Cardano (ADA) is a blockchain platform (similar to Ethereum) that currently serves as the basis for trading the cryptocurrency “ADA”. A crypto platform is to be created in the coming years that combines performance, security and functional diversity, relying on scientific investigation of cryptosystems and taking into account the deficits of older systems.
Cardano is a platform that serves as the basis of the cryptocurrency ADA. ADA is tradable since October 2017 and acts as a voucher. It is used in exchange for services and goods. Cardano was developed by three companies and institutions: IOHK (Input Output Hong Kong) of former Ethereum co-developer Charles Hoskinson, the Swiss Cardano Foundation and Emurgo, a Japanese incubator in the field of crypto. This powerful alliance has set out to develop and expand Cardano. Cardano wants to become a third generation cryptocurrency, just behind Bitcoin and Ethereum.
How does Cardano work?
Ouroboros is the technical basis of Cardano and the system’s blockchain algorithm. (Ouroboros is the name of a symbol in occidental mysticism: a snake that bites its own tail, forming a closed circle.) Ouroboros is a proof of stake algorithm. This means that new blocks are created by those nodes of the network where the highest assets (stakes) are in wallets.
Of course, this would create an oligarchy (rule of a few) of individual, especially financially strong knots. That’s why the developers did refine the process for Cardano: they define the stake as the sum of ADA values on a node divided by the total amount of ADA. This gives the stake a number between 0 and 1 for each node (only those nodes that really hold ADA will be decisive). The sum of all stakes is always 1, and the list of all these values forms a probability distribution. The algorithm then randomly selects a candidate from the stake holders, the probability of the choice corresponding to the value of its stake. This candidate then becomes the creator of a new block.
What does Cardano want to achieve?
At first glance, the plans for the further expansion of Cardano are reminiscent of Ethereum itself: in a whole crypto-ecosystem, smart contracts and decentralized apps (dApps) should be able to be implemented on the blockchain, in addition to the classic function as currency. The target group of users ranges from individual users to large banks and companies; and even for the payments of states, central banks and transnational organizations, the system should be prepared.
To achieve these ambitious goals, Cardano is trying to differentiate itself from other crypto currencies through innovations. The developers claim that for the first time, Cardano is a cryptosystem of fundamentally scientific basis: functionality and performance are constantly reviewed and further developed by a peer group of experienced developers and researchers from the crypto scene.
Above all, it is important to identify and analyze the major and deficits of previous systems and to avoid them at Cardano. The focus here is also the adaptation of the currency to the needs of large organizations. This means two things: on the one hand, the security of payment transactions must be maximized and guaranteed at a high level. For the amounts to be expected, loss, theft or misprediction are no options.
On the other hand, the anonymous aspect of the cryptocurrency must also be re-evaluated and regulated, as public institutions in particular may have little interest in a means of payment that is potentially suitable for money laundering or other illegal activity. By 2020, the developers of Cardano are promising the full expansion of their system.
Cardano’s core orientation puts this new system in the vicinity of existing cryptocurrencies. Technically, the final result should look like Ethereum, with smart contracts and other active elements on the blockchain. Also apparently many developers of Cardano come from the Ethereum environment. With regard to the target group, role models such as Ripple or OmiseGO are more likely to be considered, and banks and companies are already showing great interest in the system.
It should be possible to not only transfer money between banks, but arbitrarily large amounts of money could be transferred between any arbitrary actors. The theoretical and technical basis is in place, and Cardano is quite confident in the future of conceptualizing the cryptocurrency principle from scratch and establishing it on a new, previously unknown level. However, whether the promises of Cardano will be fulfilled by the future developments will only be seen in the next few years.
The Roadmap of Cardano can be viewed here: Cardano Roadmap