Cardano is the worlds first peer-reviewed blockchain. It is a third-generation cryptocurrency and smart contract platform which uses the proof-of-stake (PoS) algorithm known as Orobouros. Cardano claims to improve upon the scaling problems of Bitcoin, a first-generation cryptocurrency, and Ethereum, a second-generation cryptocurrency.
Cardano is founded on peer-reviewed research and developed through evidence-based methods. Discover Cardano
Proof of work (PoW) is a consensus mechanism. PoW requires processing power to verify transactions on the network. Each miner must compete to solve a difficult puzzle using their computer’s processing power, the first miner to solve the puzzle is given a reward for their work.
Proof of stake (PoS) is consensus algorithm by which a blockchain network aims to achieve a distributed consensus. The Cardano network uses Ouroboros, a verifiably secure proof-of-stake protocol. The process of staking is similar to PoW mining. However, instead of relying on processing power to create blocks, the block creator is chosen by an algorithm based on the user’s stake.
Bitcoin (PoW) uses the same amount of power as a small country. PoS networks can run using the same amount of power as a small home!
With less power consumption required to process each transaction, fees can be significantly lower than PoW networks.
PoS networks like Cardano are more secure than PoW networks. A hacker would need to buy 51% of all ADA in order have control over the network, which the market would react with fast price appreciation making it very expensive.
Cryptocurrency can be sold just as easy as buying, whereas selling a bitcoin miner can be a difficult task and is often sold at a loss.
Staking is the process of actively participating in transaction validation on a proof-of-stake (PoS) blockchain. In simple terms, staking is the process of purchasing and holding a cryptocurrency in a wallet to support the operations of the network.
A stake pool is a reliable server node that focuses on maintenance and holds the combined stake of various stakeholders in a single entity. Stake pools are responsible for processing transactions and producing new blocks with the help of delegators.
The pledge is the amount of ADA the stake pool itself is delegating to the pool.
Although pledging is not required when setting up a stake pool, it can make the stake pool more attractive to delegators, as the higher the amount of ada that is pledged, the higher the rewards that will be paid out.
By design, there is no risk to your ADA by delegating to a stake pool. Delegation allows the stake pool to use your stake on your behalf to create blocks. Your ADA is not sent to the stake pool. Stake pools combine all the delegators’ stake, the more stake the pool has, the more likely the pool is to create a block.
Stake pools can not send funds from your wallet and have no control over your wallet.
Delegated funds are not locked and can be spent at any time.
Private keys are what allows you to send funds from your wallet. Never provide your private keys to anyone!
Decentralization is a term used to describe a system that is not owned or controlled by a single entity, such as a government, bank, or company. The entire transaction history, from the genesis block to the current block, is replicated across thousands of nodes making it impossible to manipulate verified transactions. With thousands of stake pool nodes around the world, it is next to impossible to take down the Cardano network.
Banks have centralized systems which give them total control on who you can send money to, how much you can send at a time, and they can even freeze your account! With a decentralized system the only way to send funds from a wallet is with a private key, meaning that you and only you have control over your funds.