ZoneBitcoin EditorialEven if Cardano is clearly and increasingly part of the crypto landscape today, even as well known as Bitcoin and Ethereum, you should know that this crypto experienced late success.
We can even recall that about a year ago, the ADA crypto was worth no less than 0,02 US dollars. Cheaper than dogecoin...Even if the price of a crypto does not necessarily have a link with its value as you know...(We will come back to this point in a future article).
Since its historic low, ADA has seen a frankly astonishing increase of more than 7000%. Yes, you read correctly. This is huge, even if in the very volatile world of cryptos, it would be almost trivial. However, this is not trivial.
In terms of market capitalization (here, this is a size criterion), Cardano has long flirted with 3rd place, behind bitcoin and ethereum. And, even if today, she is in 5th place, which remains very impressive, let it be said.
1/ Context and creation of Cardano: Why did you want to create such a project?
Very simply said, Cardano is an open source blockchain that allows the execution of smart contracts and the integration of decentralized protocols. The Cardano blockchain was designed from scratch (i.e. without copying another blockchain as is often the case).
The team is led by Charles Hoskinson, who, let's remember, once again, is the co-founder of Ethereum).
One might wonder at this point, why create Cardano when there was Ethereum. No? Isn't that the question you're asking yourself? No problem, we'll answer it anyway.
For Hoskinson, the Bitcoin and Ethereum blockchains have big shortcomings. That's not new.
As you know, Bitcoin has a very simple design and that is why it remains a very secure blockchain. However, it remains very inflexible, not modifiable and not very flexible as you know. There's not much we can do apart from paying. That's why we say it's a first generation blockchain, eh, Unlike Ethereum, which is considered a second generation blockchain due to the fact that you can do “a lot” of things with it.
Although we can exchange goods, execute contracts etc., the Ethereum blockchain has big problems such as scalability and the problem of sometimes staggering gas fees.
In short, that was the second generation, it was Ethereum which then called on additional layers to solve the inherent problem linked to scalability.
Tell yourself that Cardano, from the start, positioned itself as a 3rd generation blockchain. Moreover, among this type of blockchain, we find for example Cosmos and Polkadot.
To tell you quickly, tell yourself that 3rd generation blockchains want to solve the problems of scalability on the one hand but also all the other problems that arise from them such as compatibility/interoperability and sustainability which affect previous blockchains.
2/ Creation of Cardano: The team behind the project
Charles Hoskinson is said to have created Cardano in 2014 after leaving Ethereum due to differing opinions, and was rumored to be related to governance and venture capital role (and not the technical aspect of the thing). He then decided to create Cardano with a former colleague who also worked on Ethereum, Jerry Wood.
The design of Cardano has been extremely thoughtful. Here, we are dealing with a project which required an enormous amount of academic work carried out by dozens of experts in different fields, ranging from computer engineering to mathematics to cryptographic science.. The project was validated by doctoral students from around the world before being validated and officially launched in 2017.
Moreover, until now, the company is governed by a foundation which also finances research.
So, regarding the name Cardano, it may be surprising at first, because in general, the acronym for crypto is often the first three letters or the strong letters of the word, like BTC for bitcoin or ETH for Ethereum. There, for Cardano, the crypto is called ADA and the story behind this name is rather nice.
In fact, it is in homage to the 19th century mathematician, the famous Ada Lovelace, that Cardano's native crypto is simply called ADA.
I quickly remind you that Ada Lovelace, is one of the first computer programmers in the world. She was even the first to think of the idea of a machine algorithm similar to a computer. In short, it played a very important role in the history of the computer and the Internet.
For the name Cardano, know that again, it is a reference to an Italian polymath (Generally to designate a person during the Renaissance who has several skills) Gerolamo Cardano.
Cardano's mission has always been very distinct from others. Moreover, Cardano has not published a classic white paper. You should know that the white paper is the ultimate file which presents the project in all these aspects (we present the mission, the team, the history, the technology used, the mathematical algorithms). In short, a white paper is the explained DNA of a project and Cardano has rather preferred to announce the principles of its designs and engineering practices.
