ELI5: Cardano $ADA

Cardano is another dense project that I've been getting bombarded to cover. I am going to try to touch on as much of it as possible and also attempt to not make this write up too long

Lets get started:

Cardano is named in honor of Gerolamo Cardano who was an italian polymath in the 1500’s and was one of the most influential mathematicians of the Renaissance.

ADA is the coin that powers the Cardano blockchain and it was named after Ada Lovelace an English mathematician from the 1800’s who was the first to recognize the full potential of a “computing machine”, and was the first computer programer.

The project was established by Charles Hoskinson, a co-founder and former CEO of Ethereum, when he partnered with the Cardano Foundation around 2015. The Cardano ICO took place in 4 stages between September 2015 – January 2017 with heavy Know Your Customer (KYC) requirements.

Cardano is seen as a 3rd generation crypto meaning it’s ethos is to resolve the major issues we see in blockchain tech which is scalability, sustainability, and interoperability.

Cardano is made up of three companies who each have distinct roles in the project:

Cardano Foundation: Is a Swiss non-profit organization. It oversees much of the Cardano ecosystem and community. It aims to proactively work with governments and regulatory bodies, as well as form strategic partnerships to further mass adoption of the technology.

IOHK: Is an acronym for “Input, Output, Hong Kong” it is an engineering company created by Charles Hoskinson and Jeremy Wood. These individuals and have extensive experience in blockchain tech. Their goal is to use peer-to-peer innovations to provide financial services to three billion people that don’t have them. The group is contracted to design, build, and maintain the Cardano platform until 2020.

Emurgo: It is a venture capital company, and its role is to invest in start-ups and assist with commercial ventures to build on the Cardano blockchain.

ICO:
It was marketed as an “investment to retire on” to primarily Japanese investors; in fact, 95% of the buyers were of Japanese descent, The ICO oversaw a total sale of approximately 26,000,000,000 of the 45,000,000,000 total supply of ADA tokens. At the conclusion of the ICO a total of approximately $63 million USD was raised.

Project:

The goal of Cardano is to create a platform for the exchange of smart contracts, with a focus on security through a layered architecture. It is similar to Ethereum in that it is a platform for smart contracts but it is majorly different in its underlying technology.

ADA runs on Ouroboros, which is the only DPOS (delegated proof of stake) consensus algorithm that has gone through a formal peer review (the process of getting a paper accepted at an academic conference) and is supported by a formal security proof, according to the Chief Scientist at the blockchain technology company IOHK, which I previously mentioned.

ADA boasts their network offers deep functionality that comes paired with speed, efficiency, and small fees. Eventually there will be a treasury model, similar to Dash, where people can request funding to improve the protocol and ecosystem. They also plan to be compliant with regulators from all different jurisdictions which is a very large undertaking.

What is unique about the project?:

Cardano is the first blockchain project to be built on peer reviewed academic research and was built from scratch in the functional programming language Haskell. IOHK hired Philip Wadler, a principal designer of the Haskell language to work on the Cardano project.

According to Hoskinson, because Haskell is similar to math in its approach, code can be written more precisely, resulting in a more secure and reliable protocol.

Haskell is considered to be one of the most secure programming languages, minimizing the number of errors and adding extremely strong security to the platform. This includes use of a technique called formal verification, which allows mathematical proof of the correctness of code.
Their aim is to use blockchain technology to bring in distributed institutions, such as insurance and banking, to the whole world including the billions of people in developing nations.

Tech:

Cardano is being developed in two layers that separate the ledger of account values from the reason why values are moved from one account to the other. This separation enables the smart contracts that are written on the platform to be more flexible and customizable.

Cardano Settlement Layer (CSL):

The CSL acts as the balance ledger and is the first layer of the platform. Created as an improvement to Bitcoin, this layer is where the POS consensus protocol Ouroboros is present.

Cardano Computation Layer (CCL):

A separate Cardano computation layer (CCL) will be built, on this layer executable code may be run. Sophisticated decentralised applications (DApps) and smart contracts will be able to function independently of the CSL.

IOHK partnered with a team from the University of Illinois, which is ranked in the top 5 for computer science universities, and created a new blockchain virtual machine called IELE.

