Cardano Came, Saw, and … Conquered?

20180104_Cardano

2017 may have been the year of Bitcoin (BTC/USD), but as altcoins gather force, Cardano (ADA/USD) appears to be emerging as one of the dark horses in the race toward greater dominance. Cardano shot up as the year drew to a close, registering gains of approximately 3000% in 2017. This was followed by ADA breaking through the critical $1 milestone on the third day of the new year.

Now, with 2018 shaping up to be the year of the alts, Cardano is among the prominent coins leading the charge. Is it a one-hit wonder or does Cardano have what it takes to play the long game? Here’s the low-down on the cryptocurrency.

Cardano Explained

The key distinguishing feature of ADA is the strong project and team behind the coin. Named after Italian polymath Girolamo Cardano, Cardano is a fully open-source decentralized public blockchain and cryptocurrency project which was publically released on September 29, 2017, after two years of planning and development. The Cardano team comprises three companies:

  • The Cardano Foundation – A Swiss non-profit organization which will be engaging with governments and regulators worldwide, in addition to establishing strategic partnerships to push for global adoption of the technology.
  • Input Output Hong Kong – Co-founded by Charles Hoskinson, who is also a co-founder of Ethereum and the brains behind Cardano, IOHK is an engineering and tech company contracted to design, build, and maintain the Cardano blockchain platform until 2020.
  • Emurgo – a company established to provide support to businesses seeking to utilize Cardano’s decentralized blockchain.

One of the most unique features of Cardano is its research-based approach – as it claims to be “the first blockchain platform to evolve out of a scientific philosophy and a research-first driven approach.” There is a strong focus on applying scientific principles to the task of designing and developing a robust blockchain platform, and the project has a solid academic foundation of peer-reviewed research conducted in partnership with top universities including the University of Edinburgh and the Tokyo Institute of Technology.

Cardano’s development team is comprised of a global pool of expert engineers, academics, and researchers – all of whom have collaborated to build a secure, flexible, and scalable technology. In addition to the core technology team, external auditors also work to ensure the quality of the product.

Much as Bitcoin has led to the development numerous coins attempting to build on its flaws and improve upon its drawbacks and limitations, Cardano has followed the same logic by taking the best of all worlds to build its product. It appears to be aiming to combine in itself the best of Bitcoin (with ADA serving as a store of value), Litecoin (LTC/USD) (fast and cost-effective P2P transactions), Ethereum (ETH/USD) (by improving on the issues in existing smart contract models), and Dash (DASH/USD) (treasury system for longevity and sustainability).

In essence, Cardano is an advanced platform for smart contracts and for running decentralized applications (dapps). It is a security-focused blockchain written in the Haskell coding language (among the most secure programming languages), which allows for minimal coding errors and more robust security for apps and smart contracts via the usage of the ‘formal verification’ technique.

Cardano has a unique layered construction, which separates the accounting/settlement layer that will run ADA from the computation layer which will handle smart contracts. This allows for easy extensibility – the system will be flexible, easily maintained, and can be upgraded via soft forks without splitting the core blockchain. This layered approach provides built-in accommodation for upgrades in the future.

ADA is the native token of the Cardano platform, named after mathematician and one of the first computer programmers Ada Lovelace. Lovelaces are the smallest unit of ADA; 1 ADA = 1,000,000 Lovelaces, or 1 Lovelace = 1/1,000,000 ADA. ADA will be used to send and receive funds on the Cardano platform, via fast, direct, and secure transfers. The success of ADA as a cryptocurrency is directly related to the success of Cardano as a platform.

The Daedalus wallet (named after a skilled craftsman from Greek mythology) has been developed and released for ADA. In the future, the roadmap indicates that support for multiple cryptocurrencies will also be added.

Cardano also employs its own specially developed Proof of Stake algorithm, dubbed Ouroboros (named after an ancient symbol for infinity, wholeness, and self-sufficiency) – this is the most vital component of the infrastructure which supports ADA, as it determines how individual nodes reach consensus about the network. In addition to being more energy-efficient than the Proof of Work protocol, Ouroboros has been designed by a team of experts and is provably secure, having been peer-reviewed by academics and accepted by the cryptography community at the Crypto 2017 conference.

Another significant innovation in the Cardano platform is that it will offer a unique and flexible combination of privacy and regulation, catering to both users who want privacy and institutions which require currencies to comply with regulations. One of the biggest hurdles cryptocurrencies face in mainstream adoption is regulatory compliance, but with Cardano, applications can easily be designed in line with such rules, and users can opt between these and more privacy-centric apps.

