Cardano (ADA): cryptocurrency and technology overview

Cardano cryptocurrency (ADA) is a native coin of the Cardano platform.

It can be used for participating in project management, staking and for value exchange (buy/sell, exchange, transfer). Over time, ADA cryptocurrency can also be used for various applications and services in the Cardano ecosystem.

According to Coingeko, the maximum supply is 45 billion coins.

Cardano (ADA) coins do not use mining, but foraging based on the Proof-of-Stake (PoS) algorithm.

What is Cardano (ADA)?

Cardano is a multi-layered, third-generation decentralised blockchain platform based on the open-source PoS algorithm, designed to create smart contracts. The programming language is Haskell.

INFO: Blockchain is named after Gerolamo Cardano, an Italian mathematician, engineer, philosopher and physician who invented a simple encryption device.

The cryptocurrency Cardano (ADA) is named after English mathematician Ada Lovelace, who is the first programmer. Incidentally, the fractional unit of ADA (0.000001) was named Lovelace.

Cardano’s main innovative technology is the PoS-protocol Ouroboros, which uses cryptography, combinatorics and mathematical game theory to ensure, according to the developers, the reliability, longevity and performance of the protocol and the distributed networks that depend on it.

History of the Cardano project (ADA)

Cardano’s founder, Charles Hoskinson, was at one time (2013) co-founded Ethereum along with Vitalik Buterin and several other talented programmers and mathematicians. But in 2014, their paths diverged for ideological reasons: Charles saw Ethereum as a commercial project with venture capital, but Vitalik did not support the idea.

After leaving Etherium, Charles set up IOHK (Input Output Hong Kong) and started to develop his own blockchain, Cardano. He enlisted colleague Jeremy Wood and crypto-scientist Aggelos Kiaias to work on the new project.

During 2015 and 2016, several ICOs were held to fund the project. There is evidence that around $80 billion in BTC was raised.

At the beginning of 2017, the Ouroboros White Paper was published, Cardano blockchain was officially released at the end of September, and Ada coins were publicly traded as of 1 October. The project is further developed according to the Roadmap (as of today, the Gauguin era).

Cardano development team

Charles Hoskinson is the CEO of IOHK, a mathematician educated at Metropolitan State University of Denver and the University of Colorado Boulder; co-founder of Ethereum, founder of Bitshares and Cryptocurrency Research Group, chairman of the Bitcoin Foundation education committee and head of Bitcoin Education Project. Hoskinson opened a blockchain research project at the University of Wyoming in 2020.

Jeremy Wood is co-founder of IOHK and a graduate of Indiana University and Purdue University in Indianapolis. He has lived in Osaka, Japan since 2008 and co-founded Kansai Bitcoin Meet-up in 2013. In late 2013, he joined Ethereum. After leaving Ethereum, he consulted on cryptocurrencies and founded Input Output with Charles Hoskinson in 2015.

Aggelos Kiaias is a cryptographer, Principal Research Fellow at IOHK and Chair of the Department of Cybersecurity and Privacy at the University of Edinburgh. He is Professor in Residence (gratis) at the University of Connecticut, Visiting Scholar at the Simons Institute at the University of California, Berkeley; he is also Associate Professor of Cryptography and Security (on leave) at the National Capodistrian University of Athens. Professor Kiaias has received a number of awards and prizes for his research, including an ERC (seed grant), a Marie Curie Fellowship, an NSF Professional Award and a Fulbright Scholarship.

The company has a large research team, including five professors from the Universities of Edinburgh, Oxford, Massachusetts and Wyoming.

Management companies

There are actually 3 companies involved in the management of Cardano:

  • Cardano Foundation, a Swiss non-profit organisation – the legal holder of the protocol and owner of the Cardano brand – is involved in partnerships and project promotion, development of the Cardano community worldwide, development of legislation and commercial standards, etc.
  • IOHK is an engineering company that develops blockchain and technology solutions for academia, businesses and governments.
  • EMURGO, a Japanese IT company, is a commercial enterprise that integrates businesses (focused on financial services, supply chain, retail, healthcare) and the public sector into the Cardano blockchain system, as well as educational activities (EMURGO Education project).

