Cardano Wiki ▷ What is the ADA? Cryptocurrency & more!
What is Cardano?
In short, Cardano is a third generation cryptocurrency protocol. A protocol is simply a set of rules and guidelines for how data can communicate with one another.
The cryptocurrency seeks to create a new smart economy and build a decentralized public blockchain that can be used by millions or even billions of people. It is also tried in a sustainable way to allow Cardano to communicate with other cryptocurrencies and their blockchains and at the same time to build a bridge between the cryptocurrency and the traditional financial world. Like Ethereum, the Cardano blockchain will also make it possible to build decentralized applications on it and to use the advantages of ADA Cardano.
The Cardano ADA project differs from almost every other cryptocurrency project by the scientific methodology involved in its development. The cryptocurrency research for Cardano is submitted to academic institutions for review before the research area is established. The idea is that these rigorous methods result in the creation of a superior protocol that will stand the test of time.
To understand what Cardano is, we need to look at the shortcomings of previous generations of cryptocurrencies and explain how Cardano solves these problems. Only then will you fully understand just how amazing Cardano actually is and what it does.
Origins: First generation of cryptocurrencies
The first generation of cryptocurrencies was developed back in 2009. Bitcoin is the original and "generation one" crypto. The question Bitcoin asked itself was: How can you create decentralized money?
1. Could we create digital money that lives on a decentralized blockchain? The idea was that the token would be scarce and tradable.
2. The second basic idea of Bitcoin was that two people could convey value to one another without the need for a trusted third party or intermediary to facilitate the transaction. In the traditional financial world, that trusted third party would be a bank.
Just a few years after Bitcoin was founded, this digital currency was actually being traded for real money. However, the market for Bitcoin was tiny and the currency initially only had a few hundred users.
Bitcoins problem
The problem with Bitcoin is that a transaction between two people, let's call them Jim and Sarah, is more than just a transfer of value. Whenever a transaction takes place, there is a story behind it. For example, Jim agrees to pay Sarah $ 50 if she walks his dogs for four hours. You should now be able to see that the stories behind transactions are essentially contracts. Think about it: pretty much every transaction you ever make will be subject to terms and conditions.
The problem with first generation cryptocurrencies like Bitcoin was that the technology was not good enough to solve or account for this level of complexity.
Origins: Second generation of cryptocurrencies
Charles Hoskinson, founders of ADA Cardano, and Vitalik Buterin understood the shortcomings of Bitcoin and decided to start the Ethereum project. Ethereum was the first second generation cryptocurrency project and brought a programming language into a blockchain. Programming languages were paired with blockchain so that smart contracts could be written.
This enabled the transactions to be adjusted and it was possible to add conditions to the transactions. The highlight of SmartContracts is that the transaction is only processed if the conditions in the Smart Contract are met. Essentially, SmartContracts ushered in a new era of bespoke blockchain transactions.
The problem with second generation cryptocurrencies
The problem with the second generation of cryptocurrencies (like Ethereum) is that we began to realize that they are not suitable for a large number of users. This became apparent in December 2017 when the Ethereum network stalled due to the high number of transactions generated by the CryptoKitties game. The utility of smart contracts has been severely limited by the inability to serve a large number of users.
In addition, both the first generation and the second generation of cryptocurrencies suffer from two fundamental problems:
1. Governance questions:Often we see different cryptocurrencies split into two parts to separate cryptos and divide the community and the developers involved in the project. These divisions in a cryptocurrency are called "forks", examples are:
* Ethereum and EthereumClassic
* Bitcoin and Bitcoin Cash
2. Financing issues:You may have heard that Initial Coin Offerings (ICOs) are the primary method of raising funds for cryptocurrency projects. However, no one has really spoken about what happens when funds run out. This makes the majority of first and second generation cryptocurrencies unsustainable in the long term.
Cardano ADA & third generation cryptocurrencies
The third generation cryptocurrencies try to solve the problems of the previous crypto generations. 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 blockchains 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 resolved, 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 experiences of first and second generation cryptocurrencies. They also plan to add new concepts and new technologies to the cryptocurrency space. In fact, these three points should be seen as the foundation on which Cardano is built.
