What is Cardano Blockchain + How Cardano Blockchain Works

In this Blockchain tutorial, we are going to learn about Cardano Blockchain. Here we will illustrate various features of  Cardano Blockchain, and we will cover the following topics.

  • What is Cardano Blockchain
  • History of Cardano Blockchain
  • Why use Cardano Blockchain?
  • Development Phases of Cardano Blockchain
  • Features of Cardano Blockchain
  • How Cardano Blockchain Works
  • Cardano Blockchain Ecosystem
  • What is Ouroboros in Cardano Blockchain
  • How Ouroboros works in Cardano Blockchain
  • What is Ada

What is Cardano Blockchain

Prior blockchain technologies, like Bitcoin or Ethereum, have scalability and performance issues. So, Like Ethereum, Cordano Blockchain is a blockchain platform that aims to address these performance and scalability issues.

Cardano Blockchain tutorial
Cardano Blockchain Official Logo

Now, the Cordana Blockchain has based on scientific philosophy and peer-reviewed research. Moreover, it utilizes layered architecture and the Proof of Stake algorithm to provide security and scalability.

Cardano Blockchain originated as a research project and has grown itself into a featured blockchain platform.

The developers of Cordano considered that smart contract blockchains like Ethereum had scalability and interoperability issues. And these issues could be solved by this new-gen blockchain platform.

Also, read, Blockchain Architecture

History of Cardano Blockchain

Cardano blockchain was established in 2015 by Charles Hoskinson, a co-founder of BitShares and one of the early developers of Ethereum.

Initially, Cardano began as a research project in 2015 to examine how cryptocurrencies may be enhanced.

Further, the Cardano platform was made available to the public on September 29, 2017. The name Cardano is a tribute to Gerolamo Cardano, an Italian mathematician.

Cardano Blockchain is developed and maintained by three different groups.

  • The Cardano Foundation, a non-profit corporation, is the legal keeper of the Cardano and is accountable for its primary governance and control.
  • Hoskinson co-founded IOHK (Input Output Hong Kong) in 2015 with Jeremy Wood. IOHK is a technology organization with a research division devoted to blockchain education. Hence, it is mainly responsible for the development of Cordano Blockchain.
  • Emurgo is another partner that aims at increasing Cardano adoption and assisting the developer community in developing solutions on top of it.

Read Introduction to Polkadot Blockchain

Why use Cardano Blockchain?

Till now, we have studied the definition and origin of Cordana Blockchain. Now, we will discuss why we need to use the Cordana Blockchain.

The initial generation of blockchains like Bitcoin provided secure cryptocurrency exchange using decentralized ledgers. However, such blockchains did not provide a suitable environment for complex transactions or the creation of decentralized applications (DApps).

The second generation of blockchain technology like Ethereum brought more advanced solutions for writing and executing smart contracts. But, the second generation frequently encounters scalability challenges.

On the other hand, Cardano Blockchain characterizes itself as the third generation blockchain. And it incorporates the characteristics of previous generations and adapts them to fulfill all user requirements.

Now, to satisfy the user requirements, Cardano Blockchain focuses on these key concepts.

Why use Cardano Blockchain
Why use Cardano Blockchain
  • Scalability: It implies that the Cardano can process a high number of transactions without slowing down the network. Moreover, scalability also helps to provide higher bandwidth, allowing transactions to carry a substantial quantity of data simply inside the network.
  • Interoperability: Cardano blockchain intends to facilitate cross-chain transactions and a variety of tokens. It also provides a multi-functional ecosystem by allowing users to engage with many currencies across several blockchains.
  • Sustainability: Cardano Blockchain allows the community to sustain its ongoing development. And this by participating and implementing system innovations in a decentralized manner. Moreover, to maintain long-term sustainability, the community controls the treasury system. And this system is refilled from potential sources like newly generated coins as funding, transaction fees, etc.

Check out, Introduction to Flow Blockchain

Features of Cardano Blockchain

Now that we have studied why the Cardano Blockchain is required and used. Next, let’s undergo some of the key features of it.

