- Cardano is a block-chain platform that’s founded on peer-reviewed research.
- In a milestone for the platform, it launched smart contracts on testnet in May 2021, with a mainnet launch to follow later in the year.
Cryptocurrencies currently face a number of challenges, including scalability, energy consumption, and the ability to interact with regular money.
Cardano calls itself a third-generation public block-chain. Its community is working to solve these problems and to improve on its predecessors, such as Bitcoin and Ethereum.
As of May 2021, Cardano is the fifth-biggest cryptocurrency by market capitalisation.
What is Cardano?
You’ve heard of the first and second-gen cryptocurrencies Bitcoin and Ethereum, right? Cardano calls itself the “first third generation cryptocurrency.” Like Ethereum, it aims to be a platform on which people can create smart contracts.
Created by a team led by Charles Hoskinson, with an aim to create a “more balanced and sustainable ecosystem” for cryptocurrencies, Cardano was originally developed as a research project.
Cardano has evolved into a block-chain platform in its own right. Its creators believed that smart contract block-chains such as Ethereum face challenges around scalability and interoperability, and that those challenges can best be addressed by a new platform developed from the ground up.
The person most responsible for the creation of Cardano is Charles Hoskinson, who was actually one of the co-founders of Ethereum.
A brief history
- Started in 2015 as a research project to explore how cryptocurrencies could be improved.
- First released to the public on September 29, 2017
- The next phase, Shelley, launched in July 2020. It improved the network’s decentralisation, and meant that holders could stake ADA.
- The third stage, Goguen, will add support for smart contracts and native token issuance. It’s due in August 2021.
- The final stages are Basho, which focuses on scaling, and Voltaire, which deals with on-chain governance.
Cardano names its major product milestones after famous English poets. The network has finished the Byron and Shelley stage and is now in the Goguen era.
So what’s so good about Cardano?
The team behind Cardano has been inspired by the world of science publishing, and has adopted its peer-reviewed approach for their cryptocurrency.
What does that mean?
Well, all changes and new features introduced are developed, reviewed and agreed upon by academics before being used, including the network’s consensus algorithm, Ouroboros (of which more later). The code for the network is written in the Haskell programming language, which is used by companies including Bank of America and AT&T. And IOHK, the company behind Cardano, has published a number of academic papers describing the platform and its technology.
But that’s not all!
The Ethereum network currently uses the proof of work consensus mechanism to verify transactions, which uses a lot of electricity and can only process a limited number of transactions at once. Cardano uses proof of stake, which consumes less power; the network uses an algorithm called Ouroboros to choose who creates the next block and to validate blocks. (Ethereum is working to switch to proof of stake by as early as the end of 2021.)
Proof of stake advocates believe that a staking-based consensus mechanism makes block-chain networks more secure while significantly reducing their power consumption and carbon footprint.
These days, you’re a lot more likely to come out on top in any market if your product or business module is more energy efficient/ environmentally friendly; just my opinion, but I’m sure you can understand my point.
“If we get [proof-of-stake] right, the network will be 250 times more decentralized than Bitcoin.” –-Charles Hoskinson
Cardano developer IOHK has already made progress in identity management and traceability, announcing a number of partnerships; in 2019, IOHK teamed up with footwear manufacturer New Balance to tackle counterfeit sneakers, enabling customers to confirm the authenticity of products using the Cardano blockchain. In April 2021, the company partnered with the Ethiopian government for an identity solution to be rolled out in schools.
Ultra-fast transaction speeds and interoperability with other blockchains are in the works too.
Did you know?
Cardano’s coin is named ADA after Ada Lovelace, a 19th century mathematician recognised as the first computer programmer, and daughter of the poet Lord Byron.
The make-up of Cardano
There are three parts to Cardano:
- The Cardano Foundation – supports the research and development of the network.
- IOHK – a company that works in conjunction with several universities on research and development.
- Emurgo – a separate company contracted to work on the blockchain and make it appealing to businesses.
