What is Cardano?

Decentralisation is at the core of blockchain technology, without decentralisation a blockchain is just a cumbersome database. Cardano is one of the world's most decentralized blockchains, a cryptographic ledger supported by over 3,000 independent network validators, also known as stake pools. This robust infrastructure guarantees an immutable record of ownership and indisputable provenance that is 100% verifiable, trackable, and public.

Cardano is an eUTxO blockchain, which takes the revolutionary UTxO model of Bitcoin (Unspent Transaction Output) and extends it with key properties, such as the ability to handle multiple assets natively, both fungible and non-fungible (NFTs).

Cardano was launched in 2017 by Input Output Hong Kong - IOHK (currently Input Output Global - IOG), a technology company founded by Charles Hoskinson, who is also one of the co-founders of Ethereum. IOG, in collaboration with the Cardano Foundation and Emurgo, has played a pivotal role in the development and growth of the Cardano ecosystem. Unlike many other blockchain projects, Cardano is built on a foundation of academic rigor and peer-reviewed research, employing a methodical, research-driven approach to overcome challenges and develop innovative solutions. This commitment to scientific research and collaboration with renowned institutions worldwide has enabled Cardano to set itself apart from other blockchain platforms, as it continuously strives to enhance its technology and expand its capabilities.

To better understand the basic principle of the (e)UTxO model, consider the "bundles of cash" analogy. Imagine 10 bundles of cash (10 UTxOs) representing the total amount of ADA in the system, shared among five people (five wallet addresses). The Cardano ledger doesn't move cash (ADA and tokens) between users; instead, it records who the bundles of cash belong to and creates new bundles to facilitate new transactions. The ledger generates "change" bundles to account for all the ADA involved in a transaction. The remaining ADA after a transaction becomes the new UTxOs, distributed according to the data in the transaction.

For example, if you want to send 8 ADA from your wallet, which holds a total of 10 ADA in two separate bundles (UTxOs) of 5 each, both UTxOs will be required as inputs for the transaction. This is similar to paying someone $8 using two $5 bills — you would need to provide both bills to cover the $8 and would receive $2 as change. In a similar manner, the blockchain consumes both 5 ADA UTxOs, sends 8 ADA to the recipient, and creates a new UTxO with 2 ADA as change, that is sent back to your wallet. However, "sending" or "moving tokens" in a digital ledger doesn't involve a physical transfer; it means deducting tokens from the sender's balance and allocating them to the recipient.

Much like a physical wallet can contain multiple types of currency, a Cardano wallet can hold various types of tokens, both fungible and non-fungible. This versatility allows Cardano transactions to have unique capabilities, such as sending multiple tokens (FTs and NFTs) in a single transaction, accommodating dozens of tokens and ADA, and enabling a single transaction to have multiple recipients. In practice, this means that a single transaction — requiring only one fee — can send ADA and 100 different NFTs from various collections to 20 different people, each receiving a unique combination of ADA and NFTs.

Cardano's smart contract capabilities bring additional versatility to the platform, enabling the creation of decentralized applications (dApps) that can cater to a wide range of use cases, including NFTs. With the introduction of smart contracts, artists and creators can develop more complex and interactive NFT experiences, such as programmable art and even NFT-based games. Plus NFT creators can benefit from the growing ecosystem of smart contract powered dApps built specifically for NFT use cases, such as decentralised marketplaces, NFT based authentication and voting platforms and many others (more details later in the guide). For instance we are currently building a smart contract powered NFT swapping pool for collectors. This flexibility empowers artists and developers to explore new creative horizons and unlock the true potential of the NFT ecosystem on Cardano.

Cardano stands out as a third-generation blockchain, designed with the aim of tackling the scalability, security, and sustainability issues that earlier blockchains like Bitcoin and Ethereum faced. With its unique architecture and layered approach, Cardano can handle a larger number of transactions without sacrificing security or decentralization. Plus, its energy-efficient consensus mechanism, Ouroboros, makes Cardano a sustainable option for the growing NFT ecosystem. By choosing to build on top of the decentralised and secure Cardano infrastructure artists and creators can ensure a reliable and scalable foundation.