Cardano: a new-generation blockchain platform with a scientific approach and great prospects - Hitecher
Cardano

Cardano: a new-generation blockchain platform with a scientific approach and great prospects

by Phil Haas

Bitcoin was the first generation blockchain network with Ethereum following it up as the second generation. However, both...

Bitcoin was the first generation blockchain network with Ethereum following it up as the second generation. However, both of these systems suffered from similar drawbacks, namely the lack of scalability, poor throughput and bandwidth, and most importantly, imperfect transaction timing and consensus. The need to cater to the geometrically progressing amount of transactions on the crypto market has driven a group of developers to create their own blockchain in September 2017, which they have dubbed Cardano as the third generation blockchain.

Cardano is a decentralized public blockchain and fully open source cryptocurrency project coded in the dynamic and mathematically verifiable Haskell language. The project is developing a smart contract platform seeking to deliver more advanced features than any protocol previously developed. It is the first blockchain platform to evolve out of a scientific philosophy and a research-first driven approach.

The Essence of Cardano

Like most blockchain projects seeking to establish their place under the crypto soon and head to the proverbial moon, Cardano has its of internal cryptocurrency. The Cardano ADA is a pre-mined coin, which does not use the all too popular Proof of Work (PoW) consensus algorithm, therefore, it can only be staked on exchanges. The ADA is a Proof of Stake (PoS) cryptocurrency based on the Ouroborous patented blockchain technology created by IOHK. Ouroborous is said to be the only PoS protocol with mathematically proven security. Under the protocol, the network randomly elects a node to confirm the next block of the transaction and the rewards are allocated to that node.

The development team consists of academics from several universities. Three organizations are contributing to the development of Cardano. The first is the Cardano Foundation, an independent standards authority based in Switzerland with core responsibilities to support the community of Cardano users and to work with authorities on regulatory and commercial matters. The second entity working on Cardano is IOHK, a leading cryptocurrency research and development company, which holds the contract to develop the platform until 2020. The final business partner is Emurgo, which invests in startups and assists commercial ventures to build on the Cardano blockchain. As such, the ADA is designed to be an all-in-one cryptocurrency. Its goals are incredibly ambitious, but there are issues Cardano will need to overcome to achieve these goals.

Cardano is a technology platform of the ADA cryptocurrency used to send and receive funds that are secured through cryptographic channels. Cardano has a digital hash, which depicts the future of digital funds and their transfer mechanism. Each layer of the platform has its own function and flexibility in regard to adaptation and modification to current needs. Cardano is the only crypto project which is developed on the basis of scientific philosophy and compromises on the research from academics and engineers around the globe. As a pre-mined coin, the ADA has a maximum supply in the amount of 45,000,000,000 coins and a total supply of 31,112,483,745 ADA. Current supply at the given development stage stands at 25,927,070,538 units.

Cardano Advantages and Disadvantages

Ethereum is considered to be the second generation of blockchain. Its advent unlocked the real potential of blockchain technology in the form of smart contracts. Cardano is proclaimed to be the third generation, and it was specifically designed with the aim of offering all the necessary functionality while overcoming the problems other currencies have encountered.

There is a number of advantages that are being attributed to Cardano over other blockchain platforms. Among the main pros are the fact that is considered to be more reliable than other crypto platforms through the use of the PoS algorithm. Proof of stake validation eliminates the need for extra machines within the system as the nodes will be responsible for throughput and the system will be less susceptible to interference as a result. The other security advantage is that it is a two-layered system where each layer is responsible for a complete set of tasks, thus allowing it to work more on interoperability with different crypto platforms. In addition, Cardano is more scalable than Ethereum and more decentralized through the use of the PoS, since it scales through side-chains horizontally, unlike its elder counterpart, which evolves vertically.

Disadvantages are also present in the Cardano infrastructure, as many considered the Proof of Stake algorithm to be flawed through a problem known as «nothing at stake». This issue consists of the problem that voting on a particular version of a proof of stake blockchain requires no resources, unlike the labor-intensive PoW, and does not involve any opportunity cost, without which miners simply mine on every competing branch so as to maximize the amount of mining returns they get. The other serious disadvantage undermining Cardano is that it is still an unproven platform that has not been tested in full, unlike Ethereum and Bitcoin.

Progress and Prospects

Cardano is developing with significant progress regardless of the market situation and has already signed a deal in May 2018 with the Ethiopian government to improve the coffee industry. Using the Cardano blockchain, consumers will be able to track down the origin of their cup of coffee by scanning a QR code, which will provide complete information about the production process and farming.

The digital currency has made significant progress since its introduction in September 2017. The ADA increased in value by 1,520% in four months and reached a market cap of about $18 billion. At the time of writing, the ADA is trading at $0.1590 with a market cap of $4.7 billion and a trading volume of $90.08 million. Most of the price predictions for Cardano in 2018 and beyond are speculative at best, as the company promises that it will produce and spread an ATM network across Japan in 2018. This development promises significant real-world applications of the digital currency. According to statistics of Smartereum analysts, the ADA will increase by over 8,000% as its value is over the 15 cents mark. Other predictions include the market cap of the coin increasing to about $40 billion by December of 2018.

Cardano is a new but underdeveloped cryptocurrency with significant prospects if the development team manages to sign more important agreements on the real world application of their technology.

Cardano is working hard to address the biggest cryptospace challenge — the creation of a scalable network. One of ADA’s main goals is to provide affordable payments to 3 million people who are lacking access to banking services. Cardano network has to cope with such enormous traffic. Cardano’s Project Manager Hoskinson recently announced that the company’s engineers are exploring the possibilities of parallel chains and the sharding concept to help them solve the issue of scalability. If ADA succeeds in doing it, it can safely be classified as a 3rd generation cryptocurrency.

Another factor that can influence Cardano’s future success is the personality of the project’s CEO Charles Hoskinson. He manages two of the company’s three operating units. Given Hoskinson’s extensive experience in the blockchain technology, he is effectively the driving force of the entire project. In fact, he recently addressed the company’s Board of Directors urging the Cardano community and the foundation’s council to act, and emphasizing that the current chairman of Cardano Foundation’s Board of Directors «is paralysing the network’s operation». Hoskinson’s experience and energy can be the driver of ADA’s global breakthrough.

A recent announcement by Coinbase of a possible ADA listing gives great hopes for the strengthening of this cryptocurrency’s positions. As of today, Coinbase has over 20 million users. Listing with this exchange can increase ADA’s liquidity and price.

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