What Is Cardano (ADA) - A good buy?

Cardano or ADA the cryptocurrency has been getting a lot of publicity lately and rightfully so. It's now the 3rd largest market cap coin! In this post I'm going to go over what exactly Cardano is and my thoughts on if it's still a good investment or not.

As of writing this Cardano (ADA) trades for $1.32 each with a total market cap of nearly 41 Billion.

What Is Cardano?

Cardano is a peer-reviewed blockchain. It was created as a non-profit by a network of academics and scientists from universities such as University of Edinburgh and Tokyo Institute of Technology that reviewed the protocols before releasing. It's a third-generation cryptocurrency and smart contract that claims to improve on the scaling issues we see plague bitcoin and Ethereum.

How It Works

The platform consists of two layers.

1. The CSL - Cardano Settlement Layer which is used to settle transactions that use ADA.

2. A control layer which is still under production however many of the new protocols have been released as of late that is giving it more functionality. Belief in the project has been growing significantly.

March 1st a crucial update will be taking place which will bring in Native Tokens and Multi-asset support to the platform. This will allow NFTs to take place on the platform which as of just a few weeks ago has been a HUGE trend going on. This could skyrocket the price of ADA once implemented after March 1st. Right now it is all speculation on the price hike.

How is it mined?

Cardano is mined via the POS Proof of stake algorithm however with some unique features. Normally a POS system operates in a way that whoever holds the most tokens has a higher chance of mining the next block.

Ouroboros is the algorithm that Cardano uses and it operates in this way. Ouroboros divides physical "time" into epochs which are made up of slots (fixed periods of time) Think of slots as being working shifts in a traditional sense of when you have a job.

Each Epoch has a slot leader that is elected by stakeholders or nodes that have already generated coins. The slot leaders are responsible for creating and confirming the transaction blocks to be added to the chain. If it fails the next slot leader gets another shot at it during the next epoch. At least 50 percent of the blocks must be produced within a given epoch.

The entire systems rewards three total areas of which there are tokens plus mining rewards. The three are

1. Input endorsers
2. Multiparty computation stakeholders
3. Slot leaders

Possible Issues But Improvement

While every major block chain learns from older block chains they will continue to evolve and get better. This will cause some older block chains to die out if development does not continue on them. ADA is actually a rather old block chain however it greatly improves on a number of areas.

While it still doesn't totally fix the possibility of the double-spending as some of the input endorsers could in theory end up approving the same set of transactions from two different slot leaders.

The solution to this could possibly be Sharding a system in which Ethereum has looked at heavily. However there are many complications of sharding and it should be noted it's why we have yet to truly see sharding in action as of yet.

Overall thought Cardano seems like it's in a very good spot at the moment. Providing a source of NFTs which is in very high hype and demand right now along with reduction in price. However it's untested and no matter how much research and work you do on something you never fully know what's going to happen until you roll it live.

For me this is a good short term buy and closely watch how the new NFT system is performing. If well it could make for a solid long term hold. However be watchful of the possibility of slow high fees again and with that possible issues with the new rolled out system.

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