Features of Cardano Blockchain
Features of Cardano Blockchain

1. Better Design

Cardano Blockchain has written using a secure, functional programming language called Haskell. Haskell utilizes pure functions to build systems, resulting in a design that is easy to test in isolation.

Additionally, the rich capabilities of Haskell enable the use of a variety of approaches for assuring code correctness, extensive property-based testing, and simulation testing.

2. Scalability

One fascinating feature of Cardano Blockchain is its scalability. It allows for faster transactions than any other cryptocurrency currently available. Instead of using Proof of Work, it uses a proof-of-stake consensus algorithm to enhance transactions per second (TPS).

Moreover, it splits the network into subnetworks using RINA and lowers the bandwidth demand of each node. Also, it addresses the issue of data storage by employing pruning, compression, and partitioning.

3. Low power consumption

Cardano is a blockchain that uses a proof-of-stake approach that takes far less energy and computational capacity than proof-of-work blockchains.

Many Blockchain technologies like Bitcoin, Ethereum utilize the proof-of-work method, which is unsustainable in the long run.

According to an internet program developed by Cambridge University (United States of America), the machines that run Bitcoin consume twice as much energy as Switzerland per year.

4. Seamless upgrades

Usually, a blockchain utilizes the hard forks to upgrade a blockchain. The current protocol gets disabled, new rules and changes get introduced, and the chain gets restarted. And all the historical data gets deleted while using a hard fork.

On the other hand, hard forks are managed differently by Cardano Blockchain. The Cardano hard-fork combinator technique offers a seamless transition to a new protocol without making drastic changes. Moreover, it maintains the history of earlier blocks and no inconveniences to end-users.

5. Functional environment

Cardano Blockchain is developing the base for a decentralized financial system worldwide. And it allows developers to create a variety of decentralized applications (DApps) that use smart contracts. Moreover, it also facilitates multi-asset tokens for a variety of uses.

Also read, Introduction to Blockchain Wallet

Development Phases of Cardano Blockchain

The development of Cordano is categorized into five key themes, each concentrating on a different set of functionality. And the themes got structured around a collection of features distributed across several code releases.

Let’s understand each category in detail.

  • Byron- Foundation establishment
  • Shelley- Decentralization
  • Goguen- Smart contracts
  • Basho- Scalability
  • Voltaire- Governance
Development Phases of Cardano Blockchain
Development Phases of Cardano Blockchain


Byron provided the basis for the emergence of Cardano Blockchain. In this stage, users were allowed to buy and sell its native token named Ada. Initially, Cardano is a federated network that utilizes a Proof of stake mechanism.

Moreover, Input-Output Global and Emurgo were managing the block production transaction validation. Additionally, this phase also observed the release of the Daedalus and Yoroi wallets.


The Shelley theme offered a decentralized ledger, resulting in an entirely new economic model. This development concentrates on a few key measures that ensure a better user experience like stake pool functioning, delegation, and reward system.

And it secures that the necessary technology is in place for the system to become fully decentralized and independent.


The development of Goguen focuses on the creation of a worldwide, financial, and multi-functional system. Now, the main goal of this system is to assist the development of decentralized applications, support for smart contacts.

Goguen plays a vital role in developing a diverse platform that can assist in developing solutions in various areas like supply chain, track, finance, etc.


Basho’s development phase concentrates on the optimization of Cardano in terms of network scalability and interoperability. While past rounds of development focus on decentralization and new features, Basho is all about enhancing fundamental performance.


Voltaire’s development phase focuses on decentralized governance and decision-making. In this, the Cardano community was allowed to vote on network development updates, technological advancements, and project finance.

To effectively decentralize the Cardano network, it will require to have distributed architecture. And it should also have the ability to maintain and expand in a decentralized manner over time.

Read Introduction to Quorum Blockchain

How Cardano Blockchain Works

Now that we got a clear idea about Cardona Blockchain and what it offers. Next, let’s discuss how this Cardon Blockchain works.