How is ADA produced?
Cardano’s ADA currency isn’t mined like Bitcoin. Instead of miners there are validators, which are chosen by the network depending on how much ADA currency they currently own.
If they’re selected to validate the transactions on the block, they place a bet on how confident they are on being able to verify all the transactions. If the block-chain verifies the validators’ block, they effectively win the bet and get a reward in ADA.
Mining ADA consumes a fraction of the energy it costs to produce Bitcoin—so Cardano was one of a number of proof of stake cryptocurrencies to benefit from a new emphasis on greener credentials for crypto, after Tesla CEO Elon Musk shone a spotlight on the topic in May 2021.
A crucial next step for the platform is its roll-out of smart contracts, which launched on the Alonzo test-net in May 2021, and are expected to go live on the Cardano main-net in August that same year.
It’s an important milestone for Cardano, with smart contracts forming a key component of rival block-chains such as Ethereum and Binance Smart Chain. They’re also essential to creating decentralised applications (dapps) such as those used in the burgeoning decentralized finance (DeFi) ecosystem.
If Cardano can prove that its rigorous approach to cryptocurrencies can bring big business into the world of block-chain, it could find itself at the forefront of a crypto revolution in the years to come.
My Personal Opinion
Cardano is still in its very early days of development. The team claims that they are building one of the fastest, cheapest and most scalable block-chains in the world. However, they still have a long way to go. Until they have a working product, it is important to understand that at this stage everything is theoretical!
It still would not stop me from placing a starting investment.
So, on the technical side of things, my style of trading is pretty simple. I won’t go fully in depth, nor will I disclose what kind of moving average (or its’ settings) is on the chart above…(those with a keen eye can probably guess what it is)
I’d like you to go through the indicator archives on TradingView and find a tool which acts like a moving average for yourself!
Back-test and forward-test the ones you find and eventually one tool may click for you. I know it is time-consuming, but this is what you have to be willing to do.
If you’d like to know where I learnt to build my own trading system, visit nononsenseforex on YouTube.
Anyway… for future reference, I refer to the moving average as my baseline.
If the fundamentals and the investment idea for ADA is still valid, I’ll look to buy when the price candlestick crosses and closes above the baseline on the weekly or monthly time-frame! (TF)
That is the basic explanation without me going too in depth.
Below is an image to explain what I mean for those of you who are visual learners (like myself).
Initiating an investment is only the first part, the most important part is managing your trade and knowing when to sell…
You may have guessed it already, but I’ll ask anyway… when do you think I decide to sell or reduce my position size?
When the price candlestick crosses and closes below my baseline!
That’s it with my Crypto trading method. Simple but effective.
So what does this mean for Cardano?
I am looking to invest, I want Cardano’s development to proceed further before I do. I am also waiting for the technicals to line up as right now, buys are not looking likely…yet.
Let us crunch some numbers on Cardano using my technical trading methodology.
Weekly Time-frame Method
|Buy Date||Sell Date||Open Price ($)||Close Price ($)||Profit/loss (%)|
|25th Mar 19||15th Jul 19||0.061||0.059||(-2.25%)|
|3rd Feb 20||2nd Mar 20||0.055||0.045||(17.98%)|
|27th Apr 20||7th Sep 20||0.045||0.092||101.88%|
|23 Nov 20||12 Jul 21||0.14||1.34||843.57%|
Monthly Time-Frame Method
|Buy Date||Sell Date||Open Price ($)||Close Price ($)||Profit/loss (%)|
|1 Aug 20||1 Aug 21||0.139||1.06||678.78%|
It is worth mentioning that on the monthly TF method, a trade is currently still in play. However, if price remains where it is until the 1st of August 21 (crossed and closed below my baseline), I would either sell the entire position or sell partials. The table above is presuming that we closed the position at the price it is at currently (20th July 21).
So there you have it…my take on Cardano. As usual, read the disclaimer section before basing any investment decisions after reading this blog, happy trading and of course…