Digital Asset Review: Cardano
Emerging, 3rd-generation blockchain technology.
Here's how you can learn.
Cardano has been making big headlines lately as it prepares to go live with smart contract capabilities. Created in 2017, Cardano is a deflationary, smart contract blockchain platform built by Charles Hoskins, an original founder of Ethereum. Cardano considers itself the third generation of blockchain technology.
The first two generations were Bitcoin and Ethereum. Bitcoin offered the a solution for digital money and created a digital form of gold. Then Ethereum was the second generation. Ethereum created a programming language that brought smart contracts, but has scale and developer funding issues.
Cardano tries to solve the issues uncovered by the first- and second-generation technologies in three ways: (1) scalability, (2) interoperability, (3) sustainability.
Why is Cardano different?
A look under the Cardano hood.
Cardano tries to solve scalability, interoperability, and sustainability issues encounter by preceding blockchains. Read briefly below, and see the resources at the bottom of the newsletter for more information.
Scalability
Scalability has become a problem for blockchains that carry large transaction volumes. Cardano uses a proof of stake model which is better for the environment. It created a system to assign the validators mining blocks a specific period of time to approve a block of transactions. It prides itself as a better allocation of resources and time. Also, Cardano creates subnetworks that mirror the TCP protocol of the internet. Think of it like highways between cities, allowing for data and information exchange among miners and developers. Simply put, Cardano is putting a system in place that can continue to be scaled as network throughput increases.
Interoperability
It has become clear that many digital currencies will exist side-by-side. Cardano aims to be the a blockchain that can understand the other chains and operate between them for on-chain and off-chain communication. One key component of this: Cardano allows users to attach extra data to transactions. This allows anyone to store data on the blockchain, keep a secure record of information, and/or authenticate and timestamp transactions. One possible implication: this could help Cardano be a go-to blockchain working with banks who want to understand AML/KYC.
Long-Term Vision
Sustainable development is key for continuous business success. Historically, coins use an Initial Coin Offering (ICO) to raise capital from investors. Then, after initial development they struggle to raise more cash to sustain that development. To solve this, Cardano created the Cardano Treasury to "resolve the funding sustainability issue for long-term cryptocurrency development and maintenance." This will be seen as a positive if developers rush to the ecosystem but a negative from decentralized proponents claiming the foundation behind Cardano isn't decentralized.
We would be remiss not to talk about a key aspect of Cardano here: the peer-reviewed research. To access this money locked away, developers submit proposals to improve the Cardano network. These proposals are voted upon by the global Cardano community. The successful proposals are then implemented and the developer rewarded.
What's Next For Cardano?
Cardano is going live with smart contract capability soon. This will mean that apps can be built on top of Cardano like DeFi, gaming apps and NFTs. This week, the coin saw new all-time highs as speculation surrounds the implementation of smart-contract functionality on the blockchain.
Investors and crypto enthusiasts alike wait to see how Cardano continues to implement and deliver on its promises.
Some key stats:
There is a maximum supply of 45 billion ADA (Cardano's token name).
Currently there are over 500 million ADA locked in the treasury, which has a value over $1.3 billion.
Year-to-Date Cardano has seen its price rise almost 1500%, from $0.178 to $2.58.
Cardano is reportedly able to process a whopping 1 million transactions per second, compared to Ethereum's 30 or Eth 2.0's proposed 100k.
Resources:
Cardano - Simply Explained is exactly what it says. Amazingly, it's from 2018 and lays out what Cardano is trying to accomplish.
Learn about Cardano's environmentally sustainable blockchain protocol, Ouroboros.
Charles Hoskins, founder and lead designer and developer of Cardano, explaining Cardano with a whiteboard in 2017.
What metadata on Cardano's transactions means.
Read more about Charles Hoskins.
Cardano's Blockchain Treasury System.
Things to consider before buying Cardano.
➡️ About FirstWatch Crypto ⬅️
FirstWatch Crypto was started by Dan McGlinn (@DigitalDanMcG)and John "Blaize" Hrabrick (@blaizebitcoin) who have been investing in the space for a combined 8 years. FirstWatch Crypto is on a mission to simplify the crypto investment landscape.
Disclaimer: None of the above is investment advice. This blog is published for entertainment and informational purposes only. The ideas expressed are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product. Nothing on this blog constitutes investment advice, performance data, or any recommendation that any security, portfolio of securities, investment product, transaction, or investment strategy is suitable for any specific person. You should not use this blog to make financial decisions. We highly recommended you seek professional advice from someone who is authorized to provide investment advice. You should always do your own research before investing in cryptocurrencies. It is a volatile market.