In comparison to other blockchains, Cardano Blockchain works on a slightly different architecture. So, to understand its working first, we will discuss its architecture, and then, we will illustrate its working.

Cardano Blockchain Ecosystem

The Cardano blockchain composes of two main parts in this ecosystem.

  1. Cardano Settlement Layer (CSL)
  2. Cardano Computational Layer (CCL)

The two layers in this blockchain enable the ecosystem to make progressive adjustments. And it also encourages faster and more secure transactions. Let’s discuss each one in detail.

Cardano Blockchain Ecosystem
Layers in Cardano Blockchain

Cardano Settlement Layer (CSL)

The Cardano Settlement Layer (CSL) serves as a unit of account, allowing token holders to transfer and receive ADA instantly and with low transaction fees. This layer is mainly responsible for coordinating the transfer of currency between a sender and a receiver.

Plutus and Marlowe are two specific scripting languages used by the CSL to move data and improve overlay network protocol functionality.

Cardano Computational Layer (CCL)

The Cardano Computational Layer (CCL) is the backbone of this blockchain that consists series of protocols. This layer helps in executing smart contracts and also ensures compliance and security in the network.

The capacity of CCL to assist scale specific protocols over time is the driving force behind its use. As technology progresses, this entails incorporating hardware security modules (HSM) into the existing protocol stack.

What is Ouroboros in Cardano Blockchain

Ouroboros is the name given by Charles Hoskinson in 2017 to the proof-of-stake consensus protocol that underpins Cardano. Now, Ouroboros depicts the potential of blockchain technology to scale indefinitely and ethically.

Cardano Blockchain utilizes Ouroboros as a consensus mechanism. Ouroboros is the first provably secure proof-of-stake protocol based upon peer-reviewed research.

Therefore, Ouroboros combines innovative technology and mathematically validated methods to ensure and maintain the security and sustainability of any blockchain.

How Ouroboros works in Cardano Blockchain

Now that we have a clear idea of Ouroboros protocol. Next, let’s understand how Ouroboros works in Cardano Blockchain.

Cardano Blockchain relies on the Ouroboros protocol, which is a uniquely built proof-of-stake (PoS) protocol. This consensus method ensures that transactions using ADA are quick and secure.

Moreover, it is also responsible for the security of smart contracts on the Cardano blockchain. And as it is a Proof-of-Stake method, it also rewards the participants who stake ADA in the network. Let’s discuss the whole process of Ouroboros in detail.

  • First, the network picks some nodes at random to have the opportunity to mine new blocks. These nodes are also known as slot leaders.
  • Next, the whole blockchain gets divided into multiple slots. And each slot is known as an epoch.
  • Slot leaders have the power to mine their particular epoch or its subset. Anyone who assists in the mining of these epochs or their subpart get rewarded for their efforts.

An epoch can have an infinite number of partitions. As a result, the Cardano blockchain is theoretically infinitely scalable. And allowing it to process as many transactions as required without experiencing a slowdown.

Read What is Corda Blockchain

What is Ada

Usually, every Blockchain technology has its native currency, like Ether is a native currency of Ethereum. Similarly, Ada is the primary cryptocurrency of Cardano Blockchain.

This native currency gets named after Ada Lovelace, a 19th-century English mathematician, and writer. And she is widely regarded as the world’s first computer programmer.

The ADA is the primary payment unit on Cardano Blockchain. Hence it is used to pay fees, deposit funds, and deliver rewards. The smallest unit of Ada is Lovelace, and 1 Ada represents 1,000,000 Lovelaces.

So, in this tutorial, we have learned about Cardano Blockchain. Here we have illustrated various features of  Cardano Blockchain, and we have also covered the following topics.

  • What is Cardano Blockchain
  • History of Cardano Blockchain
  • Why use Cardano Blockchain?
  • Development Phases of Cardano Blockchain
  • Features of Cardano Blockchain
  • How Cardano Blockchain Works
  • Cardano Blockchain Ecosystem
  • What is Ouroboros in Cardano Blockchain
  • How Ouroboros works in Cardano Blockchain
  • What is Ada

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