ADA Cardano is based on two principles:
1. All science that works on solutions to problems is rated by experts. This means that the Cardano team goes to conferences, writes proper academic papers and works with universities. The idea is that this rigorous process will lead to a better solution.
2. With regard to engineering, this is to 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 the Cardano code. This is to reduce the risk of a Cardano hack.
Third generation cryptocurrency 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 period of time.
2. Network: Transactions contain data. The more transactions there are, the more data resources the network needs. That is, a system that supports millions or billions of users could require many gigabytes of bandwidth per second to support all of the data flowing through it.
3. Data scale:Hopefully, blockchains will save things forever. This means that over time, more and more data is stored in the blockchain.
This means that as the ADACardano network grows, it is forced to:
Process more transactions per second,
Have more bandwidth and available data storage, and ensure that security is not compromised.
Pillar 1: How does Cardano ADA solve the scalability problem?
To understand how Cardanodie solves scalability problems, we'll cover each of the three components that enable makeup to be scalable.
1. Transactions per second
For the breakthrough in transactions per second, Cardano developed an peer-reviewed white paper for a verifiable proof-of-stake protocol called Ouroboros. Ouroboros is one of the most efficient consensus protocols in the entire cryptocurrency space and the first to be rigorously cryptographically proven to be secure.
The ingenious thing about Ouroboros is that it is modular and future-proof.
Ouroboros divides the Cardano universe into epochs. It takes a look at the distribution of tokens and can hold a poll and create slot leaders from a source of random numbers. These slot leaders do exactly the same thing as a miner in Bitcoin and create blocks. The difference is that it doesn't require the excessive computational resources that Bitcoin mining requires. This means that the Ouroboros system is much cheaper to operate and at the same time provides all security guarantees such as Bitcoin mining.
The interesting thing is that these slot leaders don't have to maintain a single block on a single blockchain. You can hold other blocks on other chains. This is because the cost of building a block is so low that it is now possible to talk about consensus on a number of different chains.
Epochs could also run in parallel and assign transactions accordingly. This means that these slot leaders can maintain more types of blockchains and do transaction processing for the blockchains in parallel as they get more users and their users more functions. In short, all of this means that the Cardano system can increase the number of transactions per second it can process.
Ouroboros & Security
The security of Ouroboros is not affected by adding new functions. 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 cheaply, since chains can be maintained in parallel and thus at the same time.
Ouroboros has gone through many different peer reviews, which gives the Cardano team a high level of certainty 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. Eventually, the team expects to be able to tie this with their Haskell code and Github repository to actually show that they have implemented the protocol correctly. This standard does not yet exist in the cryptocurrency space.
2. Network
It is necessary to move large amounts of data at one time. 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 unable 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 of structuring a cryptocurrency network. The aim is to build a network that offers you data protection, transparency and scalability guarantees. RINA essentially gives the team the ability to refine and configure Cardano as it grows. The Cardano team believes RINA will be a great solution to the network and overhead problems that currently exist.
3. Data scaling
Public blockchains can get very big and fast, and not every user should have to have all of the data. The Cardano team has not yet fully resolved this problem. However, they are aware of techniques such as pruning, subscriptions, and compression. Using either of these solutions reduces the amount of data that a user must store. Another idea is to break it down so that each user doesn't need a full copy of the blockchain.
Instead, they can only have part of the chain. Many users with different parts of the chain can allow the system to combine them all to form the entire chain. With regard to data scaling solutions, Cardano's idea is to study the solutions thoroughly. One technology that Cardano ADA could help solve the data scaling problem is called sidechains.
What are sidechains & how can they help Cardano?
Sidechains consist of two components:
1. They are just a condensed representation of a blockchain.
2. They create interoperability between the chains and enable transactions between different blockchains.
The aim of ADA Cardano is to transfer much smaller amounts of data to users, but still maintain the same level of security overall and of course transactions should remain correct.
In its sidechain research, Cardano has found evidence that they can build condensed representations of a growing blockchain and provide a high level of assurance that the transactions are correct. However, all of these indications are not yet a breakthrough in research.
