Estimated reading: 7 mins

A Comprehensive view on Cardano

In this blog post, we will explore what Cardano is and its main features.

What is Cardano?

Cardano is a general-purpose blockchain, much like Ethereum, where you can run nodes, develop Smart Contracts and DApps, and a consensus algorithm powers it. It has its own crypto native currency called ADA, which can be used to validate transactions as we will see later on.

Cardano was founded by Charles Hoskinson, the co-founder of Ethereum, and it is said to be a "third-generation" blockchain that is designed from the ground up to solve all the problems previous generations had. It has a scientific approach to problem-solving with academic peer-reviews of everything they do.

Blockchain generations

Generation I

It is said that Bitcoin is first generation Blockchain, as it is the first one to appear, and it has one "layer" where all the transactions are settled, and the consensus algorithm Proof Of Work (PoW) runs. The only thing that we can do with Bitcoin is to transfer money from one account to another. While it's true that Bitcoin can support some logic around how to spend the money (timelocks, multi-signature transactions, etc.), it's still very primitive. Also, the PoW consensus algorithm has been criticised a lot due to power consumption. Another common pointed issue with Bitcoin is the time it takes to validate transactions, with a 10 min block time, it's becoming a sort of "legacy" blockchain for some people.

Generation II

The most prominent blockchain nowadays is Ethereum, and it's considered a second-generation Blockchain. This blockchain has a settlement layer of transactions and consensus algorithms, but also adds a new dimension by including a Turing-complete programming language. This means the possibilities for programming money are endless. With second-generation blockchains like Ethereum, we can program complex Smart Contracts that can re-create the logic of common financial instruments in a decentralised way, for example, with DeFi. One of the biggest problems that this generation has is its scalability. Ethereum still has around 17 transactions per second, and if you think about the number of projects that are building on top of it, it is becoming more and more complex to scale. Other problems are around security (DAO and DeFi hacks) and flexibility (currently, most changes in the core protocol might need a hard fork to implement them).

Generation III

Third generation Blockchain aims to solve all of the above problems from the start. We will go deep into how Cardano is going to fix these issues later on, but first let's have a look at Cardano's organisational structure, to get a grasp on how immense this project is.


Cardano's organisation is constituted of three major players:

Cardano: A Comprehensive view

Input Output Hong Kong

Founded in 2015 by Charles Hoskinson and Jermy Wood, this company is focused on the research and development of different blockchain and decentralisation solutions. It is the scientific branch of Cardano organisation and is in charge of the main development. Input Output also supports other projects such as Ethereum Classic, Symphony, Scorex and others.


Emurgo is a multinational company founded in 2017 based in Japan. It develops, funds and supports different commercial projects helping them to integrate Cardano's Blockchain technology. It is the commercial branch of Cardano's organisation. It works with all sorts of enterprises, from startups to big governmental agencies. Emurgo also develops the Yoroi wallet, which can be used to hold ADA.

Cardano Foundation

The Cardano Foundation is an independent entity based in Switzerland which supervises the development of Cardano and its cryptocurrency ADA. It works together with IOHK and Emurgo to promote the use of Cardano and take it to the masses. The Foundation also helps to establish industry standards, facilitate partnerships, grow the community and help with Blockchain legislation.

Cardano Design Principles

From the beginning, Cardano had a different approach to all the solutions and endeavours they pursue. They want to take a scientific approach with a focus on some principles that will guide them to their goals. Everything that they do are based on these three design principles:

  • Scalability
  • Interoperability
  • Sustainability


Cardano tries to solve the scalability problem from the beginning. To achieve this, they assess the scalability problem not only as increasing the transactions per second that the network can process but also as the increase in the network availability and the data scaling. Each of these aspects has a lot of thought behind it, white papers and solutions in place that we won't go into in this article, but it's worth mentioning.


Interoperability refers to the ability for a blockchain to interact with other blockchains. As Cardano's founder Charles Hoskinson said: "There won't be one coin to rule them all". It is most likely that in the future, we will have a lot of tokens and Blockchains for different use cases. Cardano's intention is to position as the "Internet of Blockchains" meaning they can provide seamless interoperability between different blockchains, so all projects can be interconnected. To achieve this, they want to develop "side-chain" solutions that can implement "cross-chain" transactions.


According to Charles Hoskinson, this might be the toughest problem to solve. It refers to how Cardano is going to pay for future developments and growth. The most prominent idea around this is to implement a Treasury system inside Cardano's blockchain, very similar to how the Dash treasury system works. In a nutshell, this system will work by using some of the block rewards as a deposit to the treasury. Whenever there's a new change proposed or a new feature that wants to be introduced to the network, the developers must submit a ballot, and Cardano stakeholders can vote and decide if the ballot should be granted or not. If the proposal is approved, the ballot submitter gets the grant for development.

