March 7, 2019

Cardano 101: Shelley & the Arrival of Cardano Decentralization

Together Agency


What is the Shelley era in Cardano?

The Cardano blockchain is the first peer-reviewed third-generation decentralized public blockchain, which is fully open source.

Cardano has been carefully designed from inception with different eras in its development roadmap to bring important updates to the Cardano blockchain.

With the highly anticipated Shelley arrival, Cardano will transition to a fully decentralized blockchain.

Shelley, the second stage of Cardano’s development, represents the dawn of full decentralization.

Specifically, this means the evolution from a centralized blockchain network to a fully decentralized, distributed blockchain network.

Blockchains are decentralized, digital versions of data ledgers that have existed in various centralized formats for hundreds of years, from paper ledgers recording the tradings of merchant ships to digital ledgers used to record business transactions on a daily basis.

Ledgers are essential to recording transactions of value.

The core advantage of a decentralized ledger such as the Cardano blockchain is that no central authority is needed to verify a transaction of value between two parties.

Cardano as a decentralized blockchain brings with it a permissionless and distributed way of exchanging value.

Cardano’s decentralization introduces the very first provably secure Proof of Stake blockchain protocol known as Ouroboros which is the cornerstone of Cardano’s decentralization.

It is key for maintaining and updating the decentralized ledger.

A blockchain represents an accumulation of transactions.

Ouroboros ensures that each transaction is perfectly captured on Cardano’s blockchain, much like how amber preserves an insect in a perfectly preserved, immutable state.

Both Proof-of-Work (which the Bitcoin blockchain is based on) and Proof-of-Stake blockchain types both successfully maintain and update the decentralized ledger, with Proof-of-Stake having the distinct advantage of being much more environmentally friendly.

What Cardano’s decentralization means for users 

The arrival of decentralization means the arrival of Cardano ada staking for all Cardano ada holders.

Within a Proof-of-Stake blockchain, people who own a blockchain’s native cryptocurrency are chosen at random to add a block of transactions to the blockchain.

These people are picked randomly.

However, the person chosen may not be online at the time, which would cause them to forfeit their opportunity to participate.

Delegation allows stakeholders to transfer their participation to a third party, which could be a business or an individual.

This means that if a person is chosen to verify a block of transactions, the right to generate a new block can be given to someone else.

Shelley will offer all ada users or holders the chance to contribute to updating the Cardano blockchain.

Shelley brings new opportunities to businesses such as Cardano stake pool operators (SPOs).

Specifically, the business opportunity to create and operate a stake pool.

There is a financial incentive to do so, as a business or individual who runs a profitable stake pool will be rewarded for incurring the costs of setting up servers and processing transactions.

A business or individual who becomes a stake pool manager will also be providing the valuable service of updating the Cardano blockchain and ensuring it is maintained.

Operating a stake pool allows both stake pool managers and those who delegate to a stake pool an opportunity to be rewarded for adding blocks to the Cardano blockchain and adding to its decentralized security.

Follow EMURGO on Twitter for more Cardano content

EMURGO is the official commercial arm and a founding entity of the Cardano blockchain.

For more Cardano content, follow EMURGO on Twitter and the official channels below.


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