Cardano Wiki ▷ What is the ADA? Crypto currency & more!
What is cardano?
In short: Cardano is a third generation cryptographic currency protocol. A protocol is simply a set of rules and guidelines for the communication of data among each other.
The crypto-currency attempts to create a new smart economy and build a decentralized public block chain that can be used by millions or even billions of people. It will also attempt in a sustainable way to allow Cardano to communicate with other crypto-currencies and their blockchains while building a bridge between the crypto-currency and the traditional financial world. Like Ethereum, the Cardano block chain will allow decentralized applications to be built on top of it and take advantage of the benefits of ADA Cardano.
The Cardano ADA project differs from almost every other crypto-currency project by the scientific methodology involved in its development. The cryptomonetary research for Cardano is submitted to academic institutions for review before the research area is established. The idea is that these rigorous methods will lead to the creation of a superior protocol that will stand the test of time.
To understand what Cardano is, we must look at the shortcomings of previous generations of crypto currencies and explain how Cardano solves these problems. Only then will you fully understand how amazing Cardano really is and what it does.
Origins: First generation of crypto currencies
The first generation of crypto currencies was developed as early as 2009. Bitcoin is the original and the "generation one" crypto. The question that Bitcoin asked itself was: How can you create decentralized money?
1. Could we create digital money living from a decentralized block chaine? The idea was that the token would be scarce and tradable.
(2) The second basic idea of Bitcoin was that two people could communicate a value between themselves without the need for a trusted third party or intermediary to facilitate the transaction. In the traditional financial world, this trusted third party would be a bank.
Only a few years after the founding of Bitcoin, this digital currency was actually traded for real money. However, the market for Bitcoin was tiny and the currency had only a few hundred users at first.
The problem with Bitcoin is that a transaction between two people, call them Jim and Sarah, is more than just a transfer of value. Whenever a transaction takes place, there's a story behind it. For example, Jim agrees to pay Sarah $50 for walking his dogs for four hours, and you should be able to see that the stories behind transactions are in the essential contracts. Think about it: Just about every transaction you ever make will be subject to the Terms and Conditions.
With first generation crypto currencies such as Bitcoin, the problem was that the technology was not good enough to solve or account for this level of complexity.
Origins: Second generation of crypto currencies
Charles Hoskinson, founder of ADA Cardano, and Vitalik Buterin understood the shortcomings of Bitcoin and decided to launch the Ethereum project. Ethereum was the first crypto-currency project of the second generation and brought a programming language into a block chain. Programming languages were paired with a block chain so that smart contracts could be written.
This made it possible to adapt the transactions and to attach conditions to the transactions. The highlight of SmartContracts is that the transaction is only processed if the conditions in the Smart Contract are fulfilled. In essence, Smart Contracts heralded a new era of customized block chain transactions.
The problem with second-generation crypto currencies
The problem with the second generation of crypto currencies (like Ethereum) is that we started to realize that they are not suitable for a large number of users. This became clear in December2017 when the Ethereum network came to a standstill due to the high number of transactions generated by the CryptoKitties game. The benefits of Smart Contracts were severely limited by the inability to serve a large number of users.
Moreover, both the first generation and the second generation of crypto currencies suffer from two fundamental problems:
1 Governance Issues:Often we see different crypto-currencies, which are divided into two parts to separate cryptos and divide the community and the developers involved in the project. These divisions in a crypto currency are called "forks", examples are
* Ethereum and EthereumClassic
* Bitcoin and Bitcoin Cash
2. funding issues:You may have heard that Initial Coin Offerings (ICOs) are the most important method of generating funding for crypto-currency projects. But no one has really talked about what happens when funds run out. This makes the majority of first and second generation crypto currencies unsustainable in the long run.
Cardano ADA & third generation crypto currencies
Third generation crypto currencies try to solve the problems of previous cryptogenerations. To this end, the third-generation coins aim to solve the following problems:
1. scalability:this means that a network is created that can support a large number of users
2. interoperability: different block chains should be able to communicate with each other and with existing financial systems, such as banks.
3. sustainability: cryptocurrencies should be able to finance themselves in the long term. If this problem is not solved, how should the infrastructure created be maintained?
The ADA Cardano project aims to solve these three problems in a way that takes into account the best features and experience of first and second generation crypto currencies. They also plan to incorporate new concepts and new technologies into the crypto currency space. In fact, these three points should be considered as the foundation on which Cardano is built.
