What is Cardano
The cryptocurrency world is inundated with dozens of blockchain projects that make bold claims of disrupting and revolutionizing the industry of financial technology.
However, day in day out, with every new cryptocurrency launched into the market, it has become more obvious that it takes a lot more than bold claims to succeed in the market.
For crypto enthusiasts, this trend was quite disappointing and finding a promising and successful blockchain project apart from the already established ones like Bitcoin, Ethereum and Litecoin was quite rare.
This is why Cardano took the crypto community by surprise.
Not only was this project promising, but it also had relevance and potential for mass adoption.
It has been a little over a year since Cardano was first launched on the main net on the 29th of September 2017 and people are still buzzing about it.
What is Cardano?
Cardano is a decentralized, open source project based on the blockchain technology.
It was created to bridge the gap between fiat currencies and digital currencies.
Essentially, the Cardano coin is designed to perform the functions of both cryptocurrencies and fiat currencies by leveraging the benefits of each system to overcome the challenges and address the deficiencies of the global payment system.
However, Cardano is more than just a cryptocurrency. The developers of Cardano also designed the platform to host the smart contracts technology used in the development of decentralized distributed (dApps) like Ethereum.
Basically, with Cardano, software developers can build and run patent free financial applications that can be used by thousands of individuals and institutions all over the globe.
The Cardano platform is powered by the platform’s native cryptocurrency called Ada and denoted by “ADA” on exchanges.
The ADA coin which is remarkably different from the word “Cardano”, compared to other cryptocurrency symbols which are often derived from the name of the platform (like in Bitcoin – BTC, Ethereum – ETH, Litecoin- LTC, etc.) was named after the 19th-century mathematician and the world’s first computer programmer, Ada Lovelace.
Ada, according to statistics from CoinMarketCap is currently ranked as the eighth largest cryptocurrency by market cap.
The cap is currently a little over $1.9 billion with approximately 26 billion Ada in circulating supply.
After about 2 years of building and developing the project, Cardano was officially launched on September 29, 2017, by a group of developers known as the IOHK team.
The main individual behind the invention of Cardano and the leader of the IOHK team is a man named Charles Hoskinson.
Hoskinson is a former CEO of the Ethereum network; he was also on the founding team of BitShares and Invictus Innovations.
Overall, Hoskinson is an experienced and competent developer who has already built a reputation for himself in the crypto community.
Cardano’s team uses a scientific, research-driven and peer-reviewed approach to developing the network.
Every protocol technology on the platform is extensively reviewed and analyzed by a network of global researchers and scientists before implementation on the blockchain.
Charles Hoskinson’s expertise along with a skilled development team spread out across the U.S., Japan, and Hong Kong is undoubtedly a contributing factor to the amazing performance of the Cardano project.
The Cardano blockchain
Cardano is a blockchain platform created to provide security, regulation, and privacy in the cryptocurrency ecosystem.
Cardano as a network has two primary components – the cryptocurrency, ADA which is designed to facilitate digital payment and a second component which features smart contracts for the development of dApps.
To accommodate the two components, the blockchain of Cardano is divided into 2 main computing layers; ADA operates on Cardano Settlement Layer (SL), a digital ledger blockchain which supports financial transactions.
The smart contracts functionality and dApps are supported by The Cardano Computation Layer (CL).
CL is also programmed to allow for a range of other purposes such as blacklisting, identity recognition, and user compliance.
Both layers are connected by side chains, and the Cardano blockchain was designed in such a way that the system can easily be upgraded via soft forks.
The network was developed using a secure computer programming language called Haskell and ADA is the first cryptocurrency to use this programming language.
The Cardano blockchain uses a unique proof-of-stake consensus algorithm known as Ouroboros.
In addition to the fact that the proof of stake (PoS) system eliminates the energy consuming factor as in the proof of work system, PoS is also better as the system allows for better scalability on the network.
So how is consensus achieved on the network using the Ouroboros algorithm?
Ouroboros generates consensus by coin holder voting.
Nodes, who must be coin holders of ADA are randomly chosen to verify transactions and add blocks to the blockchain.
This random selection by the algorithm is achieved via a coin-flipping protocol.
Ouroboros was designed to be extremely secure, and the Cardano team is currently working on making the PoS consensus algorithm quantum resistant.
