Now that we've grasped the fundamental concept of cryptocurrencies and the contrast between crypto coins and tokens, let's delve into the world of Cardano!
If you've dipped your toes into the crypto ocean, it's likely that you've come across Ethereum, the second-largest cryptocurrency. Ethereum was crafted by a group of visionaries, the most prominent of whom is Vitalik Buterin.
After the original Ethereum squad went their separate ways, a subset of members embarked on new ventures. Among them was Charles Hoskinson, who would go on to become the renowned architect of Cardano.
In this segment, we'll explore the intricacies of Cardano. More specifically, we'll navigate through the history of the Cardano project, its divergences from other blockchains like Ethereum, and the unique attributes that set Cardano apart.
Let's embark on this journey!
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Cardano Unveiled
To commence this section, let's tackle the fundamental question – “What is Cardano?”
In order to address this question, allow me to continue the narrative from the introduction.
The fractionalization within the original Ethereum team stemmed from conflicting interests. Vitalik envisioned Ethereum as a non-profit endeavor, while team members like Charles held an opposing outlook, advocating for Ethereum to embrace venture capital and transition into a for-profit entity.
Charles Hoskinson's objective in creating Cardano was to establish a more balanced and sustainable ecosystem within the realm of cryptocurrency. At its core, Cardano is a cryptocurrency project named after an Italian mathematician. Similar to numerous other crypto projects, it employs the Proof-of-Stake consensus algorithm (more on that later) and has a native coin called ADA.
Imagine you and your friend constructing sandcastles on the beach and disagreeing on the number of towers one should have. Since you can't reconcile, your friend decides to build a separate castle to his liking, featuring as many towers and gateways as he desires!
What sets Cardano apart from similar blockchains is the overarching mission of the project. Cardano aims to resolve three key issues in the realm of crypto – scalability, sustainability, and interoperability.
Complex terms, but fear not – let's dissect each of them in a straightforward manner!
Scalability
Scalability is often cited as the primary challenge for all cryptocurrencies. Put simply, it refers to the incapacity of blockchains to keep pace with a burgeoning user base in terms of transaction speed.
Here's a simplified analogy to illustrate this concept:
Imagine employing traditional banking methods for online shopping, using a service like VISA. Your transactions are swiftly processed, as VISA can handle roughly 24,000 various transactions per second. However, occasionally, you may encounter delays if the network is congested – if tens of thousands of individuals are using VISA for purchases simultaneously, you might experience a brief wait for your transaction to be approved.
Blockchains face a similar quandary. However, they also contend with notably smaller block sizes – in essence, many older blockchains can't handle even a fraction of the transactions processed by VISA per second. Ethereum is no exception – it can only manage about 15 transactions per second!
Cardano endeavors to address and mitigate this predicament. Specifically, Charles and the Cardano team's vision is to make the network faster with an increase in the user base.
Sounds remarkable, right? However, how is this achieved?
Well, as mentioned earlier, Cardano operates on a Proof-of-Stake consensus algorithm. It's a sizable topic in its own right, so I recommend delving into a section on staking to gain a deeper understanding.
For the sake of simplicity, the Cardano network includes validators (individuals or organizations) who validate blockchain transactions. What sets Cardano apart from other PoS networks is Ouroboros.
This system is structured with epochs (currently, spanning 5 days) and slots (1-second intervals). Each slot has a slot leader (selected from the transaction validators) responsible for confirming transactions.
Admittedly, all the technical intricacies can be quite overwhelming. We won't delve further into it at this point, as the depth of the topic requires its own dedicated section. For now, it is important to understand that the Ouroboros system fortifies the Cardano network, making it more secure compared to traditional Proof-of-Stake blockchains, thereby enhancing scalability.
Eco-Friendly and Long-Term Adaptability
Having navigated through the intricate technical details, let's shift our attention to a concept much simpler to comprehend – sustainability.
In the context of Cardano (and cryptocurrencies in general), sustainability embodies two critical aspects – the environmental friendliness of a project and its potential to thrive and sustain its functionality over the long term.
When it comes to environmental impact, Cardano's Proof-of-Stake system sets it apart, making it much friendlier to the environment, compared to cryptocurrencies like Bitcoin or Ethereum. While environmental impact may still not be at the desired level, Cardano is already taking considerable strides ahead of the aforementioned coins in terms of energy preservation and environmental considerations.
In terms of longevity, Cardano has a dedicated treasury replenished with transaction fees, disbursing rewards to individuals contributing substantially to the ecosystem, such as developers and scientists.
Moreover, Cardano places great emphasis on science and long-term planning. It is akin to the notion that to make an impact on Cardano, one must draft a research paper on the subject and have it reviewed by other blockchain professionals. This underscores Cardano's foundation on scientific research and advanced mathematics!
Moreover, there came a point when Charles Hoskinson collaborated with another Ethereum co-founder, Jeremy Wood, resulting in the establishment of a new company, called IOHK (Input-Output Hong Kong). Cardano is the primary focus of IOHK, committed to crafting blockchain solutions for both private companies and governmental institutions worldwide!
Indeed, Cardano is an extensively established project, backed by multiple proponents, with a dedicated company and ambitious aspirations for the future. Charles regularly conducts live streams on YouTube, engaging with the community, addressing their queries, and discussing the prospects of Cardano.
Interconnection
Interoperability stands as another significant challenge confronting contemporary blockchains. To comprehend the term, let's consider an analogy:
Envision yourself driving a car down a road. As you continue your journey, you encounter a river that needs to be crossed. Irrespective of whether you drive a sports car, a truck, or a tractor, you cannot traverse that river without a bridge. Blockchain interoperability is that very bridge!
In the context of blockchains, the presence of a “bridge” facilitates communication between different blockchains. Lack of interoperability signifies the absence of cross-chain functionality, limiting interactions solely to native projects and applications.
Cardano resolves this challenge through the “KMZ sidechains protocol”, serving as the conduit between blockchains. Thanks to this protocol, users can trade Cardano coins (specifically ADA coins) for other cryptocurrencies!
The Tomorrow of Cardano
Hitherto, we have explored the essence of Cardano and how this blockchain network distinguishes itself from most other cryptocurrency projects. Undoubtedly, it is exceptional!
So, what holds true for the future of Cardano, and what is the sentiment within the community?
Primarily, it's crucial to acknowledge the robust community supporting Cardano. This is a testament to the project's durability and vitality, garnering significant interest from a large populace.
Conversely, it's noteworthy to mention the criticisms around Cardano, particularly regarding the emergence of a Charles Hoskinson-centric following. There are claims that any progress in network development is sluggish and that impractical ideas are discussed without tangible implementation.
But what's the actual reality?
In my candid perspective, Cardano is undeniably an astounding project with immense potential for growth! Challenges are intrinsic to any blockchain evaluation and exploration.
At the same time, it's pivotal to dispel the notion that Cardano pits itself against Ethereum. Charles has iterated repeatedly that blockchains should collaborate to forge “a better tomorrow”, instead of engaging in competitiveness over scalability or transaction fees.
Admittedly, Cardano and Ethereum are distinctly unique. While Ethereum is celebrated as the “core technology behind the development of Web 3.0“, Cardano strives to collaborate with governments and large organizations, addressing “identity, value, and governance” (as articulated by Charles himself).
With that being said, for a deeper dive into the realm of cryptocurrency, do explore the section on Web 3.0.
