Breaking down Cardano.
Cardano is a cryptocurrency network.
The network utilizes a cryptocurrency called Ada.
As of writing, Cardano is among the top five cryptocurrencies in terms of total market capitalization. Cardano’s ticker symbol is ADA.
The price of ADA has surged since late 2020, along with Bitcoin and the overall crypto market.
We already know that Cardano is a cryptocurrency network.
Cardano is also an open source project.
Cardano is a blockchain platform for changemakers, innovators, and visionaries, with the tools and technologies required to create possibility for the many, as well as the few, and bring about positive global change.
Cardano has a global focus.
The developers behind the network place an emphasis on providing financial services to its users through trust.
Similar to competitors such as Ethereum, Cardano achieves trust through the use of smart contracts.
The network also utilizes a proof of stake consensus protocol.
Interesting to note is that Cardano is among, if not the, largest proof of stake network in the world. Depending on market cap at the given time, Cardano and Polkadot have been trading for the top spot.
Cardano’s largest competitor, Ethereum, still utilizes a combination proof of work and proof of stake system. Ethereum is transitioning to a proof of stake system via its ETH 2.0 roadmap.
Cardano follows a carefully designed roadmap led by a blockchain research and development startup IOHK.
The founder of Cardano is also one of the co-founders of Ethereum. His name is Charles Hoskinson.
The development of Cardano is mapped out in their roadmap where they refer to different upgrade periods as eras.
In September 2017, and the Byron era began.
This marked the creation of Ada, allowing users to buy and sell the cryptocurrency on one layer of the network.
Ada is named after revolutionary programmer Ada Lovelace.
During the Byron era, Ada and Ouroboros, a proof of stake protocol based on academic research, were created. The team at IOHK also developed the desktop wallet Daedalus for users of Ada.
Shelley is the era we are in as of writing.
The team is, however, closing in on the next era which is likely contributing to the jump in ADA prices.
The Shelley era is a period of further decentralization.
Come the end of the Shelley era, we expect Cardano to be 50–100 times more decentralized than other large blockchain networks. — Cardano.org
During the Shelley era, more nodes have been generated and shifted towards being run by the community itself.
An incentive system has also been introduced via a process known as staking. Ada users are rewarded for participating in the network.
A personal note — I got involved in Cardano during the Shelley period. I’d previously observed it from afar for several years but was more recently convinced by a friend to dive deeper.
Part of why I’m writing this is to further my own understanding of Cardano, Ada, proof of stake, and their roadmap.
I stake Cardano using the Exodus wallet.
Most wallet providers have adapted almost seamlessly to the staking upgrades implemented by the teams behind Cardano, including of course the Daedalus wallet created by Hoskinson, Jeremy Wood, and the folks at IOHK.
An interesting note from the Cardano team during the Shelley period places an extreme emphasis on the sustainability of Cardano’s proof of stake system when compared to larger cryptocurrencies and proof of work.
…the entire Cardano network runs at a fraction of the power cost of equivalent proof-of-work blockchains, using the electricity equivalent of a single house, rather than a small country. — Cardano.org
The Goguen era brings the integration with smart contracts.
During this era, which we are counting down the days to as of writing, there will be “the ability to build decentralized applications (DApps) on Cardano’s solid foundation of peer-reviewed research and high-assurance development.”
It’s important to note that Cardano stresses peer-reviewed research within their project ecosystem. Some of their developments have been years in the making, but there’s a clear emphasis by Hoskinson on taking the appropriate amount of time to get things right.
Also coming during Goguen is the Marlowe Playground, an easy-to-use application-building platform that non-programmers can use to build financial smart contracts.
From what I understand about Goguen, you can expect to see some similarities to what we’ve seen in the Ethereum ecosystem.
There will be the introduction of natively-supported tokens along with DApps and an overall sense of making the network more accessible to both its current users and newcomers.
The Basho era will be a period of optimization.
Overall, the Basho era will see Cardano become one of the most high performance, resilient, and flexible blockchain platforms in the industry. — Cardano.org
They mention improving scalability and developing sidechains or new blockchains that are interoperable with the main Cardano chain.
In a basic sense, a sidechain takes some of the work off of the main chain. This increases the capacity of the network.
The Voltaire era introduces governance.
The network will become a self-sustaining system.
Voltaire will also further decentralize Cardano, allowing network participants to present Cardano improvement proposals that can be voted on by stakeholders.
On top of the decentralized proposal system, Voltaire will also bring with it a treasury system “whereby a fraction of all transaction fees will be pooled to provide funds for development activities undertaken following the voting process.”
Their intention is to get Cardano out from underneath IOHK’s management — true decentralization.
In my opinion, Cardano is a great example of a cryptocurrency network project that has proven itself extremely consistent.
Hoskinson and IOHK are thorough in their approach to development, utilizing peer-reviewed research in their ecosystem.
They have stuck to their roadmap.
Full disclosure, I do mine Ethereum and plan to continue doing so for as long as I’m able. Even though I mine ETH, the majority of my cryptocurrency portfolio is in Bitcoin but I do now also hold ADA and stake, as I mentioned, using the Exodus wallet.
This is by no means a shot at Ethereum, but Cardano has proven to be more consistent in hitting their checkpoints noted on their roadmap.
Ethereum has pivoted both in terms of overall direction and monetary protocol (incentives, rewards, etc.) throughout their existence. More recently, they’ve also experienced delays in rolling out ETH 2.0.
Again, not a knock against Ethereum.
I view Ethereum as more of startup environment than Bitcoin or projects such as Cardano.
Ethereum has a lot of financial interest at this point and their ecosystem is filled with experimentation that I hope proves successful.
Time will tell whether or not Ethereum remains the second largest cryptocurrency by market cap behind Bitcoin.
By contrast, Cardano is less experimental in the sense that they utilize a more mapped out timeline and peer-reviewed research. There is less of a “fail-fast/Silicon Valley” type of mindset.
Proof of Stake
As mentioned above, Cardano has become one of the, if not the, largest proof of stake network in the world.
This is a momental achievement.
It could provide a fantastic alternative for naysayers of Bitcoin and proof of work due to their environmental impact.
The extent of that environmental impact is another conversation entirely, but a network like Cardano sidesteps all of that.
Cardano Reveals What Is Possible
Bitcoin is often compared to the internet in terms of its value as a financial or technological innovation.
The world’s largest cryptocurrency has operated nearly flawlessly since Satoshi Nakamoto put it into action.
Bitcoin has given us a hedge against inflation, a form of digital gold, and internet money all in one.
The cryptocurrency space has seen A LOT of so-called successors to Bitcoin, especially in recent years. We saw the ICO craze flame out with projects funding themselves to do nothing besides make a quick buck.
It’s good to see lots of work continuing on Ethereum. Despite the speed bumps they’ve had, they’ve weathered the storm nicely.
Cardano is another breath of fresh air in the cryptocurrency community. It shows us what is possible in the future of crypto.
There is Bitcoin and there is everything else.
Cardano falls in that everything else bucket but it has quietly risen the ranks to become one of the most impressive networks in the world today.
If you’re like me and looking to learn more about Cardano, I’d recommend a number of places to get started.
Cardano.org is a great place to start and find links out to their roadmap, IOHK, forums, and all other social channels.
I mentioned this previously, but I’ll reiterate that I’m writing this to further my own understanding of Cardano and where they’re heading.