ADA Cardano is based on two principles:
1. all science working on solutions to problems is evaluated by experts This means that the Cardano team goes to conferences, writes proper scientific papers and collaborates with universities. The idea is that this rigorous process will lead to a better solution.
2. with regard to engineering, this shall be implemented as a high-assurance code. This means that the same types of quality control that are applied to the technology, such as building a rocket, are applied to theCardano code. This is intended to reduce the risk of a Cardano hack.
Third generation crypto currency problem: scalability
There are three different ways to think about scalability:
1. transactions per second: this means how many transactions a system can execute in a block in a given time span.
2. network: transactions contain data. The more transactions there are, the more data resources the network needs. This means that a system that supports millions or billions of users could require many gigabytes of bandwidth per second to support all the data flowing through it.
3. data scale:Blockchains hopefully save things forever. This means that over time more and more data will be stored in the block chain.
This means that the ADACardano network is forced to do so as it grows:
- to process more transactions per second,
- to have more bandwidth and available data storage and to ensure that security is not compromised.
Pillar 1: How does Cardano ADA solve the scalability problem?
To understand how Cardanodie solves scalability problems, we will look at each of the three components that make up scalability.
1. transactions per second
To achieve a breakthrough in transactions per second, Cardano has developed an expertly reviewed white paper for a verifiable proof-of-state protocol called Ouroboros, one of the most efficient consensus protocols in the entire crypto-currency space and the first to be proven secure in a rigorous cryptographic manner.
The ingenious thing about Ouroboros is that it is modular and future-proof.
Ouroboros breaks down the Cardano universe into epochs. It takes a look at the distribution of tokensand can make a choice from a source of random numbers and slot leader positions. These slot leaders do exactly the same thing as a Miner in Bitcoin and create blocks. The difference is that this does not require the excessive computing resources that Bitcoin mining requires. This means that the Ouroboros system is much cheaper to operate and at the same time provides all the security guarantees of Bitcoin mining.
The interesting thing is that these slot leaders do not have to maintain a single block on a single block chain. They can hold other blocks on other chains. The reason for this is that the cost of building a block is so low that it is now possible to talk about a consensus on a number of different chains.
Epochs could also run in parallel and classify transactions accordingly. This means that these slot leaders can maintain more types of block chains and run transaction processing for the block chains in parallel as more users and their users get more functionality. In short, all this means that the Cardano system can increase the number of transactions per second it can process.
Ouroboros & Safety
The security of Ouroboros is not affected by the addition of new features. Cardano is also working on making Ouroboros quantum resistant. This will lead to even more security in the system in the future. With Ouroboros, the Cardano network can be maintained comparatively inexpensively, since chains can be maintained in parallel and therefore simultaneously.
Ouroboros has undergone many different peer reviews, which gives the Cardano team a high degree of assurance that the design of the system is correct. The Cardano team also models a formal specification of Ouroboros using Psi Cakulus, a modeling language that can be understood by machines. Finally, the team is waiting to link this to its Haskell code and Github repository to actually show that it has implemented the protocol correctly. This standard does not yet exist in the crypto currency space.
It is necessary to move large amounts of data simultaneously. As the ADA Cardano network grows from a few to a thousand transactions per second, not every node can return every message. This is because nodes are not able to handle it. To solve this problem, Cardano is developing a new technology called RINA.
RINA stands for RecursiveInter-Network Architecture. RINA is basically a new way to structure a crypto currency network. The goal is to build a network that offers you privacy, transparency and scalability guarantees. RINA essentially gives the team the ability to refine and configure Cardano as it grows. The Cardano team believes that RINA will be a great solution to the current network and overhead problems.
3. data scaling
Public block chains can become very large and fast and not every user should have all the data. The Cardano team has not yet completely solved this problem. However, they are aware of techniques such as pruning, subscriptions and compression. Using one of these solutions reduces the amount of data a user has to store. Another idea is to decompose so that each user does not need a complete copy of the block chain.
Instead, they can only have a part of the chain. Many users with different parts of the chain can allow the system to combine them all to form the whole chain. With regard to data scaling solutions, Cardano's idea is to study the solutions thoroughly. One technology that could help Cardano ADA solve the problem of data scaling is called sidechains.
What are Sidechains & how can they help Cardano?
Sidechains consist of two components:
1. they are just a compressed representation of a block chain.
2. create interoperability between chains and enable transactions between different block chains.
The aim of ADA Cardano is to transfer much smaller amounts of data to users, but still maintain the same level of security and, of course, ensure that transactions remain correct.
