Ever since its invention, cryptocurrency has been changing the way society views, deals, and understands money. Everything was in black and white before—or more specifically, bills or coins. Now the field has given way to more choices that exist only on the Internet. And so, the age of digital coins was born. With every new digital coin that is created, the huge splotch of grey in the middle of the then-monochromatic financial industry continues to spread.
Bitcoin revolutionized the way transactions are made online when Satoshi Nakamoto published their white paper on the Internet. This gave birth to the liberated and open-source blockchain that is irreversible and fool-proof. Banks are not needed anymore to validate transactions and this means no more huge fees and time-consuming hurdles your money has to go through.
With its decentralized nature, no central form of authority oversees bitcoin’s flow of distribution. Instead, millions of people scattered all over the world validate each and every transaction before adding it to the blockchain. Of course, all this hard work validating transactions does not go unacknowledged and unpaid.
For every block they add to the chain, they receive 12 bitcoins. And if you know how much bitcoin costs now (around $9,000), then you know how huge of a sum that is. That’s just another reason for the Bitcoin and cryptocurrency hype.
When you hear the word cryptocurrency, Bitcoin is always the first thing that comes to mind. Though mostly known to a niche community of crypto enthusiasts, lots of other digital coins have sprung up ever since the conception of bitcoin. Each one has a designated purpose they set out to fulfill but the core definition of cryptocurrency must always be followed: it must be decentralized and kept on a public ledger that is not controlled by a central form of authority.
From Ethereum’s smart contracts and Ripple’s (XRP) solutions for seamless money transfer across borders to Tron’s (TRX) digital entertainment platform, tons of other digital assets or altcoins emerged and walked behind bitcoin’s success. They usually serve as an online currency intended to be used within networks much like TRX and XRP.
Another newcomer that braves the tide in the crypto wars is Cardano. What is it and how different is it from tons of other altcoins in the market? Does it even have a future?
Cardano is a decentralized smart contract platform and digital asset that runs on a public and open-source blockchain. It’s a smart contract-based system where decentralized applications can run and operate in the future.
Even though it was initially conceived in 2015, the Cardano project wasn’t fully launched until the final quarter of 2017. Charles Hoskinson pioneered this project that utilizes smart contracts, which shouldn’t come as a surprise since he was one of the co-founders of Ethereum.
Named after Gerolamo Cardano, an Italian mathematician and philosopher among many things, the Cardano protocol was written not as a finished whitepaper but as a group of peer-reviewed papers. Professional academics and engineers contributed to the development of this protocol before it was implemented into code.
The typical way of publishing a protocol was just posting a whitepaper on the Internet out of nowhere in complete Satoshi Nakamoto style. That’s why Cardano’s peer-reviewed paper was something new for crypto enthusiasts. This process, however, is attractive to those who are often sceptical of novel ideas since there is a sort of assurance that whatever this project is has been formed through a consensus of professionals.
Within its ecosystem runs ADA, the native coin of Cardano. Started in 2017, it rode the tail end of the great crypto bull run in the last months of 2017 until early 2018. In just a short matter of time, it rose through the ranks and immediately became a top 10 cryptocurrency. At the time of writing, it sits at the 11th spot with a price of $0.0591 and $1.5B in market cap.
An additional fun fact just for the heck of it, ADA was actually named after Ada Lovelace, an important lady figure and a revolutionary programmer in the history of computer technology. Its small denominations are called ‘Lovelace’s’! Now you know that when Cardano said that they were composed of a group of experts and researchers, they really weren’t kidding.
Based on the official Cardano site, ADA is hosted on more than 30 exchange sites available wherever you are. Cardano created its own ADA wallet called Daedalus where you can store your precious ADA and Lovelace’s.
It goes without saying that Charles Hoskinson alone isn’t responsible for this visionary project. Supporting him in this journey are three organizations that together, coordinate and maintain their blockchain.
The Cardano Foundation is a non-profit organization that mainly oversees the progress of the project. The Foundation’s main task is to promote, standardize, and protect the core protocol.
Input-Output Hongkong or IOHK is the brain of the team. It does the thinking and research needed for the protocol to improve. Hoskinson himself leads this organization, putting his mathematical genius into practice. Only the best engineers and researchers from academia make up this elite team.
Hailing from the Land of the Rising Sun is Emurgo, the business development wing of the team. It funds the IOHK by creating business opportunities that would need to utilize blockchain technology in their operations.
Much like every spring baby in an industry, Cardano aims to improve upon the problems left by the cryptocurrencies that came before it. Learning from the mistakes of its seniors, specifically Bitcoin and Ethereum, Cardano seeks to provide a system that can run decentralized applications in a more efficient, secure and faster way.
