Cardano architecture. Does Cardano resemble Bitcoin or Ethereum more? Learn how and why Cardano was designed – one of the top 10 blockchains.
Cardano is a third-generation blockchain, a programmable blockchain platform. Cardano is a system similar to Ethereum – a programmable computer. However, the data architecture that forms the Cardano blockchain is similar to… Bitcoin. What does this mean?
The data architecture of Cardano is based on Extended UTXO (EUTXO). This stands for extended Unspent Transaction Output. To understand UTXO, we need to understand the classic data model in blockchain.
Blocks, Transactions, and the Immutable History of Cardano
Data in every blockchain is stored in cryptographically secured blocks. Blocks contain transactions, which are descriptions of changes that need to be made to the blockchain. A transaction can be sending cryptocurrency from one address to another, or executing an exchange on a decentralized exchange like Uniswap, which triggers a smart contract and records the transaction data on the blockchain. The data in the blocks creates a history of changes on the blockchain, and the consensus algorithm and cryptography ensure their security and immutability.
Ethereum’s “World State” and Cardano’s UTXO Approach
Ethereum, as a programmable blockchain, has an additional special space called the “state system” (world state) alongside the blocks. This data always reflects the current, most recent state of the data. For example, by sending 3 Ether three times from account A to B, in the world state, B will ultimately have 3 Ether, even though in the blocks we will find three separate transactions changing the state. The same applies to data updated by smart contracts. This data structure makes reading and accessing data fast (indexed). Each node in the network has its own independent “world state,” which should be the same after processing all transactions across all nodes.
Cardano’s EUTXO: The Backbone of Data Operations and Smart Contracts
To check the state of Bitcoin held by address X, you have to scan every block and every transaction in the Bitcoin blockchain. Why? Because Bitcoin does not have a world state. The same goes for Cardano. The smallest data structure carrying information in Bitcoin and Cardano is UTXO. In Bitcoin, the data contained in a UTXO represents the “amount of Bitcoin” available for spending. If a UTXO with the record “1 BTC” is assigned to an address, then the address controls 1 BTC. In Cardano’s EUTXO, in addition to the cryptocurrency amount, it also contains data and even the logic of smart contracts.
EUTXO makes data operations (and programming in Cardano) a literal iteration, traversing the chain of interconnected UTXOs. UTXOs can be spent, and when spent, they are marked as “spent,” but new UTXOs are created with updated data states. The operation of smart contracts in Cardano is precisely the process of creating new EUTXOs and marking old ones as spent. I will describe this in further posts.
Follow my profile if you are interested in blockchain. I work with it professionally.
#ethereum #bitcoin #blockchain #cryptocurrencies #it #web3 #technology #fintech #mobycrypt #programming #cardano
I design and build enterprise IT solutions based on blockchain technology.
I am blockchain architect in Trans.eu building ECMR (digital CMR Consignment Note) based on blockchain. I teachabout Bitcoin, blockchain and decentralization via Linkedin and blog: https://mobycrypt.com.