Roadmap

The development of the Cardano project takes place according to a roadmap divided into 5 phases (epochs) of project development. Work on the functionality of the epochs is carried out in parallel, but they will be introduced in a certain order, there is no information about the specific dates on the developers’ website.

Byron era is the initial phase, during which the ability to buy and sell cryptocurrency Cardano (Ada) was introduced, Daedalus (desktop) and Yoroi (mobile) wallets were introduced, Block Explorer – blockchain viewing tool was launched. The network is centralised.
Shelley era – period of growth, development and decentralisation of the network, becoming a system of stacking pools allowing delegation and rewards for stacking (ended in April 2021).
Gauguin era – stage of creation of dApps and smart contracts using Plutus and Marlowe languages (available to non-programmers as well); and release of native tokens.
The Basho era – the era of optimisation, improved scalability and network interoperability: the introduction of sidechains and parallel accounting methods.
Voltaire era – the final stage in which the platform will become a fully self-sufficient system and an example of direct democracy: participants (community) will be able to manage the platform by proposing improvements and voting for them, the network will become self-sustaining thanks to an internal funding system and will leave the IOHK management.

Features of the Cardano blockchain

Cardano is positioned as the first blockchain platform to be developed based on a scientific philosophy and research-based approach.

The creators of Cardano claim to be developing a smart contracts platform with innovative functionality that does not exist in any of the currently available protocols. To achieve this ambitious goal, they focus on such conceptual features of the platform

  1. Scalability (in particular with the help of sidechains)
  2. Interoperability (not only with other blockchains, but also with financial structures)
  3. Sustainability (through community control over the financial component of the project)

The blockchain architecture will be tiered. The first layer is the Cardano Settlement Layer (CSL) to support cryptocurrency transactions. The second layer, Cardano Computation Layer (CCL), is for smart contracts and dApps.

The Cardano network operates based on the PoS consensus algorithm, more specifically the Ouroboros protocol. It provides mathematically verifiable protection against attackers.

Ouroborous algorithm

Ouroboros, the developers claim, provides blockchain security through mathematical algorithms that take behavioural psychology and economic philosophy into account.

Several different implementations of the protocol are under development, including Classic, Praos, Genesis and Hydra for scalability.

Recognising the inevitability of attacks as a given, the authors have equipped the algorithm with built-in tolerance to prevent attackers from spreading alternative versions of the blockchain. In fact, the protocol is guaranteed to be secure as long as more than 51% of the share is controlled by honest participants (i.e. those who follow the protocol).

How does it work?

In general terms, the idea behind Ouroboros goes like this. The protocol distributes control of the network amongst the stacking pools – operators of nodes with the infrastructure needed to provide consistent and reliable connectivity to the network.

The blockchain is divided into slots (20 sec each). The slots are combined into epochs (5 days).

For each slot, a leader is assigned from amongst the stacking pools, who is rewarded for adding a blockchain to the chain. ADA holders can delegate their share to a specific pool, increasing their chances of becoming a leader.

To protect against attempts by attackers to tamper with the protocol, each new slot leader must treat the last few blocks of the resulting chain as transitive: only a chain that precedes a predetermined number of transitive blocks is considered secure (calculated latency).

Each node in the network stores a blockchain and a copy of the transaction memo where transactions are added, subject to matching existing transactions.

The developers emphasise that critical is the ability of the Ouroboros protocol to generate unbiased randomness in leader selection, which ensures security.

Advantages and disadvantages of Cardano (ADA)

The project’s undisputed or contingent advantages include:

  • A thorough scientific approach to development,
  • the strongest team of scientists from the best universities in the US and UK,
  • a well-thought-out development plan (roadmap),
  • technological innovation (Ouroboros),
  • a large community,
  • the demand for Cardano cryptocurrency (ADA) and its wide availability on exchanges
  • availability of educational programs around the world,
  • eco-friendliness,
  • fast and cheap transactions on the network,
  • potential scalability, interoperability and sustainability, and the available programming languages for Cardano smart contracts.

