Cardano | What is it? | The pros and cons?

What is Cardano?

Originally invented as an alternative to Ethereum and now commonly known as “Eth Killer,” Cardano is the first open-source & peer-reviewed decentralized blockchain protocol that uses a scientific approach.

Cardano was founded by Charles Hoskinson, co-founder of Ethereum, and the third-generation public blockchain and Dapp development platform.

The platform received international media attention for its novel feature of incorporating a peer-reviewed research strategy into its core principles. Today belongs ADA to the top of the cryptocurrencies in the world.

The Cardano blockchain essentially allows people to build smart contracts, create decentralized applications and protocols, and instantly send and receive money at a nominal cost.

The developers aim to create a blockchain platform that can process more transactions at minimal cost and deliver advanced features based on a rigorous scientific and research-based process.

While at the same time protecting users’ data by integrating the distributed ledger technology (blockchain) and the smart contract infrastructure.

Like many other cryptocurrencies, the Cardano utility coin ‘ADA’ is used as a value transfer. However, its functionalities differ from those of other cryptocurrencies.

Stake pool operators use it in the staking system to maintain protocol security. In addition, those who deploy their ADA tokens on the blockchain use them to verify and substantiate transactions.

How does Cardano work?

Cardano uses a unique two-layer framework. As mentioned above, one is used to settle trades with minimal transaction fees, while the other is used to smart contracts and run decentralized apps. They are known as The Cardano Settlement Layer (CSL) and The Control Layer respectively.

Cardano strives to be as third generation cryptocurrency address some of the most common issues with large-scale blockchains.

These issues relate to the blockchain, including topics such as scalability, interoperability and sustainability. Cardano strives to overcome these problems through the development of design principles and engineering best practices.

The respective methods Cardano’s team uses to address the issues are detailed below:


In the current era, there are many cryptocurrencies on the market, each with its own unique features, benefits and functionalities. Cardano is trying to market standards to enable interoperability between the networks. These systems include blockchain governance models, system upgrade protocols, and feature sets.


Initially, Cardano could only process about ten transactions per second (tps). Recently, however, Hoskinson released a paper explaining a new network scaling solution – Hydra. Hydra is a Layer 2 scaling solution that uses state channels to process transactions off-chain. By using this technology, Cardano has the ability to process more than a million transactions per second.


Allowing blockchain interoperability introduces a new set of risks developers must address and manage. Managing these security concerns is a segment that Cardano aims to dominate. Currently, the platform has regulations governing privacy, security, and decentralization.

How Does Cardano’s Blockchain Differ?

At the heart of Cardano is the proof of stake algorithm called Ouroboros. Unlike proof-of-work protocols, Cardano’s protocol is less energy-consuming and more affordable.

Ouroboros is an off-chain based PoS protocol. It relies on randomly chosen leaders to approve and substantiate blocks.

Like the blockchains in most other cryptos, the node that adds the next block receives a reward for its efforts. However, the Ouroboros protocol is very different from other proof-of-stake algorithms. The blockchain is split into epochs, which consist of fixed periods called slots.

The technical details of this system are impressive. The leaders are chosen based on the fixed bet distribution and a random seed. This seed uses a multi-party computation (MPC) between stakeholders in the previous epoch to generate randomly.

Stakeholders can improve their chances of being selected based on the amount of ADA they deploy. As a result, Cardano has introduced the first demonstrably secure proof-of-stake protocol.

The team behind Cardano?

Charles Hoskinson (founder of Cardano) started its blockchain journey early on. In 2013, he founded an online school called the Bitcoin Education Project, where he Vitalik Buterin stumbled upon.

Not much later he became one of the eight original co-founders of Ethereum. After disagreements over whether Ethereum should become profitable, Charles left Ethereum in 2014.

Apart from the founder, Charles Hoskinson. Does Cardano have an impressive, multi-talented team with complementary expertise. Hoskinson called Cardano’s essential goal “to provide a more balanced and sustainable ecosystem” for cryptocurrencies.

After being approached by Jeremy Wood, a former Ethereum colleague, IOHK was founded. IOHK is an engineering firm that builds cryptocurrencies and blockchains for businesses, government agencies and academic institutions.

The company has a diverse team of engineers, scientists, business professionals, educators and open-source collaborators. They have Cardano built from scratch. Cardano development remains IOHK’s most important project.

The Cardano Foundation is the non-profit organization behind the platform. This foundation protects the protocol technology and ensures its functionality. In addition, they promote industry standardization to promote interoperability.

