:
A circular symbol depicting a snake, or less commonly a dragon, swallowing its tail, as an emblem of wholeness or infinity.
Ouroboros protocol is the fundamental driving force of Cardano network. Although, Ouroboros is rather a family of PoS blockchain consensus protocols that can run both permissioned and permissionless blockchains.
...laid the foundations as an energy-efficient protocol.
...successfully finds consensus for honest validators in the range of 50.001 % < consensus < 66.667 %, while maintaining transaction processing speed and decentralization.
...is able to support more users and the staking process while being secure against DDoS and other attacks.
...adds a novel chain selection rule, which enables parties to bootstrap from a Genesis block.
...is an off-chain scalability architecture that addresses three key scalability challenges: high-transaction output, low latency, and minimal storage per node.
...is the formally analyzed privacy-preserving proof-of-stake protocol. Having it under the hood, IOG development team can provide a high degree of security for a private currency in private ledgers.
...provides permissionless clock synchronization that allows parties to establish a common notion of global time by leveraging a weaker synchrony assumption, i.e. local clocks with approximately the same speed.
- Ouroboros Omega (development’s in progress)
...brings together all aforementioned components.
Time in Cardano mainnet is quite a specific entity. It’s divided into epochs, which last 5 days, and every epoch is divided into slots. One slot lasts one second. There are 432,000 slots in every epoch. Thus 21,600 blocks are created in every epoch. A new block is created every 20 seconds, on average.
21,600 blocks x 20 sec = 432,000 slots
The latest block in blockchain, at the moment, is block 6234350 and the current Cardano epoch is 289. So the total number of blocks inside 289 epochs in the ledger is 6,242,400 blocks, inclusively.
21,600 blocks x 289 epochs = 6,242,400 blocks
In Delegation center of a Daedalus wallet we can read these lines:
Changes to delegation preferences will take effect after both the current and next Cardano epochs have completed. Epochs on the Cardano mainnet last 5 days. Any changes made now will take effect in 7 days, 12 hours and 33 minutes.
Hence, if you need to start staking, even when you already delegated your funds to a desired stake pool, you can’t stake immediately — you have to wait for a beginning of an epoch after the next epoch, at least.
Please note, if your pool couldn’t mint a block at epoch 292, you will not receive the reward. Thus you have to wait for epoch 293.
Usually, you’ll get your first reward in 21…25 days. C’est la vie.
Cardano open source code is written in Haskell — secure language with a functional paradigm, type inference, and lazy evaluation. On-chain and off-chain code is written in Haskell.
Here’s how the Haskell code snippet looks like:
powerOfTwo :: Int -> Int -> Int
powerOfTwo base n = base ^ nmain = do
putStrLn "A power of two is:"
print(powerOfTwo 2 8)
A power of two is:
There are several software/hardware wallets for storing ADA. To name a few:
- Daedalus — Software desktop wallet for Windows, macOS, and Linux
- Wallet Command-Line Interface — Supports Linux, macOS, Windows
- Yoroi — Software wallet for Chrome, Firefox, iOS, Android
- AdaLite — Supports hardware wallets Trezor T and Ledger Nano X/S
- Nami — Browser-based wallet
- Exodus — Software wallet for Windows, macOS, Linux, iOS, Android
- Trezor — Hardware wallet
- Ledger — Hardware wallet
- Tangem Card — Hardware cryptobill (NFC-powered)
Tip: Never store your ADA in exchange wallets nor in online wallets. Your funds are exposed to server hacks, the bankruptcy of the service company, or legal seizures.
There are four styles of receiving addresses you can find in blockchain:
- Icarus-legacy-style: starting with Ae2 — Byron-era
- Daedalus-legacy-style: starting with DdzFF — Byron-era
- Jörmungandr-legacy-style: starting with ca1 — Byron-era
- Daedalus-new-style: starting with addr1 — Shelley-era
Also, Shelley-era introduces four different types of addresses: base addresses, pointer addresses, enterprise addresses, and addresses for collecting staking rewards. Shelley continues to support Byron-era bootstrap addresses and script addresses.
Plutus is the Greek god of wealth. According to mythology, Zeus blinded Plutus when he was young so that he would not just bless wealth onto those who were deserving of it but onto everybody.
In Cardano, Plutus is a smart contract language built on Haskell. You can use it for decentralized applications (DApps). There’s also a specialized smart contract language, Marlowe, that is based on Plutus and designed for non-programmers in the financial sector.
The best part is that you can try Plutus online in the Plutus Playground.
The final goal of the Cardano team is to gain full decentralization, the highest network security, autonomous governance, and scalability.
The last factor is crucial — let’s discuss why. Now Bitcoin processes up to 7 transactions per second (LN layer isn’t even implemented in 20% of BTC wallets yet). Visa, on the other hand, processes about 4,000 transactions per second. Cardano, at the moment, is able to process about 250 transactions per second. With the addition of a new layer, called Hydra, Cardano could potentially process up to 1 million transactions per second.
That’s all for now.
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If you have any questions you can reach me on Cardano StackExchange.
Happy staking, and Happy Programmer’s Day!