What must be understood by this is that Cardano immediately wanted to create with this white paper a sort of open bookstore, a research thesis of sorts.. It's a very particular approach, you have to know that. They are truly motivated by scientifically advancing blockchain technology. Hence the fact that the project is open source and not patented. This is what motivates them, before profits, as we can deduce.
The managing companies of Cardano:
IOHK (Input Output Hong Kong) is the parent company of Cardano; It is a for-profit company that therefore manages Cardano. IOHK also collaborates with the Emurgo company which aims to promote better financial inclusion in the world, particularly among the unbanked in Africa and around the world. Emurgo is also a founding investor in Cardano.
Beyond the IOHK company, you should know - like many crypto projects - that there is also a non-profit foundation, mainly dedicated to research. The Cardano Foundation is based in Switzerland and wants to promote Cardano technology through different angles, like legislation, etc.
2/ What is Cardano’s blockchain architecture? Discover its added value
The particularity of Cardano is to be built on two layers which have very specific functions:
- The Cardano Settlement Layer (CSL) : Ideal for transferring tokens between users peer-to-peer. The consensus used is that of proof of stake (via the Ouroboros protocol) which will therefore make it possible to generate new blocks and confirm transactions.
- The Cardano Computational Layer (CCL) . For many, this is the great strength and singularity of Cardano. It is this layer which makes it possible to execute smart contracts and manage the calculation needs of the blockchain.
For example, Ethereum has a single layer architecture (hence network congestion, slow transactions and high gases). It also uses external Layers 2 to overcome these flaws.
On the other hand, Cardano directly attempts to resolve them through these two Layers which are the CSL and the CCL.
So, to summarize, say that the CSL layer is the space where all cryptographic transactions are processed while the second layer, the CCL, allows smart contracts and decentralized applications to be deployed.
The CCL layer is then operated separately from the CSL layer. This is what makes Cardano so flexible. Likewise, its off-chain protocol allows flexibility in data storage, for example, which makes the creation of personalized rules during the validation of different transactions fluid and practical.
Understanding the strong concepts of Cardano
What is very interesting about Cardano is that from the start, they thought about using proof-of-stake, even before Ethereum.
This is a great idea, especially since proof of work is strongly criticized for its energy-intensive nature...which really creates negative publicity for cryptocurrencies.
Proof-of-Stake and Ouroboros
To fully understand Cardano in depth, you also need to understand Ouroboros, its consensus algorithm. By the way, Ouroboros designates a drawing or an object which represents a snake or a dragon biting its tail. In short, on Cardano, it works on the Proof of stake model with twisting. The POS allows nodes that have the largest number of tokens to create transaction blocks.
The Ouroboros algorithm will work on Cardano in a unique way. Note in this regard that Ouroboros is designated as the least energy-consuming consensus mechanism possible.
Let's move on to the technical part.
With Ouroboros, Cardano will divide physical time into fixed periods. When one period ends, another will begin. This is how network congestion is contained. We don't do anything at the same time.
The periods are also divided, and each period will have a leader who will take care of management in relation to other nodes. These slot leaders will then create and confirm the transaction blocks to be recorded in the blockchain. If the slot leader cannot then create a block in a period, then the leader of the next slot will take over. Slot leaders are actually chosen at random and to create and confirm blocks of transactions in the network.
That was the first “team” of the Ouroboros protocol. You should know that the transaction blocks submitted by the period leaders are then verified and examined by those who manage the entries. These constitute the second group of teams running the Ouroboros protocol. Remember that entry endorsers are elected based on the number of ADA tokens they have staked on the network.
3/ Cardano’s revival with the “Mary Shelley” update for a multi-token blockchain (the era of decentralization is here)
As you know, hard forks represent major changes to the source code of a blockchain protocol. You should know that hard forks mean that the previous protocol is no longer usable or valid, by definition.
