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Cardano (ADA)

Jan 20, 2018 Admin Cryptocurrencies
name
    Ripple
Founder Name
    Jed McCaleb
Ticker
    XRP
Cardano (ADA) image

The Possibilities of Gen 3 Cryptocurrencies: Cardano (ADA)

Overview:

Taking a look at the chaotic state of blockchain and cryptocurrency, one could make the comparison to the chaotic state of the internal aspects of a biological organism and its evolution. From simple beginnings with a limited purpose found in the initial iteration of Bitcoin, to the eventual growth and ‘division’ created through soft and hard forks that led to the formation of more sophisticated ‘cells’ that can accomplish more and provide greater and unique functions to the organism. Thinking about the entire cryptocurrency ecosystem in this light makes it easy to realize how far these technologies have to go still.

If one considers Bitcoin to be the first of the first generation of cryptocurrency, which are defined as only a digital currency that is tracked on a public digital ledger known as the blockchain, and Ethereum to be a part of the second generation, defined by their more complex functionality and utilization of the blockchain in more ways, one might begin to wonder what the third generation will look like, or, to go back to the biology example, what will the next evolution of blockchain and crypto-tech look like, what will it provide, and what will make it be considered the next step in the evolutionary path?

A possible answer to this question can be found by taking a look at Cardano (ADA), a decentralized, open-source, public blockchain project, powered by their cryptocurrency ADA. The project was just recently launched back in September 2017 by the Input Output Hong Kong (IOHK) firm, led by Ethereum co-founder and former CEO, Charles Hoskinson. It is important to note that IOHK is one of three organizations involved in the Cardano project, with IOHK being the R&D arm of the project until their contract is up in 2020.[1]

The Cardano project is being marketed as the first of it’s kind, with their cryptocurrency, ADA, being called a coin developed upon a “scientific philosophy and research-driven approach.”[2]. What this means is that ADA is peer reviewed by scientists and programmers intensely to ensure the Cardano project is ethical and possibly an acceptable standard for the technology in terms of the law. This last fact is what we’re going to consider as one of the prerequisites for third generation status; a cryptocurrency/blockchain/ICO built upon a standardized, ethical and peer-reviewed code that can/will gain legal status with a governing body.

This aspect of the project is led by the second arm of the project, The Cardano Foundation. On their website, cardanohub.org, the foundation is listed to be a non-profit, independent standards body based in Switzerland. The core mission of the foundation is to “standardize, protect and promote the Cardano Protocol technology.”[3]

Their goals are listed as the following:

  • To Study and Propose Blockchain and Cryptocurrency Regulation
  • To act as a Blockchain and Cryptocurrency Standards Body
  • To Protect, Enhance and Evolve the Cardano Ecosystem
  • To Aggregate, Educate and Grow the Cardano Community
  • To Serve as an Objective Organization for Enterprises to Join

The third arm involved is Emurgo, who will function as the on-boarding and investment advisors for the Cardano ecosystem. They will do this by “developing, supporting, and incubating commercial ventures and help integrate businesses’ into Cardano’s decentralized ecosystem.”[4]

Their focus on investment will be done through two methods; direct investments into start-ups, and cultivating partners across the commercial sector that wish to utilize blockchain tech. Emurgo is headquartered in Japan and has multiple locations across Asia.

Another important factor to note is that the Cardano Foundation is not just relying on its own hired members of academia to peer-review their technology, they also requested the involvement of multiple academic institutions, such as Lancaster University and Professor Bingsheng Zhang, who are looking into funding methods for Cardano’s blockchain via a ‘reference treasury model’, a model initially proposed by the World Bank for an automated treasury system to ensure transparency and accountability.[5][6]

But other than these organizational points and their focus on standardization, what makes Cardano different than other cryptocurrencies like Ethereum?

One of the major differences currently is protocol; Cardano has created their own protocol called Ouroboros, which is a based on a Proof of Stake (PoS) algorithm. One of the benefits of PoS over the widely used Proof of Work (PoW) is that it is much more energy efficient, and offers the possibility of faster transactions. It is important to note that Ethereum is working on their own PoS system, which may be available in the next patch, if not the patch right after.

Ouroboros works by appointing a number of ‘leader nodes’ that are tasked with ‘verifying and validating transactions from a collection of nodes’. Once validated the leader nodes will then confirm the transactions onto the network.

Another feature implemented into the Cardano pipeline is Recursive Internetworked Architecture (RINA), a method of network arrangement developed by John Day. It allows for “customized increments to heterogenous networks”, and was implemented to create a system wide opportunity for interoperability.

Interoperability is an important feature for the longevity of the project, as it would allow for Cardano to interact with the fiat financial world, which is currently not possible without utilizing a third-party exchange, which are not a stable system to support a long term standardized cryptocurrency, which is why they are pursuing native means to facilitate this.

Perhaps the most important feature is the coding of a ‘constitution of protocols’ which would be hardcoded into Cardano’s ecosystem, meaning any smart contracts, DApps, exchanges, would all have to comply with this constitution for them to function on the platform.

They also have plans for identity management, a universally recognized crypto-wallet with built-in conversion to fiat currencies and trading capabilities called Daedalus, and a credit system.

Advantages:

  1. Programmed in Haskell language – one of the most secure programming languages
  2. Thoroughly peer reviewed
  3. Cross-chain operability
  4. Cardano is a non-profit in contrast to NEO which is heavily monetized

Disadvantages:

  1. PoS might support plutocracy – government by the wealthy
  2. Still very early in its life cycle – interested parties will have to wait until 2019 for a more fleshed out platform
  3. Faces massive competition on multiple fronts by Ripple, Litecoin, and Dash.
  4. Only supported by native wallet

How to Buy:

A Basic Guide to Buying ADA

As we mentioned, Cardano has their own wallet called Daedalus, which is geared to be a universal wallet, blockchain application platform, and app store, making it the most comprehensive wallet on the market. It is also the only wallet that supports ADA to date.[7]

ADA can be bought, sold, and traded on the following exchanges:

 

As the only wallet supporting ADA, you can only transfer ADA from the supported exchanges to your Daedalus wallet.

[CITATONS]

  • 1. Get a wallet that supports ADA
  • 2. Purchase ADA from supported Exchanges, or select ATMs (Japan only)
  • Bittrex: https://bittrex.com/
  • Binance: https://www.binance.com/
  • Upbit: https://upbit.com/home
  • Coin Nest: https://www.coinnest.co.kr/
  • 3. Transfer funds to Daedalus
  • [1][3][4] https://www.cardanohub.org/en/home/
  • [2] https://www.cardanohub.org/en/team/
  • [5] https://www.investopedia.com/news/introduction-cardano/
  • [6] http://documents.worldbank.org/curated/en/132421468741355620/Treasury-reference-model
  • [7] https://daedaluswallet.io/

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