Layers Design

One of the main approaches Cardano has to stand the test of time and face future challenges is their two-layer design. The blockchain is clearly divided into two separate layers:

  • Cardano Settlement Layer (CSL)
  • Cardano Computational Layer (CCL)

Cardano Settlement Layer

The CSL is the layer where the ledger of accounts with their balances live. As its name suggests, it is the layer where transactions are settled, and the consensus algorithm Ouroboros is executed.

Cardano Computational Layer

The CCL is the layer where all computation is executed, meaning where all the Smart Contracts execution takes place. This layer is clearly separated from the settlement layer to account for more flexibility in case of future changes. A good example on how this approach differs from Ethereum is that in Ethereum both layers are merged, so any core change to Ethereum might end up in a fork that can potentially divide the network (like it did with Ethereum Classic). With the separation of the two layers, Cardano intends to avoid future forks and problems while maintaining flexibility.

Programming Languages

Cardano has a particular approach on the programming languages for their Smart Contracts. Unlike other competitors such as Ethereum or EOS that use an Object-Oriented Programming paradigm (Solidity, Vyper in Ethereum, and C++ in EOS), Cardano uses a Functional programming approach.

The languages used for developing on the Cardano platform are Haskell and Plutus. Haskell is an old functional programming language, and Plutus is a new one developed by Cardano based on Haskell. The main advantage of having a functional programming paradigm is that every piece of code can be verified mathematically; this means that it is a lot harder to introduce bugs when coding Smart Contracts. This is Cardano's approach to avoid unexpected problems by providing a more secure programming language to developers. The downside of this is that there are not many functional programmers, and many will have to learn this paradigm in order to be able to code on the platform. This is the opposite approach of Ethereum's Solidity, which is very similar to JavaScript, a very popular web language.

Ouroboros Consensus Algorithm

The Consensus Algorithm used in Cardano is called Ouroboros and is a variation of Proof Of Stake. It is said to be provably secure by providing mathematically verifiable security against attackers. The protocol is guaranteed to be secure as long as 51% of the stake — in the case of Cardano, ADA — is held by honest participants, which, in addition to other novel concepts, is achieved through random leader selection. The protocol continues to evolve through new iterations and rigorous security analysis.

Ouroboros protocol features an incentive mechanism that rewards network participants for their participation - either by operating a stake pool or delegating a stake in ADA to a stake pool. Rewards (in the form of ADA) can be earned by completing either of these activities.


ADA is the native cryptocurrency of Cardano. It is named after Ada Lovelace: a 19th-century mathematician who is recognised as the first computer programmer and is the daughter of the poet Lord Byron.

The ICO was between 2015 and 2017, and today's price is around 0.1227 (updated July 9th 2020).

Every ADA holder also holds a stake in the Cardano network. ADA stored in a wallet can be delegated to a stake pool to earn rewards — to participate in the successful running of the network — or pledged to a stake pool to increase the pool's likelihood of receiving rewards. In time, ADA will also be usable for a variety of applications and services on the Cardano platform.

Cardano: A Comprehensive view

Daedalus Wallet

Daedalus is the full-node desktop wallet developed by IOHK. This wallet downloads a full copy of the Cardano blockchain and independently validates every transaction in its history. This provides maximum security and completely trustless operation, without centrally hosted third-party servers.

Cardano: A Comprehensive view

Cardano Roadmap

Cardano has a clear Road map and the means to achieve it. As with any ambitious software and/or crypto endeavours, there may be delays and Cardano is no exception. The original Roadmap was planned to deliver Shelley Mainnet a bit earlier than it will deliver, but it doesn't seem to affect expectations of investors, users and developers. As of July 2020, Cardano is about to launch Shelley Mainnet, which will be a huge milestone for the team. This phase will enforce decentralisation and staking rewards for validators.

Cardano: A Comprehensive view


Cardano has certainly been behind on the delivery of their solution compared to Ethereum and other general-purpose blockchains, but this is because they are not compromising quality and security with timelines, which is an interesting approach in these fast times. The magnitude of this endeavour is very ambitious, and we are slowly seeing the results of many years in the making. This year is proving to be a great one for Cardano with the launch of Shelley Mainnet, but the future also looks bright with many milestones ahead in the following development phases. The crypto community welcomes Cardano and all the possibilities it can bring to the world.

About the author:

A software developer by profession, and a traveller by heart, Juan Nuvreni has lived and travelled in many countries. Once he recognised the power of Bitcoin and Blockchain technology, there was no way back. Driven by the potential to create a fairer world through technology, he is now on a mission to educate and spread the word of blockchain.


The above references an opinion and is for informational purposes only. Do not take this as personalised financial advice or investment advice. The views expressed by the author do not necessarily represent the opinion of BitPrime.

Last updated: 15/07/2020

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