Cardano (ADA) is not nearly as popular as Bitcoin or Ethereum, but it is just as important (if not more) as these two projects. Bitcoin and Ethereum, as of now, face 3 major problems that need to be solved for crypto to become an everyday staple. These major problems are sustainability, interoperability, and scalability.
We will address each one of them in a bit, but just understand that these problems are holding crypto from becoming mainstream, and it is due to these problems you should not use crypto to buy a latte.
You can do it… but it is not feasible yet.
Cardano aims to be third-generation blockchain technology, advancing on existing technologies, and one of its goals is to allow you to buy your latte with no issues. Not kidding.
A third-generation blockchain aims to solve problems such as scalability, interoperability, and sustainability.
There are many other third-generation cryptocurrencies that bring unique solutions and their own philosophy to the same problems such as IOTA, NANO, DOT, and even Ethereum aspires to be third-generation crypto once ETH 2.0 transition is complete. But no one is quite there yet. The race is on!
It is too early to declare Cardano the winner, but I am most confident with Cardano because of the following reasons :
The Team and Development
A successful team is necessary to bring any project to life. While most of the crypto projects comprise just 5–10 full-time team developers, Cardano has around 250 full-time researchers/developers working to make the project successful. There is an entire community that believes in the vision and makes contributions to the open-source project.
All the research goes through filters and peer-reviews from various universities and conferences. This means that the community must review and validate all the decisions to make it a reality. They prove all the protocols and algorithms mathematically before implementation.
There is an IOHK YouTube channel, where scientists explain how everything works. Charles Hoskinson, in his own YouTube channel, discusses other projects and conducts Q&A/AMAs. The website is updated frequently and the project roadmap is very clear.
Out of all the crypto projects I have seen, Cardano has the most active community and accredited researchers/developers.
All the developments, future endeavors related to Cardano are public and once they implement all the phases, the community will run it through an advanced governance model: *Voltaire*. The custodian organization IOHK, which is handling all the operations, would leave the network completely in the hands of the community.
The Voltaire system of Cardano would allow network participants to use their stake and voting rights to further the development of Cardano through a treasury system.
According to IOHK, A treasury system is a community controlled and decentralized collaborative decision-making mechanism for sustainable funding of the underlying blockchain development and maintenance.
I do not know technically how this would work, but according to IOHK, the integrity of the treasury voting decisions is guaranteed even when all the voting committee members are corrupted.
This got me most excited!
The biggest problem with all the current blockchain solutions is scalability. Scalability comprises few essential things such as transaction per second, network bandwidth, and data storage. The goal is to reach higher TPS than the current VISA network solution with minimal data storage per node.
There are many projects that offer high transactions per second. But there is usually a tradeoff. If TPS is high, blockchain is usually not secure because it is easier to create a block in a proof of work setting and if proof of work is hard, it takes time to create a block, so there is a tradeoff between security and TPS.
A PoW network can reach a throughput of a few dozens, a PoS network can reach few hundreds, but all decentralized solutions lack behind VISA’s theoretical 24000 TPS.
The internet of today has already solved these problems, and therefore it will always be preferred over a decentralized solution unless you are super paranoid about privacy or something better comes out.
Cardano aims to be that better solution. It uses a proof-of-stake approach called Ouroboros Hydra, which in theory, can reach up to 1Million TPS — much higher than the current VISA benchmark. This is because unlike PoW, Ouroboros does not require miners to solve for a block, instead, it elects stake pools based on their stake in the network, and then a leader is elected to make the next block.
Let’s see why hydra is different.
Cardano, like many other high TPS networks, is divided into layers to achieve high TPS. The first layer is Blockchain, which is slow but provides maximum security. The second layer is hydra, which provides high TPS and low transaction costs.
What sets hydra apart is its compatibility with the first layer. In Ethereum, the first and second layers cannot communicate because they use different languages, so a conversion must be made, but Cardano uses the same language.
Hydara uses state channels which allows involved parties to have a common state or a common ground truth without the need of the first layer. This allows off-chain parallel processing and at the end of processing a final state is reached, which is used to update the blockchain.
So put simply, data from the blockchain is loaded into hydra, and participants can make transactions or run smart contracts in the hydra. Once their job is finished, they close the hydra and the final state is updated in the blockchain. As multiple such hydra ‘heads’ can be created, it allows fast and cheap parallel processing. How to Make Money With ETH2.0 Hold, Stake, DeFimedium.com
There is a lot more that goes into it. You can read a more detailed explanation by cardanians.io here- Hydra: Cardano scalability solution Cryptocurrencies came to the world to become an alternative to the current financial system. As such, users must be…cardanians-io.medium.com
Interoperability is another key ingredient missing in all the cryptocurrencies today. For the massive adoption of crypto to become a reality, cryptocurrencies must connect to other cryptocurrencies and the outside world. Banks and financial institutions are seeking interest in crypto, but one major roadblock is Interoperability.
There should not be a single cryptocurrency to rule them all. Each project has its own principles, solutions, and philosophy.
Cardano recognizes these issues and is working on the solution. Through side-chains, it will allow meta-data (identities of the parties, the purpose of the transaction, etc)to those institutions that need it and abstain from providing such sensitive information for certain kinds of transaction/applications where it is not essential, to maintain user privacy and security.
Cardano is also working on an ERC-20 converter, which would facilitate the transfer of tokens from the Ethereum network to the Cardano network. This would diversify the Dapp ecosystem, which is currently ruled by Ethereum.
There are a few other cryptocurrencies project trying to connect the decentralized and centralized world, a major one being Chainlink. Chainlink is a decentralized middle agent between traditional parties and smart contracts. It tries to solve the Oracle problem. Centralized and Decentralized Systems Finally Get ‘Chained’ What is Chainlink and how it differs from other crypto-currencieslevelup.gitconnected.com
How do you take a project beyond a certain company, investors, founders, in-house developers, and beyond time, forever? Founding centralization is a reality that plagues cryptocurrency development, the control is centralized amongst the initial members, who might just seek personal gains.
For a decentralized network to truly exist, it must be more than the founders/company who created it. Even if the company is transparent and meant for well-intended purposes, we will always prefer a decentralized encrypted solution.
A cryptocurrency must have a self-sustaining economic model for all its stakeholders, and it must have a governance model with flexible and rigid protocols to incentivize all stakeholders.
This model should prevent destructive hard forks, which led to the birth of Ethereum Classic and Bitcoin Cash.
Cardano is currently under the custody of IOHK, which handles the rapid development of the platform. Eventually, the goal is to make Cardano self-sustainable. There will be a blockchain-based method for proposing, vetting, and enacting changes to the protocol. There will be a treasury that will take a small fee from all the transaction fees, and at regular intervals, it will fund the future developments of Cardano.
You can read more about the Voltaire governance here- Governance Our current systems do not work for everyone. A better, more positive future is possible. If the world is to serve the…cardano.org
Please let me know your thoughts on Cardano. If you know of any other crypto projects that come close to Cardano or any project which is solving real-world issues, let me know through the responses.