Cardano's approach to data scaling is to intelligently restrict what is visible and relevant to users. They aim to disassemble whenever possible, to find intelligent cryptographic ways to compress transactions and not have to give users a whole copy of the blockchain. The ultimate goal is to do all of this in a way that maintains the security guarantee like Bitcoin.
Fortunately, TPS also tends to grow network resources, which is relatively cheap for data storage. For this reason, the Cardano ADA team doesn't consider data scaling to be particularly urgent. However, the research has begun and the team believes they will have an overall solution to this problem by the end of 2019.
Pillar 2: solving interoperability problems
Interoperability is based on the idea that there won't be a single winner in cryptocurrency. Instead, there will be many different networks like Ethereum, Bitcoin, Ripple and legacy systems like the traditional banking networks that run on older protocols like SWIFT. The problem is that all of these systems have their own languages, rules, and business logic.
The problem right now is that it is very difficult for cryptocurrency networks like Ethereum and Bitcoin to get along with each other and with traditional banking networks.
If you don't have a single standard or way of communicating with these various systems, then you face a situation where the value becomes highly fragmented. This means that it doesn't matter how decentralized a single ecosystem is (e.g. Bitcoin or Ethereum), the Kingmaker will control the flow of value between different systems. At the moment these are cryptocurrency exchanges. However, it is possible that other solutions are used and call the exchange into question.
However, this exchange is fragile. Subject to hacking, regulation and sometimes just terminated. This is essentially not a good idea for a supposedly decentralized ecosystem like Bitcoin. The reason for this is that a single group of actors controls whether someone can convert value from one system to another, e.g. converting Ethereum to Ripple. People doing business in the cryptocurrency world are likely to have to come into contact with the traditional financial world. However, cryptocurrency companies do not have their customers' compliance information and are therefore classified as risky companies by traditional financial systems.
How does Cardano ADA Coin solve the problem of interoperability?
The idea with a third generation cryptocurrency like the Cardano ADA Coin is that they should be able to observe and understand other cryptocurrencies. A cryptocurrency that when it sees an event on a network like Ethere can check whether that event is true or false. So if Jim and Sarah made an Ethereum transaction, the third generation cryptocurrency should be able to tell whether that transaction took place or not. In short, cross-chain transfers should be reliable and able to validate transactions without a trusted third party.
The way that all different cryptocurrencies can talk to 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 check whether or not that transaction took place and to confirm that both transactions are not a duplicate expense.
It is important to understand that every possible method must be done in an exceptionally compressed manner. The reason for this is that there are over 1.500 cryptocurrencies today and the blockchains for each cryptocurrency are getting bigger and bigger. This means that a solution that requires a copy of every cryptocurrency blockchain is simply not scalable. The result is that high levels of compression are required to enable interoperability.
Cardano has started his research on sidechains and has already published scientific papers on the topic. The Cardano team hopes that they can develop a solution from this research.
Interoperability & Traditional Financial Institutions
Even if all cryptocurrencies could communicate with each other without any problem, there is still the problem that the cryptocurrency world cannot communicate with the traditional financial world. There are three reasons why the cryptocurrency world is still incompatible with the traditional banking network:
1. Metadata
Metadata is the story behind a transaction. For example, what amount and where you spent it. In the cryptocurrency space, showing how much you've spent is really easy. However, it is extremely difficult to prove where and what you spent the money on. The problem is that metadata is heavily used by the ancient world of finance, particularly to determine risk to a company.
The problem with cryptocurrency is that metadata is very private. In fact, they can represent a whole range of transactions in cryptocurrency and permanently store them in a public file.
When it comes to Cardano ADA, think about where, when and how you can put metadata on a blockchain and benefit from factors such as audibility, immutability (storing the transaction as a permanent record) and timestamp. The aim is to make ADA Cardano metadata responsible and useful in a blockchain. For example, the data can be encrypted and only accessible to selected people.
2. allotment
Attribution is about the identity of the actors involved in transactions. In short, knowing the story behind the transaction is not enough, the traditional financial system needs to know where the money came from and where it is going.
