What is Cardano and How Does it Work

Today I am introducing you all to the now third most popular cryptocurrency, Cardano ADA. In this article, I will give you all a walkthrough of what the Cardano blockchain technology is, how it works, and some other related information.

So let us get started.

What Is Cardano?

Cardano is founded by Charles Hoskinson, the co-founder of Ethereum in 2018.

It is an open-source blockchain network made to build financial applications that can be used by businesses, governments, and consumers worldwide and is developed in layers.

It also enables users to send and receive digital currency directly and quickly. These transactions are made cryptographically secured. ADA represents the cryptocurrency token of the Cardano blockchain technology.

Their well-admired team of developers and engineers have integrated a layered development feature that allows easy maintenance and upgrades in the blockchain with soft forks.

It is written in the Plutus programming language which is based on Haskell, a leading functional programming language.

The technology, similar to Ethereum, looks forward to obtaining the capability of running decentralized applications or dApps and smart contracts in the coming future.

Why Was Cardano Invented?

Cardano is built by an expert and brilliant team of engineers and academics and is the only project to follow a scientific blockchain development approach. It is also peer-reviewed.

The technology’s chief objective is to distribute scalable, secure, reliable, and robust technology to run financial applications that millions of clients can use daily.

This was what provoked the team to employ the same scrupulous approach that is used in mission-critical banking arrangements.

The longstanding vision of this blockchain technology and its cryptocurrency, ADA, aims to diminish the challenges and requirements of both the users and regulators to let them enjoy a seamless way to engage and interact.

This innovative technique of regulatory digitization will likely streamline the roadblocks faced by millions of users worldwide when it comes to getting access to financial services due to a wide variety of reasons.

This will also contribute to catering financial freedom and inclusion to such people. Moreover, the ADA coin aims to ensure quick and affordable money transactions.

How does the Cardano Blockchain Work?

Let us now get to the technical part and understand how it all works and what’s the technology behind it.

To start, Cardano takes a slightly different approach compared to other blockchains. The network has 2 layers namely, a settlement layer, and a computational layer.

The first layer, that is the settlement layer has been accomplished and is now functional. This is allowing users/consumers to exchange ADA tokens, from one wallet to another.

The second layer, the computational layer is in progress. Its chief objective is to allow people to initiate and sign up on smart contracts. Although it all sounds similar to what the Ethereum blockchain is already doing, it’s got more plus points over it.

The Cardano platform is more adjustable as it allows us to modify our contracts affording to the wants of end-users. For instance, monetary and financial regulations differ across boundaries. Hence, this requires smart contracts to adapt to them.

Here’s when Cardano allows writing smart contracts such that they change how information is stored, handled, and retrieved based on those regulations. Since the computational layer is isolated, it allows ADA users to still use the currency in different countries while conforming to the changing laws and regulations.

“The computational layer also allows the Cardano project team to make changes using soft forks and without disrupting the ADA or settlement layer. To verify transactions, it uses the proof-of-stake protocol. Users who want to participate are called validators, and they must invest a certain amount of ADA coins in demonstrating they’ve “stake” in this whole process. They are also rewarded based on their stake.” – CoinJournal.

Benefits of Cardano

  • Layered blockchain – Uses two separate blockchains for processing tokens and smart contracts, respectively, allowing soft forks to update blockchains with affecting each other.
  • Adaptable – Ensures compliance for all participants with help of dynamic smart contracts.
  • Decentralized – Ensures elimination of central authorities and intermediaries like governments and banks.
  • Enhanced Financial freedom


In this article, I gave you a walkthrough of what the Cardano blockchain technology is, how it works, and some other related information.

Noteworthy Reference

Cardano Roadmap


Aneesha S
Aneesha S
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