Cardano is a decentralized open source blockchain that works on the proof of stake algorithm. Decentralized means that its owner is not a single person or an entity, but it is owned by all those people who are connected to this Cardano blockchain, apart from this open source blockchain means that its codes are available in public and Proof of stake is a mechanism of blockchain through which miners validate transactions.
Now to understand the proof of stake more easily, both bitcoin and ethereum blockchain work on proof of work mechanism. In the proof of work mechanism, a complex mathematical problem has to be solved in order to add a new block of transaction to the block blockchain, to solve it many miners compete among themselves but only one miner can win and ad the block. Finds that the rest of the miner has to complete the next time again for another transaction.
In such a situation, a lot of electric energy of those who could not add miner blocks gets wasted. To solve this problem, proof of stake mechanism was introduced. The validator does not have to race in Proof of stake. In this, miners have to stake on their crypto coin network to validate the transaction and any miner is randomly selected through an algorithm to validate the transaction.
The more crypto coins you have staked, the higher your chances of getting selected. Now because in this method only a miner validates a block, then the wastage of energy is greatly reduced. So far three generations have come in the Crypto World.
The first generation starts with Bitcoin, which wants to become an alternative to fiat currency like dollars, rupees etc. by using blockchain technology.
The second generation starts with Ethereum which introduced smart contracts and the third generation starts with Cardano which is working to increase the speed of blockchain technology and also focusing on reducing power consumption.
Now let's see which problem Cardano is solving. Cardano has mostly come to solve three problems.
No.1→ Energy Consumption
No.2 → Interoperability, understand it in simple language, then any two blockchains share data among themselves while staying within the scope of their security.
No.3→Scalability, Cardano can validate 266 transactions in a second, Ethereum can do only 13 transactions in a second and Bitcoin can validate only 7 transactions.
Let us know why Cardano is so famous. The Cardano blockchain works on the proof of stake mechanism i.e. it has very low power consumption. It is a sustainable blockchain which adds to its popularity. Apart from this, if its transaction speed is seen, then Cardano is much faster than Bitcoin and Ethereum, due to which Cardano became famous.