What Is Cardano? 

Cardano is a blockchain project and cryptocurrency founded by Charles Hoskinson, one of Ethereum's co-founders, to "provide a more balanced and sustainable ecosystem" for cryptocurrencies. According to its website, ADA is the only coin with a "scientific philosophy and research-driven approach." In practical terms, this means that its open-source blockchain undergoes a rigorous peer-review process by scientists and programmers in academia.

Cardano History

Cardano was originally released in 2017 by Hoskinson and Jeremy Wood after founding IOHK in 2015, a business created to develop blockchains for enterprise uses. The Cardano blockchain uses a proof-of-stake consensus mechanism called Ouroboros and has a total supply of 45 billion ADA.

ADA was named after Ada Lovelace, a nineteenth-century mathematici💝an considered by many to be the first computer pꦇrogrammer.

How Is Carꩵdano Diffe♓rent From Bitcoin and Ethereum? 

Cardano calls itself the first third-generation blockchain created to tackle scalability, int🐬eroperability, and sustainability issues Bitcoin (first-generation blockchain) and Ethereum (second-generation blockchain) had. As part of its attempts to improve upon previous blockchains, the primary differences are in its accounting model and governance system.

Accounting Models

One of the most significant differences between Cardano and the two most popular blockchain projects is its accounting model. Bitcoin uses the unspent transaction output (UTXO) model, where there are no accounts, only inputs and outputs. On the Bitcoin blockchain, an output is the result of a transaction. These transactions are similar to using cash, where a bill is handed to someone, who gives back change. The blockchain sends the entire output (the "bill") to the new address and returns any "change" to the originator. The "change" is now an unspent transaction output.

The Ethereum blockchain uses accounts where a balance is tracked, and value is transferred between addresses. This is much simpler for people to understand because it's similar to the way banks use electronic ledgers and accounts for balances and transfers.

Cardano uses what it calls extended unspent transaction outputs (EUTXO), which uses smart contracts to manage UTXOs.

Governance

Blockchain governance is the ability for users to have input regarding changes to the blockchain and cryptocurrency. Most pro🌄jects use one of two governance models: on-chain or off-chain. Bitcoin and Ethereum use an off-chain model where community members can create proposals. These proᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚposals are evaluated, discussed, tested, discussed more, and, if accepted, eventually programmed into the blockchain. If a majority of node operators upload the changes, the blockchain upgrades.

In September 2024, Cardano switched to an on-chain voting mechanism, where stakeholders can propose and vote on protocol changes or other matters pertaining to the project.

What Is The Market for Cardano? 

Car🌜dano’s primary use case has been as a p𝕴ayment platform using its cryptocurrency ADA. Its developers have ambitious plans for the future, intending to move beyond settlements and serve as a platform for developers to create decentralized projects and possibly Web3 applications.

Cardano claims it is useful for other applications, including education, where diplomas can be tokenized; anti-counterfeiting uses through tokenization; supply chain management and solutions; reducing government expenses through digital identities and documentation control; finance; and health care and pharmaceutical solutions.

The Bottom Line 

Cardano has an impressive pedigree and a long-term vision for its blockchain and cryptocurrency. While its initial use case was as a cryptocurrency, Cardano’s blockchain has expanded beyond coins into a global platform that can provide blockchain-based services. However, many other blockchains offer the same solutions, so whether the blockchain will survive and thrive is anyone's guess.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our for more info. As of the date this article was written, the author owns BTC, ETH, ADA, and XRP.