In his sidechain research, Cardano has found evidence that they can build compressed representations of a growing block chain and provide a high degree of assurance that transactions are correct. However, all these clues are not yet a breakthrough in research.
Cardano's approach to data scaling is to intelligently limit what is visible and relevant to users. They aim to decompose whenever possible, to find intelligent cryptographic ways to compress transactions and avoid giving users a whole copy block chain. The ultimate goal is to do all of this in a way that maintains the security guarantee of Bitcoin.
Fortunately, with TPS, network resources also tend to grow, which is relatively inexpensive for data storage. For this reason, the Cardano ADA team does not consider data scaling to be particularly urgent. However, research has begun and the team believes they will have an overall solution to this problem by the end of2019.
Pillar 2: Solving interoperability problems
Interoperability is based on the idea that there will be no single winner in the crypto currency. Instead, there will be many different networks likeEthereum, Bitcoin, Ripple and legacy systems like the traditional banking networks that run on older protocols like SWIFT. The problem is that all these systems have their own languages, rules, and business logic.
The problem at the moment is that it is very difficult for crypto-currency networks such as Ethereum and Bitcoin to understand each other and traditional banking networks.
If you don't have a single standard or way of communicating with these different systems, you are faced with a situation where value becomes highly fragmented. This means that no matter how decentralized a single ecosystem is (e.g. Bitcoin or Ethereum), the Kingmaker will control the value flow between different systems. Right now, these are crypto currency exchanges. It is possible, however, that other solutions will be used and will challenge the exchange.
However, this exchange is fragile. It is subject to hacking, regulation and sometimes it is simply terminated. This is essentially not a good idea for inherently decentralized ecosystems like Bitcoin. The reason for this is that a single group of actors controls whether someone can transform the value from one system into another, e.g. the transformation of Ethereum into Ripple. People doing business in the crypto-currency world are likely to come into contact with the traditional financial world. However, crypto-currency companies do not have the compliance information of their customers and are therefore classified as high-risk companies by traditional financial systems.
How does Cardano ADA Coin solve the problem of interoperability?
The idea with a third generation crypto currency like the Cardano ADA Coin is that they should be able to observe and understand other crypto currencies, a crypto currency that when it sees an event in a network like Ethereums, it can check whether that event is true or false. So, if Jim and Sarah have made an Ethereum transaction, the third-generation crypto currency should be able to tell whether or not that transaction took place. In short, cross-chain transfers should be reliable and able to verify transactions without a trusted third party.
The way, so that all different crypto currencies can speak with each other, is via sidechains. The basic concept is that there is a way to structure information from one chain to another. If the transaction is compressed, there should be a way to verify whether or not that transaction has taken place and to confirm that both transactions are not duplicated.
It is important to understand that every possible method must be done in an exceptionally compressed way. The reason for this is that there are over 1,500 crypto-currencies today and the blockchains for each crypto-currency are getting bigger and bigger. This means that a solution that requires a copy of each crypto currency block chain is simply not scalable. The result is that high levels of compression are required to enable interoperability.
Cardano began his research on sidechains and published preparatory work on the topic. The Cardano team hopes to develop a solution from this research.
Interoperability & traditional financial institutions
Even though all crypto currencies could communicate with each other without problems, there is still the problem that the crypto currency world cannot communicate with the traditional financial world. There are three reasons why the crypto-currency world is not yet compatible with the traditional banking network:
Metadata is the history behind a transaction. For example, what amount and where you spent it. In the crypto-currency space, it is easy to show how much you have spent. However, it is extremely difficult to prove where and on what you spent the money. The problem is that metadata is heavily used by the old financial world, especially to determine the risk to a company.
The problem with the crypto currency is that metadata is very private. In fact, they can represent a whole series of transactions in crypto-currency and store them permanently in a public file.
When it comes to Cardano ADA, think about where, when and how you can place metadata on a block chain and benefit from factors such as audibility, immutability (storing the transaction as a permanent record) and timestamping, with the aim of ensuring that ADA places Cardano metadata in a block chain in a responsible and useful manner. For example, the data can be encrypted and accessible only to selected persons.
Attribution is about the identity of the actors involved in transactions. In short, it is not enough to know the story behind the transaction, the traditional financial system must know where the money came from and where it is going.
With Cardano, there will be a possibility to voluntarily add an assignment to a transaction in a simple way. With the technology of already existing crypto-currencies, it is possible to create individual digital identities and store them securely. When it comes to attribution, Cardano wants to create a simple way for people to identify themselves to both attributions of transactions.
