What Is Cardano?
Cardano intends to be a scalable cryptocurrency platform that hosts smart contracts and decentralized applications. Its website claims that it is the first blockchain to evolve out of a scientific philosophy, and the only one to be designed and built by a global team of academics and engineers. Its website also claims that it will combine regulation and privacy.
Ethereum created a platform for smart contracts and decentralized applications but it has led to security and scalability problems. In its current iteration, Ethereum is unable to support a global economy of smart contracts and decentralized applications because its blockchain would be too congested. A better platform needs to exist for global cryptocurrency adoption.
Cardano will use a Proof of Stake they call Ouroboros as well as sidechains to address scalability issues. Cardano is building a scalable, interoperable, and sustainable blockchain that goes beyond the applications of a first generation blockchain like Bitcoin and a second generation blockchain like Ethereum.
Cardano will use Ouroboros to determine consensus throughout its network. It is a Proof of Stake system that does not require extensive energy resources. In Proof of Stake, users (stakeholders) can choose to lock up and stake their coins to determine the next block in the blockchain. The likelihood of finding the next block is equal to the proportion of the total coins at stake that user stakes. So if a user stakes 1% of the total coins being staked, they have a 1% chance of finding the next block and getting awarded with a block reward. Proof of Stake has not been a secure consensus mechanism in the past, but Cardano claims to have a mathematically proven secure Proof of Stake solution.
Beyond its consensus mechanism, Cardano seeks scalability by using sidechains. In summary, sidechains allow multiple blockchains to interoperate with each other, which means that if one chain gets congested, users can use a different chain under the Cardano umbrella. One advantage of sidechains is that it allows the blockchain to update features without the need of a fork. If a new feature is added onto a sidechain, users can move their ADA to that chain without a complicated hard fork.
The Cardano team consists of people from The Cardano Foundation, IOHK, and Emurgo. Cardano’s leader, Charles Hoskinson, co-founder of Ethereum, is the face of the blockchain. Hoskinson founded IOHK (Input-Output Hong Kong), which is a technology company focused on academic blockchain innovation.
It may take years for Cardano to fulfill its roadmap. By the time it is done, a competitor may have already beaten Cardano to the punch. Dan Larimer, founder of Bitshares, Steemit, and EOS, claims that Cardano’s latency (20 seconds) is too long to support financial applications, which begs the question, even if Cardano creates a secure Proof of Stake platform, will it be practical to use for all applications?
Cardano’s scalability is in progress. Snapshot from May 2nd, 2018
Point of the Cardano Token
ADA is required to process transactions and contracts on the Cardano blockchain.
Cardano has videos and whitepapers to support its secure Proof of Stake smart contract platform but it may take too long for their ideas to come to fruition to make an impact. Cardano’s success depends on the success of other cryptocurrencies like Ethereum and EOS. If the EOS mainnet launch in June 2018 goes well, Cardano’s research will be slighted. If EOS’s mainnet launch does not do well, Cardano’s long term plan of creating a third generation blockchain will look more promising.
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