As common with the network where every protocol has to be peer-reviewed, Ouroboros has similarly been reviewed by different blockchain experts and researchers and the team is so far confident in the system.
How it all began
The Cardano project started in 2015 as a collection of ideas and concepts focused on identifying and addressing the limitations and challenges of blockchain projects.
Here’s Cardano’s roadmap to illustrate important milestones, breakthroughs and future plans:
The Cardano Foundation is a Switzerland based non-profit organization created to promote, securing and standardizing the Cardano blockchain in the crypto community. The foundation is also responsible for enforcing standards on the Cardano network.
The Development Team
IOHK which is short for “Input Output Hong Kong” is a blockchain research and development company.
The company develops blockchain solutions to be used by organizations, academic institutions, and governments.
IOHK is essentially a research team made up of highly accredited and recognized blockchain developers.
The company was founded by Charles Hoskinson and Jeremy Wood who were both on the Ethereum project team.
The IOHK team forms the development team of the Cardano project.
Emurgo is a blockchain technology development company whose role in the Cardano project is to provide support services for businesses and companies in the integration with Cardano’s blockchain.
Essentially, the company invests in start-up projects looking to expand their businesses using the blockchain technology to bring them into the Cardano ecosystem. Emurgo is a Japanese based company headquartered in Tokyo.
Formation of Cardano
On Friday, the 29th of September 2017, after a very successful ICO where the team raised about $62 million, Cardano was officially launched.
In October 2017, about a month after the project was launched, the team released the project roadmap.
The roadmap is subject to regular updates with a countdown timer indicating when the next update will be made available.
As stated on the webpage of the Cardano, the roadmap belongs to neither the Cardano Foundation, IOHK or Emurgo; it is the property of its community of users.
And speaking of which, Cardano had ditched the Cardano Foundation for various reasons and decided to develop the coin without it. If you’re interested about the why, here’s a short video announcement from the creator himself, Charles Hoskinson.
The Cardano roadmap is divided into five phases:
The Byron Phase
The network is presently in the Byron phase which is also known as the “bootstrap era.”
The IOHK team is currently making improvements to the source code of the platform and in the design of the digital wallet Daedalus.
They are also developing the network to facilitate integration on third-party platforms via APIs.
The primary aim of Byron is to develop the core components of the platform, make Ouroboros more robust and decentralize the Cardano Settlement Layer (CSL), the layer which supports the unit of exchange.
Completed projects in Byron:
- Development of Yoroi, a light client desktop wallet expected to be used as an alternative to Daedalus.
- Development of a reference implementation for a lightweight wallet that can be used on Cardano.
- Release of Cardano Settlement Layer 1.3 and Daedalus 0.11 to enhance the performance of the network as well as the user experience.
- A log submission mechanism for users to report issues and bugs on the platform.
- Exchange enhancement to increase performance ratings on exchanges.
Active projects on Byron:
- Cardano test net to explore new features before they are released on the mainnet – 80% complete.
- Development of Daedalus to support the Linux Operating system – 90% complete.
- Cardano rust project expected to promote the adoption of Cardano by third-party developers – 30% complete.
The Shelley Phase
Shelley will see to the development of the system into a completely autonomous and decentralized network.
The features of Shelley are expected to be released in early 2019.
Completed projects in Shelley:
- Improvement of the block download speed for faster synchronization of the blockchain.
- Improved wallet restoration in the Cardano
- Launch of a start-up ledger accelerator and venture studio in New York.
- Partnership with the Investment Management Company at the University of Science, Tokyo.
- Partnership with Hero Group, an Indonesian based retailer to improve efficiency in the supply chain.
- Acceleration programs to help teams launch their startup ventures.
- Investment in LiqEase, a Shanghai-based blockchain project for invoice financing in global B2B trades.
- Partnership with Mox to help fund entrepreneurial blockchain initiatives.
- Provision of a co-working space in Hong Kong for developers.
- Introduction of paper wallets to provide offline cold storage for Ada holders.
- Implementation of consensus initiatives and fees.
- Publishing of Ouroboros delegation research paper titled “Reward Sharing Schemes for Stake Pools.”
Active projects on Shelley:
- Implementation of the open Ouroboros delegation – 10% complete.
- Multisignature transaction support on Daedalus – 40% complete.
- A new wallet backend with improved performance – 95% complete.
- Implementation of BLISS for quantum-resistant signatures – 50% complete.