The recent Mary update (which dates from March 1, 2021) put Cardano on new rails, we can say. It was from there that the crypto community began to take a more serious interest in Cardano. For Hoskinson, it is a historic date.
This is a real point of progress in the roadmap and in the growth strategy of the company IOHK (parent company of the Cardano project).
So Mary's goal is to make Cardano, a protocol that allows developers to create custom tokens on the network.
This explains why now many DeFi developers and users (also frustrated with the slowness of Ethereum) are migrating to Cardano for its scalability and are then creating non-fungible tokens, tokens or stablecoins on Cardano.
The update therefore showed that it was possible to create a network with very low gas costs, to create a scalable network and it is for all this that many people confirm the idea that Cardano could be the 'Ultimate Ethereum Killer.
But this recent update is just the beginning. This is why it is said that it is an extremely promising project and that many people are investing at the moment.
As you have understood, Cardano likes to name the phases of the Cardano project and choose names that make sense.
The hard fork is called “Mary”, because its mission is to bring Cardano into the era of decentralization (called Shelley).
This decentralization then makes it possible to open the way to a new phase called Goguen (in reference to the computer scientist Joseph Goguen) which makes it possible to support several tokens.
After the establishment of Goguen, the next stage will be the Basho era. This wants to improve the interoperability and scalability of Cardano.
The final era will be that of Voltaire, who will introduce a voting and even treasury system with regard to network governance.
Should you invest in Cardano (ADA) today?
The problem of scalability was once again highlighted and we also realized that it is a real challenge that has not yet been resolved.
So, obviously, the promise and affirmation of Cardano with its Mary update was very well received. Let us remember, in fact, that the great promise of Cardano is to solve the problem of scalability encountered on Ethereum. This is once again, which earns it the beautiful name of Ethereum killer.
And lately, therefore, there has been a lot of talk about Cardano. Why so much hype about Cardano? Now is the time to respond!
The power of Cardano revealed
To give you a direct answer, it's mainly because Cardano solves Ethereum's scalability problems. As a reminder, on Ethereum, we can process between 7 and 15 transactions per second (TPS), which is extremely low compared to Visa's 24 transactions for example. It is a fact.
The challenge is significant and Cardano won a small battle with its Mary update. Some say that the Cardano blockchain will be able to process more than 2 million transactions per second!
In fact, this huge update which will slap Visa itself, can be explained with Hydra Layer 2 which is currently in development.
Now let's come to the investment part.
Thus, this explains the exposure of the ADA price in recent months. In February, ADA was at $0,44 (only) and here today, as I write this article (June 2021), it is bought at $1,70… ADA even resisted the crash terrible which caused bitcoin to lose 30% of its value. That’s telling you…
However, for many investors who are investing heavily in Cardano, this is only the beginning. For them, the ADA price could experience the surges of what Ethereum experienced, for example.
Cardano wallets
Users can then store and keep their digital assets on their Daedalus wallet or Yoroi wallet for example.
Daedalus is a full mode wallet, this means that by downloading it, you also download the entire copy of the Cardano blockchain, and you can therefore use it without going through a 3rd party.
You should know that you can also use lightweight wallets such as ultra-light Yoroi, which allow users to monitor the digital assets in which they have interests.
What future for Cardano and blockchain technology?
In fact, recently, gas fees on DeFi, when we have never been so tempted to participate in it, are a real obstacle to mass adoption. Very clearly.
The race has been started and each blockchain platform is trying to resolve the flaws in this technology.
With Mary, you can then create personalized tokens and even import other projects on the Cardano network. The consequences are very interesting especially if we consider DeFi protocols and NFT including.
In any case, the fact remains that Cardano remains for many, the underestimated project par excellence. And, I must remind you once again, in the world of cryptocurrency, it is not the best technology that will have the most light. Rather, it is the one with the best business strategy.
We can see this with projects like Cardano or Algorand For example. These are incredible projects that are really pushing this technology forward, but they don't have the same resonance as purely commercial products like safemoon for example…
Understand what you need to understand: the best crypto projects are not the most visible, unfortunately..
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