Cardano explains that since its conception, there are now three generations of cryptocurrency:
Scalability deals with the number of transactions per second, network bandwidth and storage of the platform. Cryptocurrency boasts its speed in terms of transferring assets all over the world. This also means you receive thousands of simultaneous transactions from around the globe. If a platform can’t handle a lot of transactions per second, it will prove erroneous and problematic.
This is where Cardano’s Ouroborous comes in. This system solves the scalability problem by adopting proof-of-stake rather than the more used proof-of-work. The latter is the algorithm used by bitcoin when validating each and every transaction that needs to be added to its blockchain. Validators mine new blocks and this process costs tons of energy and computer power as well as time.
In the proof-of-stake algorithm used by Cardano, only a few nodes are elected by the network to mine the next blocks. This means that unlike bitcoin where every validator races to finish hashing one block in order to get that sweet 12 bitcoin incentive, each node in Ouroboros is assigned one block to focus on. This proves to be a more efficient way since each node works on a different transaction and produces more end result.
For the network to handle the thousands of validated transactions, it needs to have sufficient bandwidth for continuous downloads. Cardano solves this by creating subnetworks that cater to small groups of nodes called Recursive InterNetwork Architecture or RINA so they won’t have to share the bandwidth with thousands of other nodes.
There are lots of altcoins in the market right now and everyone’s vying for the title of the hottest coin to buy and which one will top the rest in terms of overall performance and market cap. The people behind Cardano don't concern themselves with the competition, however, and sees it more like a community where digital assets live together in harmony.
Cardano aims to be the ‘Internet of blockchains’ where it connects with thousands of other blockchains of every cryptocurrency out in the industry. This valiant promise translates to the seamless conversion of assets from one blockchain to another without the need for intermediaries.
Another problem that Cardano addresses is the rocky relationship that banks and governments have with cryptocurrencies. Because of the blockchain’s decentralized nature and its position in a relatively new and uncharted industry, forms of authority tend to be sceptical of cryptocurrency. Transactions in the chain are different from banks in the sense that they don’t contain information about the sender and the reason for sending it.
Contrary to what banks think, this absence of sensitive data is what others would say as one of the advantages of the blockchain. Then again, crypto enthusiasts and banks don’t really tread the same road, thus the creation of the crypto industry.
But to cater to both sides, the Cardano project offers the option for people to attach the sweet information wanted by banks to a transaction. This is completely optional, however, and people don’t need to do this each and every time. With this option, Cardano serves as the middle ground for cryptos and the banking world.
Lastly, Cardano solves the problem of financially sustaining a crypto company that does not offer services or products for a price. Normally in the crypto business, a company launches an ICO or Initial Coin Offering that presents a low price for their new coin. This provides a hefty amount of money that serves as its capital for the initial part of the company’s growth.
Eventually, this will run out since there’s no incoming flow of money. Cardano tackled this problem by creating a treasury. It’s basically a savings account for the company. For every transaction that happens on the network, a small percentage is put in the treasury that is not controlled by anyone.
This treasury also serves as the pool fund for future developers who come up with novel ideas on how to improve the Cardano protocol. In this way, they have a sustainable way of providing funds for improvements and research and they won’t have to worry for a source of money.
The Cardano Roadmap envisions a total of 5 eras for the completion of their visionary project. The ingenuity of the teams behind Cardano shows with the names of each era starting with Byron, Shelley, Goguen, Basho, and Voltaire. These are all names of people that marked a change in the world today mostly in the field of computer technology.
The Byron era kickstarted the whole project in 2017 with the birth of the ADA cryptocurrency and the Ouroboros consensus protocol. With the foundations laid down in mint condition, the Shelley era followed shortly, where more nodes joined in on the network. Cardano’s delegation and incentives scheme, as well as their proof-of-stake network, started rolling during this era.
While the Shelley era focused mostly on decentralizing the core of the system, the Goguen era that followed it welcomed decentralized applications into Cardano’s peer-reviewed research and high-assurance development. They branched out and reached enterprise-level clients who have no knowledge of smart contracts.
Right now, the fourth stage or Basho era just recently kicked off with intentions of focusing mostly on fixing scalability and interoperability issues of the network. This era fixes its eye on improving the underlying performance of the network to further support the incoming developments that are planned to be implemented by the last stage, the Voltaire era.
In the future, Cardano envisions itself to be a self-sustaining system. The treasury system takes off in this era where network participants can propose their own development ideas for the network, have them approved and funded with money secured by the treasury. In its last stages, Cardano becomes more decentralized and gives more rights and influence to its stakeholders.
With their problem-solving solutions and smart contract platforms, Cardano presents a visionary journey that holds high expectations. With such an intricately planned future ahead of them, it’s both intriguing and interesting to watch whether all of that tasty promise will come to fruition. If or once they do, not only will this hold significant growth for Cardano, but for the whole crypto community as well.
Words by: Leann Padilla