Cardano Cryptocurrency Platform
Cardano (ADA) is currently the 6th largest crypto-platform with a market capitalization of almost $8.5 billion (CoinMarketCap). Its ADA token is presently trading at around $0.33 (at the time of this writing). These numbers are down considerably since we last covered Cardano, here at Core Media, back in early January 2018. The reason for its price drop can be attributed mainly to a larger dip in the overall cryptocurrency market.
After surging to record-level highs in mid-December 2017, when we saw Bitcoin reach an all-time high of nearly $20,000, the crypto-market’s aggregate value is down from over $800 billion to just over $400 billion. That’s about a 50% drop. However, the key thing to note here is not the price.
Focus Should Be On Improving Crypto-Technology
As Ethereum co-founder Vitalik Buterin recently pointed out that the digital currency market could drop to a “near-zero” level, the primary focus of the crypto-community should be on learning more about this nascent technology, and how everyone can help to improve it. This is precisely what the developers of Cardano are attempting to do.
Most crypto watchers are well-aware of Bitcoin’s scalability problem, which not only limits the number of transactions its network can process at a given time, but also slows them down quite a bit. Not only have BTC transactions been reported to take a long time to confirm, they’re also very expensive. These issues are primarily the result of Bitcoin’s protocol limitations, coupled with soaring demand. On the other hand, the Ethereum network is comparatively more flexible, but it’s neither adequately safe nor practically scalable according to lead Ethereum developer Vlad Zamfir.
Cardano Claims To Offer A Better Solution
Many new startups have claimed that their cryptocurrency network will be superior to that of the leading crypto-platforms. Cardano happens to be among one of these emerging startup companies. Notably, Cardano’s developers assert that its source code, which is written using the purely functional Haskell programming language, is much more secure.
Per Cardano’s developers, another unique approach, which sets it apart from other crypto-platforms, is that it’s backed up by peer-reviewed academic research. Moreover, Cardano’s programmers say that it is faster and more scalable than its competitors, because it is implemented using the Ouroboros proof-of-stake blockchain protocol.
The Abstract describing Ouroboros reads:
“it offers qualitative efficiency advantages over blockchains based on proof of physical resources (e.g., proof of work). We also present a novel reward mechanism for incentivizing Proof of Stake protocols and we prove that, given this mechanism, honest behavior is an approximate Nash Equilibrium, thus neutralizing attacks such as selfish mining. We also present initial evidence of the practicality of our protocol in real world settings by providing experimental results on transaction confirmation and processing”.
Now, let’s break this down. Nash equilibrium, which is named after American mathematician John Forbes Nash Jr., is a central concept of game theory and economics. A system is said to be in Nash equilibrium, in this case the Cardano network, if none of the network participants (aka nodes/entities) have an “incentive to deviate from their ‘chosen strategy'” after examining the current state of the network and the behavior of other participants.
Selfish & Harmful Behavior Is Neutralized
Basically, this just means that entities on Cardano’s blockchain are less likely, as compared to other blockchain platforms, to engage in behavior which isn’t in the best interests of everyone on the network, such as “selfish mining”. The creators of Cardano also aim to make it “prohibitively expensive” for malicious nodes to launch DDoS (distributed denial of service) attacks, which clog the network by spamming it with thousands of transactions.
In addition to making the Cardano platform more secure and scalable, its development team intends for it offer more interoperability through its Daedalus wallet, which will allow different cryptocurrencies to be exchanged. Another noteworthy design feature that Cardano’s team wants to offer is long-term sustainability by establishing a cryptocoin treasury that would be used to finance long-term initiatives.
The Architects Of Cardano
When researching cryptocurrencies and their underlying technology, one of the main things to look for, or consider, is the credentials and reputation of its architects. It appears that Cardano’s team has a solid background, especially when reviewing the profile and experience of Charles Hoskinson, their main developer. Hoskinson was a student of Analytic Number Theory at Denver’s Metropolitan State University and University of Colorado at Boulder.
Although he did not complete his studies, Hoskinson went on to become the co-founder of Ethereum. His current crypto-related activities include spreading knowledge and awareness about cryptocurrencies and blockchain technology by speaking to audiences, as he travels around the globe. He says that Cardano’s creators did not really do any marketing to promote their platform, and recalls that when Cardano first started trading on Bittrex,
“[people] kinda saw the vision, which was this idea of a third generation cryptocurrency, and all this things that we’ve set up, the research team that we set up, this enormous team we’ve put together. They saw the code, they saw all the progress”
Third-Generation Cryptographic Currency
When discussing Bitcoin and Ethereum, Hoskinson refers to them as 1st and 2nd generation cryptographic currencies, respectively. He goes on to explain that the creators of Bitcoin and Ethereum had introduced a brand new concept and technology to the world. There had never been anything like it before. Therefore, it wasn’t possible for the architects of these cryptos to fully anticipate the various problems in their design.
Now, apparently, Hoskinson says that Cardano’s developers have learned from the mistakes of older digital currencies, and have built “every component” of their platform “from scratch”. There seems to be some credibility behind Hoskinson’s words. That’s because, according to Cryptomismo, a website that monitors and keeps track of the number of times a crypto’s source code has been updated (Github Commits), reveals that Cardano comes in second in terms of being the “most active” crypto-project.
Concerns Regarding Cardano’s Ambitious Project
It would be beyond the scope of one article to delve into every single aspect of Cardano’s extensive project. This also happens to be one of the primary concerns regarding its development. Hoskinson explains:
“We’re starting very far behind everybody…A lot of the work that we did in 2016 and all throughout 2017 and we’re still doing now is about building up to a point where we catch up completely with all of our competitors. The difference between us and a lot of our competitors, is that every time we get involved in something, we write a paper. And the people reviewing these things are cryptographers, experts from universities such as Cornell“.
Since Cardano’s approach to developing their platform is very time-consuming, it could struggle to keep pace with other crypto-projects that might not spend as long going over all the details of their implementation. Nevertheless, Hoskinson has stated that they’re beginning to make more steady progress than before. He compares the development of , their proof-of-stake algorithm, to that of Ethereum’s Casper, and claims that they’ve made a lot more strides. So much so that he confidently remarks that they have progressed “to the extent that we have a network running with proof-of-stake at the moment”.
Claims Regarding Cardano, From A Credible Source
Although only time will reveal whether Hoskinson’s statements will materialize, he does have a lot of experience working with the Ethereum platform. To his credit, this gives a fair amount of credibility to his statements, even though the Cardano project hasn’t been fully realized. He’s not only the co-founder of Ethereum, but also served as the CEO of its projects from December 2013 to May 2014.
Despite having a strong background, particularly with Ethereum, Hoskinson’s claims cannot be completely validated, given the present stage of Cardano’s development. Additionally, there’s also some heavy debate going on in the larger crypto-community, in general, as to which version of proof-of-stake is actually better.
The purpose of this article is by no means to offer an exhaustive analysis and explanation of all the intricacies of Cardano’s project. Moreover, it’s meant to help create more awareness, and motivate readers to gain more knowledge about this exciting new technology. Also, Cardano’s intensive research and development efforts have undoubtedly given us a good reason to keep an eye on it as we move forward.