The obvious disadvantages are that the project is still at the development stage and it is difficult to predict the final outcome; due to its limited functionality, its ecosystem is not developed and there are not many successful user-cases.

For the sake of fairness, it is worth noting the recent progress in promotion: a test network of Alonzo smart contracts has been reported on social networks, and in March the Mary hardfork took place, opening the possibility of creating native tokens (equal to ADA, which do not require smart contracts).

But the project has a serious potential competitor in DeFi and smart contracts – Ethereum 2.0

Cardano (ADA) competing with Ethereum 2.0

Today, Ethereum, despite its popularity and reputation, huge ecosystem and many successful DeFi projects running on its blockchain, has significant drawbacks: transaction costs and transaction processing speed. On these parameters, it is inferior to Cardano. But will it always be that way?

Like Cardano, Ethereum is actively evolving and some estimates suggest we could see Ethereum 2.0 in action as early as autumn.

But according to Charles Hoskinson, it is developing in the wrong direction, as the lack of a comprehensive approach to shaping governance and project development strategy when moving from PoW to PoS will weaken Eth 2.0. The opinion is certainly not the most objective due to conflicts of interest.

Differences between Cardano (post-completion) and Ethereum 2.0:

  1. The architecture, the system of links and interactions between layers,
  2. maximum transaction processing speed,
  3. terms of stacking and the reward system,
  4. tokenomics.

The fact that these projects are aimed at different markets may lessen the competition.

Etherium has traditionally focused on developed countries in Europe and the US and private projects. Cardano sees its application in developing countries in Africa mainly at the governmental level, offering in particular affordable solutions for finance, healthcare, education, registry management, agribusiness and others.

How and where to buy Cardano (ADA)?

Cryptocurrency Cardano (ADA) is quite a sought-after digital asset. You can buy Cardano (ADA) on many major exchanges, including Binance, Huobi Global, Coinbase Exchange, KuCoin, Gate.io, Kraken, Bittrex, Bitfinex, OKEx.

The main cryptocurrency trading pairs ADA with BTC, ETH, USDT, BUSD, USDC, BNB.

It can also be bought for fiat (Roubles, US Dollars, Euros, Pounds Sterling, South Korean Won) on Coinbase Exchange, Kraken, Binance US, Binance, Bithumb.

WARNING: When buying cryptocurrency on an exchange, withdraw it for safekeeping to a more secure non-custodial cryptocurrency wallet.

In addition to exchanges, Cardano (ADA) can be purchased from exchanges or cryptocurrency wallets that support the currency.

Trustee Wallet supports the ADA token (BEP-20).

Cardano (ADA) growth outlook and forecast

At the end of 2018, SIMETRI wrote about Cardano: “Cardano’s scientific approach to project development sometimes stands in the way of marketing and adoption. Slow and careful promotion is both its strength and weakness, as its competitors move aggressively towards a DeFi future.” That thought still holds true.

However, in 2019, Cardano (ADA) is recognised as the fastest-growing crypto project.

Cardano’s roadmap is not even half over, and ADA’s currency is reliably high in the top 10 cryptocurrencies by market capitalisation, second only to BTC, ETH and USDT, which demonstrates the community’s support and belief in the project’s bright future.

When assessing the project’s prospects, one should take into account, among other things, the potential of the target audience, the activity of competitors in the general market, and the degree of public receptivity,

In these respects, Cardano stands a good chance. The main competitor is strong, but the markets are different; society is positively disposed towards PoS blockchain coins for their environmental friendliness; and the target audience (developing country governments) is quite promising, as the traditional focus of crypto projects is developed communities, financially and intellectually ready to accept the new financial reality.

The factors of reasonable concern include the prospect of successful completion of development and the timely launch of all phases of the project, as well as the readiness of developing countries to meet the economic and technical requirements for such innovations.

Overall, analysts say the coin has good potential and foresee a good future if the project shows steady progress on the roadmap. And traders agree on predictions of growth in the long term.

In any case, when deciding to buy a cryptocurrency, remember that such assets are highly volatile and no one can guarantee growth or at least stability. And all forecasts are nothing more than the personal opinions of individuals based on their deductions.

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