Compliance includes things like Know Your Customer Checks (KYC), Anti-Money Laundering (AML) and Counter Terrorism (CTF). With all these components, essentially the same question arises. What do we know about the transaction and can we say that it is a legitimate transaction? All these checks are not really considered in the world of crypto-currency, but they are a cornerstone of the traditional banking network or a money service company.
At Cardano the idea is that a user can voluntarily decide to send a transaction in a way that makes a bank feel comfortable. The key is to do this in a way that protects the privacy of the user while ensuring that data is protected. As we have seen with other data breaches at companies like Ashley Madison, data retention can be very problematic.
A large part of Cardano explores the traditional part of the financial network with new cryptography, the use of optional metadata and the use of things like trusted hardware. Trusted hardware gives us very secure ways to store credentials, guarantee that data is destroyed after a certain period of time, and geotagging.
Cardano Review: Interoperability
If Cardano successfully solves the interoperability problem, then Cardano can be imagined as the adhesive that brings together the network of block chains. This means that the various crypto currencies can remain as they are and the banks can continue to work with their legacy systems. ADA Cardano is to become the decentralized bridge between the traditional financial world and the crypto world. If the Cardano can reach ADA Coindies, it will usher in a new era of interoperability and significantly increase the benefits of all crypto currencies.
Pillar 3: Sustainability
Sustainability is all about the future of Cardano ADA Coin. It can be divided into two key areas:
1. how do we pay for things?
One should understand that crypto currencies are not companies. Crypto-currencies like Cardano build infrastructure, like roads. Crypto currencies are open source protocols and the goal is to minimize costs. Crypto currencies could charge tolls and fees on the protocol, but that would probably make them less competitive than a completely open and free protocol. It is therefore very difficult to find a way for users to pay for these systems and maintain them in the long term.
One possibility is patronage, where a company offers developers free maintenance and updates of the protocol. The problem is that the company will have a lot of power over the proposed changes to the protocol, which will probably lead to centralization.
ICOs are another method. They allow a lot of capital to be invested in a crypto-currency project in a very short period of time. This method could be successful if there is good regulation. However, ICOs are finite and the capital will be used up at some point.
How will Cardano ADA e-Coin finance itself?
Cardano wondered whether it was possible to create a system with a treasury. With a treasury, a crypto-currency token can be printed and these new tokens placed in a treasury bank account. This is inflationary and a method developed by DASH. At Bitcoin, when a block is mined, the entire reward is given to the miner. In DASH, some of the rewards go to the decentralized Treasury account. DASH allows the funds in the decentralized bank account to be reconciled to determine the allocation of funds for funding proposals. This means that there is a democratic participation in the allocation of funds.
For the treasury system to work properly, there are four things that need to be done:
1. an adequate and fair voting system.
2. an incentive to vote.
3. there must be a simple way to submit votes. This must be done in such a way that the judicious votes have a higher weighting than others.
4. all this must be done in a completely decentralised way.
Cardano is very interested in the treasury model and considers it one of the most important things to ensure that the project is sustainable. A correct model will allow the system to pay its own bills. This will require a lot of research and Cardano is working on it right now.
How will the voting work?
Cardano has looked into the voting system and tried to make use of the so-called liquid democracy. They intend to combine this with a stimulating treasury model developed in collaboration with researchers from Lancaster University and some of Cardano's developers. The idea is to create a reference treasury module that can be plugged into any crypto currency, such as ADA Cardano. The trick is to balance the needs of token holders with those of those who wish to obtain adequate funding. This is a tricky business to solve, and the modular methodology is used so that the system can be updated as needed, regardless of the protocol.
Two. What's next?
Crypto-currencies are living creations. It's not as easy as writing code and saying the project is finished. You need to be able to change the crypto currency as technology changes, use cases change, and new innovations are discovered, usually by using hard and soft "forks" in crypto currencies. A fork only means that the code has been changed.
The problem with current crypto currencies is that there is no way to determine which crypto currency is the "right crypto". This leads to incompatible differences and to the breaking of chains. We have seen this with Bitcoin and Bitcoin Cash or Ethereum and Ethereum Classic. This problem will only continue if these systems scale and increase in value.
Cardano has investigated which existing systems exist that can be updated but have fixed rules. The best example is a constitution. We do not see a fragmentation of one country into two USAs when the constitution is updated. The reason is that it is a slow and deliberate process and people agree to follow it in principle.