- Development of light client support mode – 25% complete.
- Iteration in the development of paper wallets to enhance usability and security – 50% complete.
- Support for Cardano on the Ledger Nano S hardware wallet – 60% complete.
- Development of multi-account support for Daedalus wallet – 30% complete.
The Goguen Phase
This phase will feature the development of IELE virtual machine for smart contracts execution and the development of programming language framework that will serve as core infrastructure for the coming blockchain systems.
This language framework will strengthen the network, lessen the vulnerabilities and improve security.
Completed project on Goguen:
- Development of two smart contracts testnets – KEVM and IELE.
- Development of the first version of the IELE virtual machine.
Active projects on Goguen:
- Development of sidechains to enable the CSL and CLL blockchain operate efficiently with each other – 85% complete.
- Development of a multi-currency ledger – 20% complete.
- Development of the Plutus core language for implementation in CSL and CCL – 19% complete.
- Development of Marlowe, a Domain Specific Language (DSL) new to the blockchain – 46% complete.
The Basho Phase
This phase will focus on improving the performance of the network especially regarding scalability and security.
Ouroboros Praos will also be implemented in this stage.
There are no completed projects yet in this phase, and the singular active project is the development of a voting centre for software updates.
The Voltaire Phase
A treasury model to promote self sufficiency, sustainability and scalability of the blockchain is expected to be launched in the Voltaire.
There is yet to be a project for Voltaire.
Cardano vs Ethereum
The truth is that the Cardano vs. Ethereum analysis is not as straightforward as you would expect it to be.
For one, Ethereum is a well-established network with the second most valuable cryptocurrency by market capitalization, while Cardano on the other hand just celebrated its one great anniversary and is still developing its platform.
As the first platform to offer smart contracts functionality, the Ethereum network is pretty well established and has dominated that niche of the blockchain.
However, recent trends have shown that Cardano is an equally impressive project and regardless of the three-year head start Ethereum had, if there were ever a platform to give Ethereum a run for its money, Cardano would be that platform.
The two concepts are similar in function in that they both host smart contracts to allow developers build and run decentralized apps on the platform.
They each also have a native cryptocurrency which powers the network, Ada in the case of Cardano and Ether in the case of Ethereum.
However, beyond that, they do not have any more similarities as you would have thought.
Below are some of the significant differences between the two networks:
1. Although there are plans to switch Ethereum to the Proof of Stake system, the network currently uses the Proof of Work system. Cardano, on the other hand, utilizes the Proof of Stake Ourobos algorithm to maintain the network.
2. Cardano utilizes Haskell and Plutus to build smart contracts that run on the network as opposed to Ethereum’s Solidity.
3. The Cardano blockchain is split in two layers – the Cardano Settlement Layer (CSL) which supports Adaand the Cardano Computation Layer (CCL) which handles the smart contracts. Ethereum operates as just a singular blockchain which is bound to cause some scalability issues.
While Cardano may not have the large user base, the network still has a great level of support in the crypto community nonetheless.
Also, Cardano has the advantage of being developed from a “scientific philosophy” with an international academic research team to mitigate the issues of scalability, regulation, and privacy on the blockchain.
When it comes to development plans, both platforms have loaded roadmaps to work with.
While Ethereum is set to implement scaling solutions like Plasma and its Proof of Stake Casper algorithm, Cardano has a state of the art update called Shelley underway.
Shelley is going to be released in the first quarter of 2019, and the update will include light client support, quantum resistant signatures, multi-signature transactions, Ouroboros delegation, human-friendly addresses among other innovative features.
Essentially, the real comparison will begin if the planned upgrades are effectively implemented on both platforms.
Until then, both Cardano and Ethereum have greatly impacted the crypto community and have helped to expand the application of the blockchain technology beyond financial transactions.
Cardano has a lot of potential for mass adoption, and if the network is appropriately managed, it is going to achieve a lot.
If its present performance is anything to go by, having managed to address certain deficiencies of the blockchain, it is going to be exciting to watch how things unfold for the cryptocurrency and technology platform in the near future.
What do you think of Cardano?
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Disclaimer: You should do your own due diligence, research and analysis before you invest any money in cryptocurrencies. Cryptocurrencies are highly volatile and classed as high-risk investments. You should never invest any money unless you’re prepared to lose your capital. The author of this article holds the said assets and might be biased towards them.