Cardano is simply just proof of state cryptocurrency.
The founder Hoskinson saw that cryptocurrencies would suffer from three main problems. These problems are scalability, interoperability, and sustainability
Because of bitcoin’s block size, the network can only confirm around five to seven transactions per second. This is not even comparable to the visa behemoth that can do tens of thousands of transactions per second the block size debate in bitcoin raged on for years
How can a project scale?
- As Hoskinson said we actually want things to speed up as more users use a system not slow down as many of them do if the network is being used.
- It needs to speed up in order to be consistent for its users i.e., a blockchain’s capability should scale linearly with its usage.
- Cardano solves this by using what is called epochs which basically divides up who validates certain blocks in the blockchain.
- They use slots and any of the nodes from people or organizations that are running the blockchain. They can be nominated to be a slot leader.
- They allow Cardano’s proof of stake to scale.
- Cardano calls this system oraboros.
- Oraboros could warrant its own video due to its complexity.
- The important thing here is that slots can be divided up further which lets the network scale
Interoperability: It is a very old technological problem. For example: If you’ve ever wanted to set up a wireless network in your house you know you have to connect your devices with a router so that the signal can reach your device. But what if your apple iPhone only connects to apple routers. It wouldn’t be useful if everyone has to get the same hardware for everything from the ground up and from the same brand.
How does Cardano make sure that crypto doesn’t suffer from the same problem?
It allows people to easily bridge Cardano and other cryptocurrencies that use other blockchains with KMZ sidechains protocol. This is the crypto version of being able to easily exchange U.S. dollars for Canadian dollars or Euros or some other currency. Now, unlike other cryptocurrencies, Cardano knows it won’t be the only cryptocurrency and because of this it proactively works on an interoperability solution using bridges.
- If Cardano or any other cryptocurrency is going to host our financial lives, obviously we would need a way to guarantee that the system stays functioning.
- Cardano because of its proof of stake instead of proof-of-work mechanism is environmentally sustainable.
- There is a huge debate about environmentalism in the crypto world regardless of what we are talking about is the network’s ability to keep the lights on continuously to make improvements and have a healthy development community.
- Cardano solves this by establishing a treasury that collects fees and pays them to those who make contributions to the network.
- Hence, Cardano is a self-sustainable cryptocurrency that has intentions of improving itself in the future and it is developed.
- Cardano seems to be designed for solving problems very rationally and logically.
- This is a project created and run by a man who used to be a mathematician.
- The token which actually carries value and is used on the network is called ADA.
- So, Cardano is the blockchain and ADA is the coin.
- ADA comes from the name of a woman who is now considered to be the first ever computer programmer.
- Charles Hoskinson clearly has shown ambition for tackling big challenges through methodical reasons and problem-solving.
- Within the Cardano project, there is tons of research being done, papers being written and even peer reviews to get third-party feedback.
How exactly Cardano is different from Ethereum?
- Hoskinson thought Ethereum should be a for-profit entity whereas Buterin wanted Ethereum to stay as a non-profit.
- Both of their wishes ended up coming true in a way Buterin stayed with Ethereum and Hoskinson took a sabbatical shortly followed by a proposition fellow co-founder of Ethereum.
- Jeremy wood approached Hoskinson about creating a for-profit entity that would create blockchain projects for companies, governments and even other organizations.
- This company became known as IOHK or input output Hong Kong.
- It’s an homage to the engineering term and to the place that it was incorporated.
- IOHK’s main project is what we know as Cardano.
- Although Ethereum and Cardano are both smart contract platforms they do differ in several ways:
- The first is that Cardano has been a proof-of-stake blockchain from the beginning.
- This means that instead of bitcoin’s method of doing really hard math problems to mine coins they validate transactions according to how many tokens the validators stake.
- For example: if you own a lot of ADA, you can stake that ADA and have more power in the network than those who have little ADA.
- Ethereum however started as a proof of work chain but is now migrating to become a proof of stake chain. Another thing that’s important is that bitcoin Cardano is deflationary. This basically means there is a fixed amount.
- In the case of ADA, 45 billion total ADA coins will be minted as opposed to Ethereum which mints more and more Ethereum every year from an economic perspective. That would generally mean that all other things being equal to ADA should increase in value or be appreciated more than Ethereum.
Let’s take a look at where Cardano is being used in the real world and where it might be used in the future despite the ICO craze of 2017 which was known for a lot of shady scams.
- Cardano actually started off with an ICO.
- Cardano showed through its commitment to rigorously researching and testing its solutions.
- IOHK helped both the University of Edinburgh and the University of Wyoming support there blockchain initiatives.
- We can see the breadth and depth of Cardano’s potential when we look to its partnership with the government of Georgia.
- They have decided to build an id verification system using both Cardano and IOHK’s enterprise solution ATALA.
- They followed this in 2021 with an agreement with the Government of Ethiopia to use Cardano for id verification for students commercially.
- Its most impressive partnership is with new balance.
- IOHK has been hired by a new balance to use its technology to verify the authenticity of its sneakers
- It is similar to how we chain is used to authenticate supply chains using a blockchain as a methodical
- IOHK has released a roadmap for Cardano’s future which includes five eras: foundation, decentralization, smart contracts, scaling and then governance.
- Each of these eras takes on a new challenge and adds new products and features to Cardano’s Capabilities.
- It’s safe to say that regardless of any future utility Cardano will always have a plan for what they do.