- Founded by Ethereum co-founder and mathematician, Charles Hoskinson, Cardano is the world’s first blockchain platform based on peer-reviewed research
- Cardano aims to improve upon scalability, interoperability, and sustainability through its Proof-of-Stake protocol, Ouroboros
- Cardano’s coin, ADA, has seen great strides in 2020 and has the potential for growth unless people lose faith in Hoskinson and his vision
Cardano’s ADA coin has been gaining traction since its launch in September 2017. As of this writing, ADA has a market cap of $3,247,742,572 on CoinMarketCap, making it one of the top 10 cryptocurrencies, just a few spots behind Bitcoin and Ethereum.
But what is Cardano? In this article, we’ll tell you all you need to know about this third-generation cryptocurrency.
A Mathematician’s Lament
Cardano was invented by mathematician Charles Hoskinson and Jeremy Wood. You might recognize these names from Ethereum. Hoskinson co-founded the cryptocurrency with Vitalik Buterin but a schism between the two caused Hoskinson to leave the project in June 2014. Ethereum launched a year later.
Hoskinson then established the Cardano blockchain platform after two years in development. Cardano hosts its ADA coin, which you can hold in its accompanying wallet.
Everything about Cardano is dressed in mathematics references. Its namesake was an Italian polymath known for his work in probability. And the ADA coin is named after Ada Lovelace, whom many consider being the first computer programmer.
Cardano is different from previous cryptocurrencies. Instead of publishing a white paper and converting it to code, the platform is founded on peer-reviewed research.
Bitcoin was the first-generation cryptocurrency, establishing the P2P electronic system. Then, Ethereum started the second generation by introducing smart contracts. But both are plagued with scalability issues.
Cardano wants to solve three problems with the current generation of protocols: scalability, interoperability, and sustainability.
To scale towards a global payment system, Cardano increases its transactions per second through a proof-of-stake protocol called Ouroboros, contrasting Bitcoin’s proof-of-work protocol. Everyone can mine new blocks in a proof-of-work algorithm but Cardano elects “slot leaders” to mine blocks. Block rewards are proportional to the amount of ADA staked. Ultimately, this feature saves on computing power, network bandwidth, and electricity.
The second problem is interoperability. There are a lot of cryptocurrencies and they don’t talk to each other. You can’t exchange your Bitcoin into Ripple without a third-party. Cardano wants to be the “Internet of Blockchains” to move assets across chains.
The final problem is sustainability. Typically, companies can launch an ICO to get started on their idea. But what happens when that money runs out? Should companies launch another ICO?
Cardano uses a treasury, which takes a percentage of every transaction that happens on the network. It’s similar to a smart contract and can release funds to developers who want to improve the Cardano protocol. Users submit improvement proposals, which are voted on by the community.
Cardano has been rolling out across five phases. The first phase, Byron, set everything in motion. Users could trade ADA and bear witness to the Ouroboros consensus protocol. The second phase, Shelley, focuses on decentralization. This era encourages adoption by driving stake pools. The Shelley code was released a few weeks ago.
All this work is supported by three organizations. The Cardano Foundation maintains standards of the Cardano ecosystem and encourages adoption. IOHK builds, designs, and maintains the platform. And Emurgo is the commercial arm inviting businesses and governments into the fold.
What is Cardano Used for?
Cardano has outlined various use cases for enterprise. They all follow the platform’s design principles like traceability and authentication.
Agriculture: This pandemic has shown the faults in our supply chains. Logistics has been stuck in the 20th century. Blockchain technology can help modernize the industry. Instead of sifting through spreadsheets and other data management software, Cardano’s platform enables product certification and transparency across the entire value chain.
Healthcare: The World Health Organization estimates that ~50% of medications sold online are subpar or counterfeit. Couple that with the pandemic and people don’t know where to put their trust. Unfortunately, their lives depend on it. Cardano can authenticate and verify the origin of pharmaceuticals and lay bare its journey across the supply chain.
Decentralized Finance (DeFi): There are almost 2 billion adults worldwide that have no access to financial services. Catering to the unbanked is a $10 trillion market. Decentralized finance can move financial services over to the blockchain, countering corruption and forgery in the process. Hoskinson has hinted at moving into the DeFi space.
Where Does Cardano Go From Here?
First, the tech. ADA’s price has rallied around 400% in 2020. That price rally started with the announcement of the Shelley update back in May. The Shelley era promises to make the network more decentralized than other blockchains. It also widened the stake pools to 1000.
Clearly, the crypto community has faith in Hoskinson and Cardano’s roadmap. The next phase is the Goguen era, named after the American computer scientist, which aims to improve upon smart contracts.
Firstly, the Goguen era enables people to build decentralized applications. Secondly, the “smarter” contract means that Cardano’s platform will not prioritize ADA transactions and contracts over other tokens, as Ethereum does for Ether over ERC-20 tokens. Lastly, users from non-technical backgrounds will be able to execute smart contracts using the Marlow platform.
The last two phases – Basho and Voltaire; named after the Japanese poet and French philosopher, respectively – will be the last puzzle pieces that make Cardano a self-sustaining system.
Now, the price. ADA is currently trading around $0.12 USD at the time of this writing. It hasn’t come close to its $1.20 high back in January 2018. But, that’s okay. Cardano is playing the long game.
On that note, Messari founder Ryan Selkis predicts that ADA will continue to be on CoinMarketCap’s top 10 in 2021. DigitalCoinPrice thinks it’ll reach $0.25 by year’s end and $0.49 by 2025. And UseTheBitcoin sees it hitting the $1 mark by early 2021. A steeper hill to climb, but not impossible. And it’s not even the most aggressive prediction.
So our conclusion is that unless Cardano fails its roadmap, it has plenty of room to grow.