Cardano: The Third Generation Blockchain

Let’s take it from the top of the cryptoverse and blockchain world. We saw the rise of Bitcoin, the financial system powered by blockchain tech and we have also seen Ethereum coming into the picture, which is the smart contracts system based of course on blockchain. It’s a fact that these two have established arguably an unprecedented place in this new digital revolution. Now what’s next? Here’s a bright idea, how about a system that could do both, a system that merges both the king and the jack of the blockchain world, that too in a more efficient way? Cardano is doing just that.

Self dubbed as the third generation blockchain, Cardano is a decentralized system, based on blockchain and very much like Ethereum it is a smart contract platform, thus it can be used to run decentralized apps (dApps). Developed by Charles Hoskinson, who also happens to be one of the co-founders of Ethereum, Cardano’s similarity to Ethereum doesn’t come as much of a surprise. However, Cardano focuses on the matter of security through its system, the architecture of which comprises of layers.

Apparently Cardano is the first of its kind to be created from scientific philosophy and built on the foundation of peer-reviewed academic research. The team behind the platform is working on an ecosystem that caters to the end-users as well as regulators; hence Cardano itself can be deemed as an attempt to find a middle ground in order to balance the fickle thread; which is the necessity for regulation while keeping privacy and decentralization at its core.

How Does Cardano Work?

As mentioned earlier, Cardano’s architecture consists of two layers that are responsible for separating the ledger of account values and the reason of movement of values from one account to another. This separation facilitates in the flexibility of the smart contracts on the platform. Futhermore, it opens a door of opportunity for businesses, allowing them to exclusively hand tailor the privacy, design and the execution of each contract in order to fit perfectly to their specific requirements.

The Cardano Settlement Layer

Crafted as an improvement to the Bitcoin, the Cardano Settlement Layer (CSL) is the first layer of the platform and takes on the role of the business ledger. The CSL works on the Proof-of-Stake consensus algorithm in order to create new blocks and at the same time, confirm transactions. It comprises of the following

  1. Two sets of scripting languages; one for the movement of value and the other to improve overlay protection support.
  2. Sidechains in order to form a link between other ledgers.
  3. Multiple signature types including quantum resistant signatures
  4. Multiple user-issued assets
  5. Scalability with which the proficiency of the system increases as more users join the platform.

The Cardano Computation Layer

The Cardano Computation Layer (CCL) forms the second layer of the platform and it holds the information regarding the reasons behind the occurrence of transactions. Moreover, the Cardano smart contracts run within this layer and because both the layers are detached from each other, it gives ground to diverse users of the CCL to create different rules while they evaluate the transactions.

The KMZ Sidechains

The Cardano platform supports sidechains by leveraging a new protocol by Kiayias, Miller, and Zindros, which involves prof proofs of work. This protocol is what allows for a secure movement of funds from the CSL to any CLL or even to any blockchain. However the blockchain must use the same protocol. Hence with this protocol, ledgers that are bound by certain regulatory compliances can interact with the CSL, without having to share any private data.

The Cardano Coin

The Cardano coin (ADA) is the native digital currency that powers the platform, with the aim to provide for a quick and secure exchange of currency, all the while allowing users to operate smart contracts and applications smoothly. The development of the coin started back in 2015 by IOHK, along with a Japanese company Emurgo. The team set that there’ll be a maximum of 45 billion ADA coins to be created. Ever.

The Daedalus Wallet

The Daedalus wallet acts as the open-source wallet for the Cardano platform and is a multi-currency wallet, which allows for a free exchange between currencies that are supported.

The Cardano Foundation

The Cardona Foundation is non-profit and acts as the custodial agent of the project, with an aim to “standardize, protect, and promote the Cardano Protocol technology”.

Cardano’s Team

There are three well-developed organizations working in sync with each other to deliver the Cardano project to its full potential.

  1. The Foundation, which as discussed earlier is the non-profit custodial agent of Cardano
  2. Input Output Hong Kong (IOHK), is an engineering company powered by blockchain. It’smain focus is on the actual building of the Cardano project.
  3. Emurgo, which is the blockchain project incubator that provides most of the funds.

You can read the whitepaper, along with the academic papers and philosophy here. 

Abeer Anwaar

Abeer holds a Bachelors degree in Media studies and covers blockchain startups for BlockPublisher. An optimist, excels in the art of the written word and swears by the joy of all things sweet. Contact the editor at

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.