Cardano believes that we should treat protocols like constitutions, and this allows us to make changes and have a process for doing so. Cardano is looking at using the same voting system as the treasury system, which will also be used for making and voting on proposals to improve the system. This process should have higher and higher thresholds as the change comes closer to implementation. Cardano deals with making this whole mechanism understandable and mechanizes the social process. An upgrade system is already in place and this system is to be replaced by the voting system to be introduced together with the Treasury.
The Cardano Team
Cardano has a global team and has developers who come from all over the world to work on the protocol. The main character is undeniably Charles Hoskinson, who founded theCardano ADA-eCoin in 2015. In the following, we will focus on theCardano founder, although there are many talented people on the Cardano team.
Founder &CEO - Charles Hoskinson
Charles started at the University of Colorado Boulder in 2008. He first studied analytical number theory and we suspect that it was in this context that he read Satoshi's white paper on Bitcoin and then decided to switch to mathematics and cryptography at the university. After graduating in 2010, several years passed before Charles became director of the Bitcoin Education Project. His job was to educate the public about the benefits of decentralization and cryptocurrency. In July 2013 Hoskinson founded InvictusInnovations Incorporated with Dan Larimer. You may also know Dan Larimer as the founder of the crypto currencies Bitshares, Steem and EOS. At Invictus, Charles helped launch the Bitshares platform.
At the end of 2013, Charles took on a new project and became one of the founders of Ethereum and even CEO. It was during his time at Ethereum that he discovered the shortcomings of this second generation of crypto currencies. Charles Hoskinson wanted to create an improved crypto currency and founded the Cardano ADA project.
The future of Cardano-Coin
Cardano does not yet have a functioning product and the work is scheduled to last until 2020. Like other third generation coins, Cardano was widely touted as an Ethereum killer. Importantly, Cardano is not just an application development platform like Ethereum. The project is intended to be the glue that holds the crypto-currency world together and serves as a bridge to the traditional financial system. If Cardano is successful, the value is difficult to quantify. However, it can be assumed that it could exceed Ethereum's all-time valuation of 133 billion dollars.
Ultimately, theCardano price is determined by the number of people who will set up and use Cardano in the future. This means that the Cardano value is ultimately based on the number of people using the protocol.
If Cardano finds the widespread acceptance that so many accept, Cardano ADACoin can reward its investors well.
2018 was an important year for the project and you can learn more about the current Cardano roadmap here .
The Cardano ICO
Cardano's ICO lasted over a year, starting in September 2015 and running until January 2017, during which time Cardano's ICO sold two-cent coins and raised $63 million. cardano is, of course, one of the best funded crypto-currency projects on the market and could have been contracted to develop keys by 2020.
Should I invest in Cardano ADA Coin?
- It is the only crypto currency that takes a scientific development approach. This should lead to a more future-proof crypto currency.
- Instead of trying to solve scaling problems later, Cardano has concentrated on solving them from the beginning.
- Cardano founder Charles Hoskinson has already founded successful crypto currency projects such as Ethereum and Bitshares. This kind of success story is rarely seen among crypto currency founders.
- Cardano does not want to replace the traditional financial system, but it wants to work with it. We think this is an exceptionally intelligent approach.
- The project has a long term view and creates a way to fully fund it in the future: many crypto currencies are likely to die when their funds are exhausted. Cardano understands that the road they are building must be maintained, and that means there must be a built-in mechanism for it to maintain itself.
- There is no functioning product yet.
- The Cardano ADA Coin only becomes truly valuable when central application developers build popular applications on the Cardano block chain.
- It remains to be seen whether the banks will cooperate with Cardano.
- The Cardano team still hasn't solved all the problems. It cannot be assumed that these solutions can be found.
How can I buy Cardano ADA Coin?
There are several ways to buy Cardano ADA Coins. In our comprehensive guide to buying ADACoin, we show you our preferred ways to buy.
TheCardano project could be the next step in the development of crypto currencies. It has the potential to be not only an ethereum killer, but also the bridge that connects the crypto-currency world and the traditional banking system.
Cardano's unique scientific approach to block chaining is refreshing. We really like the way the team looks at past crypto currencies, examines their shortcomings, and intends to offer a solution for every problem.
The problem with Cardano is that they may have set their sights higher than they can achieve. The project doesn't have a working product yet and it's still uncertain if they can solve all the problems.
However, the Bitcoin-News.one team is very excited about what further developmentsCardano will bring in the future. We believe that this project could be the next step in the development of the block chain. It also has the potential to make crypto currencies more widely accepted by the traditional financial sector, and this can only be good news for the general introduction of crypto currencies.