The Cardano team’s ultimate (and rather ambitious) aim is to “change the way cryptocurrencies are designed, evolved and funded”, the pursuit of which has been outlined in the project’s detailed roadmap which allows community members to track the development and goals of the project.

ADA’s Ascent

Following the release of the Cardano network at the end of September last year, ADA was launched on Bittrex on the first of October. It is currently available on two major exchanges – Bittrex (on which it was initially launched in October last year) and Binance (on which it was added in December 2017), and a few minor exchanges. Trading pairs currently offered include ADA/BTC, ADA/ETH, and ADA/USDT.

ADA spent October and most of November in a period of relative obscurity, trading at below $0.4. However, a massive 600% increase at the end of November propelled ADA into the list of top ten cryptocurrencies (by market cap).

Another spike in price at the end of December saw ADA surging past 0.70, followed by the $1 breakthrough this year. With a market cap of roughly $30 billion (it crossed the $10 billion mark within 2.5 months of its inception) Cardano is currently the 5th largest cryptocurrency, listed above older, more established coins such as Dash and Litecoin.

While Cardano’s meteoric rise has been welcomed by investors, community members, and enthusiasts, it has also given rise to unease and allegations that the cryptocurrency is overpriced.

Those who cast a skeptical eye on the cryptocurrency’s gains claim the price rise is unjustified and that the current valuation is inaccurate considering the team has yet to deliver a finished product. Litecoin founder Charlie Lee, for example, sent out a tweet expressing shock at Cardano’s massive and sudden growth (to which Hoskinson replied with the confirmation that the team was un-swayed by the price and remained hard at work).

That the valuation does not reflect the coin’s current worth is undeniable. The Cardano platform is still under development, while ADA is not yet decentralized (the network is currently being operated by nodes trusted by IOHK and the Cardano Foundation) and has yet to offer any actual functionality to users (at present, it can only be bought, held or sold).

However, if the roadmap is any indication, Cardano has plenty to offer the blockchain and cryptocurrency community upon completion, and it is this expectation in regards to the future potential of the platform and its native token that is driving the price forward. ADA’s current value has less to do with the unfinished product, and is more of an investment and vote of confidence in what Cardano aims to become. In addition, the recent price surge may also be linked to the just-released Goguen update.

What’s Next for Cardano?

Exciting things are in store for Cardano in terms of updates. Shelley – which was announced in late 2017 and focuses on developing Cardano into a fully autonomous and decentralized system – is due to be completed by Q2 2018.

Meanwhile, their Goguen update came out today (as per the Cardano countdown clock); which involves the integration of smart contracts, and the development team designing IELE – a next-generation virtual machine – along with a core infrastructure which utilizes a universal language framework. This will allow for greater security and dependability, and lower vulnerabilities in future blockchain systems.

Goguen will then be followed by two more updates, as per the Cardano roadmap – Basho (which will focus on performance improvements, security and scalability), and Voltaire (which will focus on scalability and assurance, and add a treasury system and governance).

In addition to rolling out updates, Cardano also plans to further the aim of making ADA an easily accessible digital currency by releasing 25 ATMs this year in Japan, along with debit cards.

Often dubbed ‘Japanese Ethereum’, Cardano’s main target audience is Japanese, as Japanese buyers account for almost 95% of the participants in the initial sale in 2015. In addition, the decision to expand in Japan is smart considering it is a blockchain-friendly country where there is a high awareness of cryptocurrencies among the population. This move could lead to further expansion in Asia.

Given Cardano’s growing popularity, some have begun to brand ADA as a giant slayer of sorts, claiming it will overtake Ethereum. While Cardano is, undoubtedly, a strong competitor to Ethereum and NEO on paper, and was founded by Hoskinson (who shifted his energies to Cardano after his vision diverged from Ethereum), these claims may be premature as dethroning Ethereum from the platform of choice for dapps, smart contracts, and ICOs, is going to require a strong network effect and a more developed version of the platform.

However, Cardano’s intellectual grounding is sound and the proposed project seems capable of providing solutions to next-generation blockchain applications. Provided the team manages to successfully adhere to and implement the detailed and ambitious roadmap they have laid out, 2018 just might be Cardano’s year.

Leave a Reply

Your email address will not be published. Required fields are marked *