What is ADA used in crypto currency

 

ADA, also known as Cardano, is a cryptocurrency that aims to provide a secure and scalable platform for the development of decentralized applications (dApps) and the execution of smart contracts. Launched in 2017 by Ethereum co-founder Charles Hoskinson, Cardano has gained significant attention due to its unique approach to blockchain technology and its focus on academic research and peer-reviewed development.

Cardano is built on a blockchain platform

that utilizes a proof-of-stake (PoS) consensus mechanism called Ouroboros. This consensus algorithm allows ADA holders to participate in the block validation process based on the amount of ADA they hold and are willing to "stake" as collateral. This approach eliminates the need for resource-intensive mining, making Cardano more energy-efficient and environmentally friendly compared to other cryptocurrencies like Bitcoin, which use proof-of-work (PoW) consensus.

One of the key features of Cardano is its layered architecture, which separates the network into two main layers: the settlement layer and the computation layer. The settlement layer handles the cryptocurrency transactions, while the computation layer is responsible for executing smart contracts and running decentralized applications. This separation allows for greater flexibility and scalability, as updates and improvements can be made to one layer without affecting the other.

Cardano also aims to address some of the scalability issues faced by other blockchain platforms by utilizing a technique called "sharding." Sharding involves partitioning the network into smaller groups called shards, each capable of processing its transactions and smart contracts. By dividing the workload across multiple shards, Cardano can achieve higher transaction throughput and improved scalability.

Another notable aspect of Cardano is its emphasis on formal verification and academic research. The development team behind Cardano has placed a strong emphasis on ensuring the security and reliability of the platform by utilizing rigorous mathematical and scientific principles. Formal verification techniques are employed to mathematically prove the correctness of the platform's code, making it less prone to vulnerabilities and bugs.

Cardano's development process follows a structured and methodical approach known as the "Cardano roadmap." The roadmap consists of several phases, each focusing on different aspects of the platform's development. These phases include Byron, Shelley, Goguen, Basho, and Voltaire.

The Byron phase marked the launch of Cardano's mainnet and focused on the basic functionality of the network, such as wallet implementation and ADA transfer. The Shelley phase, which began in July 2020, introduced the decentralization of the network by allowing ADA holders to participate in the staking process and earn rewards. This phase also involved the introduction of stake pools, which are groups of ADA holders who pool their resources to increase the chances of validating blocks.

The Goguen phase, currently in progress, aims to enable the execution of smart contracts on the Cardano platform. This phase will bring Cardano closer to its goal of becoming a comprehensive platform for decentralized applications, allowing developers to build and deploy a wide range of dApps and decentralized finance (DeFi) solutions.

The Basho and Voltaire phases will focus on further scalability and governance enhancements. Basho will introduce optimizations to improve Cardano's performance and enable sidechains, while Voltaire will address the platform's governance model, allowing ADA holders to participate in decision-making processes and vote on proposed protocol upgrades and improvements.

Cardano's ADA token serves multiple purposes within the ecosystem. Firstly, ADA is the native cryptocurrency of the Cardano blockchain and is used for transactions and value transfer. ADA holders can send and receive the token, as well as stake it to participate in block validation and earn rewards.

Secondly, ADA is used as a fuel for executing smart contracts and running applications on the Cardano platform. Similar to other smart contract platforms like Ethereum, executing operations on Cardano requires a certain amount of ADA to be paid as transaction fees.