With Cardano there will be a possibility to add an assignment to a transaction in a simple way. With the technology in existing cryptocurrencies, it is possible to create individual digital identities and to store them securely. When it comes to attribution, Cardano wants to create a simple way that people can identify themselves when assigning transactions.
3. Compliance
Compliance includes things like Know Your Customer Checks (KYC), Anti-Money Laundering (AML), and Counter Terrorism (CTF). Essentially the same question arises for all of these components. What do we know about the transaction and can we say that it is a legitimate transaction? All of these tests aren't really considered in the cryptocurrency world, but they are a cornerstone of the traditional banking network or a money services 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 users while ensuring that data is protected. As we've seen with other data breaches at companies like Ashley Madison, data retention can be very problematic.
Much of Cardano is exploring the traditional part of the financial network with new cryptography, the use of optional metadata, and the use of things like trusted hardware. Trustworthy hardware gives us very secure options for storing credentials, guaranteeing that data has been destroyed after a certain period of time and geotagging.
Cardano Review: Interoperability
If Cardano successfully solves the interoperability problem, then Cardano can be thought of as the glue that brings the network of blockchains together. This means that the various cryptocurrencies can remain as they are and the banks can continue to work with their legacy systems. ADA Cardano is intended to become the decentralized bridge between the traditional financial world and the crypto world. If the Cardano ADA can reach coins, then it will usher in a new era of interoperability and significantly increase the usefulness of all cryptocurrencies.
Pillar 3: sustainability
Sustainability is all about the future of the Cardano ADA Coin. It can be divided into two key areas:
1. How do we pay for things?
It should be understood that cryptocurrencies are not companies. Cryptocurrencies such as Cardano build infrastructures such as roads. Cryptocurrencies are open source protocols and the goal is to minimize costs. While cryptocurrencies could impose tolls and fees on the protocol, that would likely make them less competitive than a completely open and free protocol. Therefore, it is very difficult to find a way that users can pay for these systems and maintain them in the long term.
One option is patronage, in which a company offers developers the maintenance and update of the protocol free of charge. The problem with this is that the company will have a lot of power over the proposed changes to the protocol, which will likely lead to centralization.
ICOs are another method. As a result, a lot of capital is put into a cryptocurrency 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 does Cardano ADA e-Coin intend to finance itself?
Cardano wondered if it was possible to create a system with a treasury. With a treasury, a cryptocurrency can print tokens and place these new tokens in a treasury bank account. This is inflationary and a method developed by DASH. With 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 on the decentralized bank account to be voted on 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 must be four things:
1. Adequate and fair voting system.
2. An incentive to vote.
3. There has to be an easy way to get votes. This must be done in such a way that the judgmental voices have a higher weighting than others.
4. All of this has to be done in a completely decentralized way.
Cardano is very interested in the treasury model and believes it is 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 is going to take a lot of research and Cardano is working on it right now.
How will the voting work?
Cardano has dealt with the voting system and tried to use what is known as liquid democracy. They intend to combine this with an incentive treasury model developed in collaboration with researchers from Lancaster University and some of the Cardano developers. The idea is to create a reference treasury module that can be converted into any cryptocurrency, e.g. ADA Cardano, can be inserted. The trick is to balance the needs of token holders with those seeking adequate funding. This is a tricky thing to remedy and the modular methodology is used so that the system can be updated if necessary regardless of the protocol.
2. What's next?
Cryptocurrencies are living creations. It's not as easy as writing some code and saying the project is complete. You need to be able to change cryptocurrency as technology changes, use cases change, and new innovations are discovered. Typically, cryptocurrencies do so through hard and soft “forks”. A fork only means that the code has been changed.
The problem with current cryptocurrencies is that there is no way to determine which cryptocurrency is the "right crypto". This leads to irreconcilable differences and the rupture of chains. We have seen this with Bitcoin and Bitcoin Cash or Ethereum and Ethereum Classic. This problem will only continue as these systems scale and increase in value.
Cardano has investigated which existing systems are there that can be updated but have fixed rules. The best example is a constitution. We don't see a country split into two US when the Constitution is updated. The reason for this is that it is a slow and deliberate process and people are happy to follow it in principle.