It is similar to Ethereum’s virtual machine, however, Cardano’s is easier to formally verify contracts and simpler to integrate with other programing languages so people don’t have to learn all new things.

The Cardano team is creating a new programming language to use to develop smart contracts on the CCL – Plutus. The CCL also supports Solidarity, the language behind Ethereum smart contracts.

To help developers, Cardano will also include a reference library of Plutus code that’s available to use in dApp projects.

Sidechains:

Cardano uses the the KMZ sidechain protocol (KMZ standing for the names of the people who designed it). It allows funds to move securely from the CSL to any CCL or any blockchain that also uses the protocol. Charles has been seen on twitter talking to Charlie about donating engineers to integrate Litecoin https://twitter.com/SatoshiLite/status/942282146101596160

Wallet:

Daedalus will eventually be a multi-currency wallet where you can freely exchange between the supported currencies utilizing atomic swaps. The wallet is built on a web based platform that will allow people to create applications and plugins for it.

Final Thoughts:

Basically Cardano is trying to take on all the major goals of other projects and do it all themselves from the ground up. Their planning on implementing smart contracts, but more advanced that we know them now, also utilizing side chain interoperability, and decentralized governance with voting through the treasury model, and with blanket compliance to all the major regulators.

This why when Cardano or Ada are brought up, people often say “far reaching goals” or “I’ll believe it when I see it.” There is definitely a large amount of development time required to accomplish all this successfully. Projects that have a long road map of ahead of them battle with time, and losing people to loss of interest.

Present:

What is live now is the first major release of the platform dubbed “Byron.” This is the first generation of the settlement layer, which is where Ada lives.

Following Byron, the next major release of Cardano, dubbed “Shelley,” is scheduled to arrive in the first half of 2018. During the Shelley phase, the system will evolve into a full-featured, independent cryptocurrency.

Cons:

Right now the community is waiting for the release of Shelley which is the next big implementation in the Cardano roadmap. Currently, cardano is a centralized blockchain with a functioning wallet and in what they call the “bootstrap era”. Meaning a fixed, predefined amount of users have control over the blockchain via nodes or “bootstrap stakeholders.”

The purpose of Bootstrap era is to address concern that at the beginning of mainnet majority of stake will probably be offline. Bootstrap era is to be ended when network stabilizes and majority of stake is present online and Shelley is implemented. So, at this early stage, even though Ouroboros is turned on, consensus is locked to private nodes until the system gathers momentum

They have a lot of hurdles to overcome because they are promising some serious highy reaching goals. However 2018 seems as though it will be the year for alt coins, or less mainstream projects, Cardano included, and I am really looking forward to what they accomplish.

“Let’s do things like we’re proper academics. Let’s actually write proper whitepapers with domain experts, let’s go through peer review, let’s implement them, let’s iterate, let’s listen to people. And that’s really the first component of the Cardano project. How do we be good engineers dealing with high-assurance code, and at the same time, how do we be good researchers, and do things the way that academics have been doing things for a very long time.” Charles Hoskinson
Source:

Sources:
https://www.cardanohub.org/en/audit-report-summary/
https://www.forbes.com/sites/amycastor/2017/08/23/at-crypto-2017-blockchain-presentations-focus-on-proofs-not-concepts/2/#255adc0d6770
http://www.forexnewsnow.com/forex-analysis/cryptocurrency/cardano-ada-cardano-predictions-forecasts-2018/
https://www.cardanohub.org/en/genesis-block-distribution/
https://cardanoroadmap.com/
https://www.forbes.com/sites/capitalone/2017/12/15/think-technology-has-no-place-in-art-think-again/#71d6e0f962a9
https://bitcointalk.org/index.php?topic=2223889.0
https://www.reddit.com/r/cardano/comments/74o3q1/welcome_to_rcardano_the_reddit_home_of_the/
https://blockonomi.com/cardano-guide/
https://coincentral.com/cardano-beginner-guide/
https://medium.com/@BitcoinByte/a-blockchain-with-privacy-and-regulation-cardano-3606e1288bc2
https://whycardano.com/interoperability/
https://iohk.io/blog/how-cardanos-transaction-fees-work/
https://runtimeverification.com/blog/?p=498
https://bitcoinmagazine.com/articles/iohk-launches-cardano-blockchain-ada-now-trading-bittrex/