Acting as Cardano’s legal custodians, the foundation works with regulators to: encourage adoption, shape blockchain governance, establish commercial standards, and support Cardano’s user community to use Cardano to solve real-world problems.

Finally, Cardano has also partnered with Japanese incubator EMURGO. This team focuses on commercial ventures and how to promote the use of blockchain technology in various sectors.

Cardano benefits

Understanding the pros and cons of Cardano is essential when deciding whether ADA is a good and potentially profitable investment. Hence, they are discussed below:

There is a great development team behind Cardano:

Due to its infamous founders, who were ex co-founders of Ethereum, Cardano gained a lot of popularity after its official release in 2017. Moreover, Cardano’s peer-reviewed framework ensures that there are no weaknesses are in the protocol.

Cardano has support from academia

Cardano benefits from being one of the very few coins that positive reviews received from academics. In addition, many academics work for IOHK and write papers on what they believe would improve Cardano’s prospects. This gives Cardano a credibility that most coins do not have.

Cardano uses multiple layers:

By implementing a settlement layer and a compute layer, Cardano ensures unlimited scalability and fast transactions.

Novel Third Generation Blockchain:

Cardano has been declared a third-generation blockchain. It is considered more reliable than other cryptocurrencies as ADA continues to overcome challenges. It is also more decentralized than Bitcoin (first generation) & more scalable than Ethereum.

Cardano is more secure and can provide digital identity:

Cardano uses a proof of stake protocol that guarantees mathematically proven security. With the increased number of cyber attacks, hacks & hacking attempts in the crypto sector, there is no doubt that security is a crucial aspect.

Companies are positive about Cardano:

Charles Hoskinson claims that there are now over a hundred companies that want switching from Ethereum to Cardano. In addition, the number of companies investing in Cardano is predicted to increase with the announcement of Cardano’s recent upgrade and the rise in Cardano’s price.

Besides, Cardano is now listed on Coinbase, which will add credibility & will make it easier for more traders to buy Cardano, increasing the market cap.

Disadvantages Cardano

As with any investment where there are advantages, there are also disadvantages. Following are some negative aspects of Cardano:

Cardano is still in the development phase:

Although Cardano is known as the ‘academic blockchain’ with essential scrutiny and testing, the crypto is undeniable still in its development phase.

This is the main reason why Cardano has lost its position against Ethereum and other cryptos as it still has to deal with incomplete smart contracts, token standards and still working on its scalability aspect.

While cryptos like Ripple can process 1,000 transactions per second, Cardano facilitate only 257 transactions per second. In addition, Cardano did a lot of work to decentralize in mid-2020 when they released their Shelley upgrade, but unfortunately decentralization is still an issue.

But maybe the most disturbing of all, Cardano does not yet have a smart contract and dApp capabilities. This is a major concern as these are the primary features that are essential to the crypto’s prospects.

Concern that Cardano’s value is highly speculative:

The fear that the bulk of Cardano’s value is based on hype is circulating. Cardano claims in research papers that they are the best, but do not provide much evidence. Unfortunately, investing in Cardano is indeed, at the moment, largely speculative until they deliver.

Cardano’s plan to implement a voting system:

However, while having an open voting system where upgrades can be proposed and democratically decided is an attractive factor, it seems to be a double-edged sword simply because token holders are not always tech savvy and could vote for an unreasonable decision.

Ethereum’s PoS Researcher Vlad Zamfir Argues That on-chain voting is dangerous. He notes that the system enforces rule changes on entire nodes. This strategy removes an important control and balance provided by informed node operators.

Charles Hoskinson’s Unpredictable Behavior:

Charles Hoskinson’s erratic behavior has caused mixed views of himself in the eyes of the public. Some see him as self-centered and indecisive by his experience to go back on his statements. Such an image has negative consequences for the currency.

Conclusion: is Cardano a good investment?

Considering the advantages & disadvantages above, despite all the criticism and negative aspects around Cardano, it can be said that Cardano is still a good investment, it is currently the current number 3 in the ranking of coinmarketcap and has the potential to in 2021 to rise to a few dollars. I would like to say that this is not financial advice.

Buy Cardano with IDEAL

Due to the popularity of the coin, Cardano is available on almost all Dutch crypto brokers. Bitvavo is the most famous and cheapest broker in the Netherlands where you can buy Cardano. This can easily be done via IDEAL. As a welcome bonus at Bitvavo you get 1000 euros free trading costs in the first 7 days after your registration.

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