Cardano believes we should treat protocols like constitutions, and that allows us to make changes and have a process for doing so. Cardano checks the use of the same voting system as in the treasury system, which is also to be used for the submission and coordination of proposals to improve the system. This process should have higher and higher thresholds the closer the change comes to implementation. Cardano is concerned with making this entire mechanism understandable and mechanizing the social process. An upgrade system is already built in and this system is to be replaced by the voting system that will be introduced together with the treasury.
The Cardano team
Cardano has a global team and developers working on the protocol from around the world. The main character is undeniably Charles Hoskinson, who founded the Cardano ADA-eCoin in 2015. In the following we will concentrate on the Cardano founder, even if there are many talents in the Cardano team.
Founder & CEO - Charles Hoskinson
Charles started at the University of Colorado Boulder in 2008. First he studied analytical number theory and we suspect that in this context he read Satoshi's whitepaper on Bitcoin and then decided to switch to mathematics and cryptography at the university. After graduating in 2010, it was several years before Charles became director of the Bitcoin EducationProject. Its job was to educate the public about the benefits of decentralization and cryptocurrencies. 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, becoming 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 cryptocurrencies. CharlesHoskinson wanted to create an improved cryptocurrency and founded the Cardano ADA project.
The future of the Cardano coin
Cardano does not have a working product yet and the work is expected to last until 2020. Like other third generation coins, Cardano has been widely touted as an Ethereum killer. What is important is that Cardano is not just an application development platform like Ethereum. The project is intended to be the glue that holds the cryptocurrency world together and serves as a bridge to the traditional financial system. When Cardano is successful, the value is difficult to quantify. However, one can assume that it could beat Ethereum's all-time valuation of $ 133 billion.
Ultimately, the Cardano price is determined by the number of people who will build up and use Cardano in the future. Because what is the worth of a road that no one is using? That means the Cardano value is ultimately based on the number of people using the protocol.
If Cardano finds the widespread acceptance that so many are adopting, then Cardano ADACoin can well reward its investors.
2018 was an important year for the project and you can here Learn more about the current Cardano roadmap.
The Cardano ICO
The Cardano ICO lasted over a year and started in September 2015 and ran until January 2017. During the Cardano ICO, coins were sold for two cents each and $ 63 million was collected have been commissioned.
Should I Invest in Cardano ADA Coin?
Benefits
It is the only cryptocurrency that takes a scientific development approach. This should result in a more future-proof cryptocurrency.
Instead of trying to solve scaling problems later, Cardano has focused on solving them from the start.
Cardano founder Charles Hoskinson has already established successful cryptocurrency projects such as Ethereum and Bitshares. This type of success story is rarely seen in cryptocurrency 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 been thinking long term and creates a way to fund it in full in the future. Many cryptocurrencies are likely to die when their funds are used up. Cardano understands that the road they are building needs to be preserved, and that means there has to be some built-in mechanism so that it can sustain itself.
Disadvantages
There is no working product yet.
The Cardano ADA Coin only becomes really valuable if decentralized application developers build popular applications on the Cardano blockchain.
It remains to be seen whether the banks will work with Cardano.
· The Cardano team still has not solved all 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 We will show you our preferred purchase options for buying ADACoin.
Conclusion
The Cardano project could be the next step in the development of cryptocurrencies. It has the potential to be not only an Ethereum killer, but also the bridge that connects the cryptocurrency world and the traditional banking system.
Cardano's unique scientific approach to developing blockchains is refreshing. We really like the way the team looks at past cryptocurrencies, examines their shortcomings and intends to come up with a solution to every problem.
The problem with Cardano is that you may have set yourself more than you can afford. The project does not have a working product yet and it is still uncertain whether they can solve all problems.
However, the Bitcoin-News.one team is very excited to see what further developments Cardano will bring in the future. We believe that this project can be the next stage in the development of the blockchain. It also has the potential for cryptocurrencies to be more widely accepted by the traditional financial sector, and that can only be good news for the general adoption of cryptocurrencies.
