Cardano (ADA) is a third generation cryptocurrency, which seeks to fix many of the issues that are prevalent in previous generation cryptocurrencies, such as sustainability and decentralization. Not only is ADA aiming to fix issues within the cryptocurrency sphere, ADA has the potential to revolutionize the world we live in today by providing financial services to the millions of people who inhabit this planet who do not currently have access to traditional financial institutions. Live data for the coin ADA can be found here.
Cardano is the blockchain platform that ADA actually runs on. Cardano is a proof-of-stake blockchain platform that relies on people from around the world operating stake pools (like me :D), and other ADA owners delegating to these stake pools. Having a whole collection of people operating stake pools around the globe helps to keep the currency decentralized. ADA Cardano was created by one of the co-founders of Ethereum, Charles Hoskinson, and is the first peer reviewed cryptocurrency.
What is proof of stake?
Proof of stake is a blockchain consensus system. I like to think of proof of stake in how it compares to proof of work blockchains, which both Bitcoin and Ethereum currently run on. Proof of work blockchains rely on those who are mining Bitcoin/Ethereum/etc. to have pretty powerful computers solve complex algorithms in order to mine another block on the blockchain. Everyone mining these coins competes with one another to have their computer solve these algorithms first, so the more powerful your computer, the easier it is for you to mine that coin. This consumes a whole lot of energy, and is also not always very accessible to the average person. Proof of stake is a step in the right direction towards remedying some of these issues. Proof of stake chooses amongst generally well performing pools to produce blocks, and does not require vast amounts of energy to get the job done! Proof of stake is also less susceptible to the infamous 51% attack because one would have to own 51% of the available supply of the cryptocurrency, which is costly. On top of that, if someone actually did own 51% of any given digital coin, it would then not be in their best interest to attack the network on which he/she/they owns a majority share.
What’s a stake pool?
A stake pool is a node in the larger Cardano network. Simply put, a Cardano ADA stakepool puts up its own ADA coin as collateral, and then has other non-stake pool operators delegate their coin to a given stake pool. Because a stake pool is a node in the Cardano network, and the Cardano network is a Blockchain platform, pools that perform well produce blocks on the blockchain. Pools that perform well also produce rewards for their delegators in the form of ADA, and in turn operators take a small percentage of their delegators’ rewards (typically 1-5%). It’s worth noting that your Ada never leaves your own wallet, it’s simply accruing rewards!
How do I delegate to a stake pool?
The Cardano organization has created two mainstream platforms an individual can use to delegate to a stakepool: the Daedalus and/or Yoroi wallet. Both are desktop wallets that connect to the Cardano network, and allow you to delegate money from there. You are also able to undelegate at any time and withdraw from your wallet! In both of these wallets, you’ll be able to search stake pools based on their ticker and/or metadata 🙂 (My ticker is TORO) You can then just leave it and let it garner rewards and appreciate in value.
Have other questions? Please reach out! Always happy to chat.