What is Cardano?
Cardano is the blockchain network that supports the Ada cryptocurrency. ADA is a digital currency that allows users to send and receive funds in a fast, secure and private environment. Cardano is one of the most robust blockchain network available today given that it is driven by a community of scientist, engineers, and academics around the world. Cardano places a significant emphasis on scientific innovations, research, and development. The blockchain deploys scientific rigors and testing similar to those in aerospace, medicine, and banking industries. The network is focused on precision, efficiency, and effectiveness.
The application of the Cardano blockchain is however not limited to cryptocurrencies alone. Cardano has the ability to be applied to broader technological applications in various fields and industry. Courtesy of its resilience, security, and decentralization Cardano can be used for issuing smart contracts and running decentralized applications(dApps).
Cardano has adopted a collaborative approach between engineers and academics to develop some of the most advanced features and protocol in the crypto-world today. Thee collaborative efforts have seen the incorporation of distributed systems, mechanism design and cryptography to design a highly functional and resilient network. Cardano utilizes the Ouroboros, Proof of Stake algorithm and Haskell code, technologies which were unheard before in the cryptocurrency world.
The idea to build Cardano was first conceived in 2015 with an aim of creating an intersection between regulations and privacy. The network as however not embraced a comprehensive roadmap but has embraced a collection of principles that form the backbone of its application and features. This flexibility allows the development to innovate widely around the platform rather than stick to a specific set of goals.
Cardano aims at separating accounting and computational operations into separate layers, this separation will be handy when making changes to the network(soft forks). Development teams embrace interdisciplinary collaborations to support the implementation of highly functional codes. Additionally, Cardano embraces the principle of fast iterations between modules to facilitate post-deployment upgrades without changing the network.
Cardano uses a decentralized development fund to facilitate development projects on the network. The network is further aimed at bringing stakeholders together with an aim of improving the long-term design of the network. The network is focused on developing an accounting framework for all the assets on the ledger while promoting abstractions to conform with legacy systems. Overall the coin is driven by a spirit of collaboration and continued learning from other cryptocurrencies and industry standards. This spirit will provide the axis on which regulation and privacy can strike an optimal balance.
By far the most common application of Cardano has been the ADA cryptocurrency. ADA is a third generation cryptocurrency that aims at streamlining the crypto ecosystem by infusing intra-trading. Since its inception, the coin has generated massive interest from investors with its price quadrupling from $0.023155 to the current price of $0.081147.
Besides ADA, Cardano has collaborated with the National Research and Education Network of Greece(GRENET), to develop an application to prove the legitimacy of diploma certificates. To protect the student’s privacy the platform will only contain a cryptographic hash of the diploma. When verifying users only have to input encrypted hashes and they are checked for equivalence with what is already on the network. This application will help in reducing instances of forgery and fraud as well as lessen the time and resources used to verify diploma certificates.
Cardano has also developed advanced smart contracts that will be used in casinos and the mobile gaming industry. Earlier this year IOHK, the development team behind Cardano launched the KEVM testnet. The testnet is a complete formal semantics for the Ethereum Virtual Machine and will facilitate the verification and execution of smart contracts on the network.
In March 2018, Traxia ICO was launched on the Ethereum blockchain. During the launch, it was announced that the ICO would migrate to the Cardano blockchain in the fourth Quarter of 2018. Traxia aims at decentralizing the global finance system by converting invoices into smart contracts that can be traded as short-term assets.
Cardano’s team is comprised of three major organizations the Cardano Foundation, IOHK, Emurgo. Cardano foundation is focused on supporting the community on regulatory and commercial aspects. Their core mission is to help standardize protect and promote the community’s welfare. IOHK, on the other hand, are responsible for conducting research and developing the Cardano network. Emurgo is the overall financiers of the Cardano blockchain. Emurgo helps in incubating commercial ventures and integrating businesses into the network.
Cardano’s development is dived into three major phases or roadmaps, the testnet phase, the Byron/ bootstrap phase and the Shelly/reward phase.
The testnet era involves testing of all the network functionality including the reward mechanism. Participants download software to test the network capabilities and provide feedback to the development team.
The second phase which is the current phase is the Byron phase, where users are allowed to purchase and redeem ADA coins. The coins are staked automatically and sent to trusted nodes that are responsible for maintaining the network. The purpose of this phase is to ensure that the network is fully decentralized.
The shelly phase will be focused on ensuring that all elements are in place and functioning correctly. Some of the features that should be in place by this period will be Ouroboros delegation, multi-signature transactions, wallet back-end, quantum resistant signature, light clients, UI/UX, networking and the Daedalus wallet.
Apart from those three major phases, there are other roadmaps such as Goguen, Plutus, Basho and Voltaire that will be focused on ensuring the network achieves a universal language framework, scalability, and security.
Daedalus is the default wallet for the Cardano blockchain network. The platform was designed by Cardano’s development partners IOHK to provide users with advanced encryptions. Overall, Daedalus is a web-based wallet that can be run on a vertical of devices, browsers, and operating systems.
Since its inception, Daedalus has grown significantly in use and popularity within a very short span of time. The wallet provides users with a variety of advanced features and functionalities that are not present in most other wallets. Users are afforded with increased simplicity and ability to organize and recover their funds seamlessly. The unique and feature richness of the wallet has made it one of the most convenient wallets available today.
The wallet allows users to store and retrieve data such as private keys in a simple secure and private manner. Its availability as a web-based application further allows it to be accessible to anyone and anywhere across the globe. Overall, Daedalus is highly secure, convenient and fast wallet that is still growing.
While Daedalus is a feature-rich wallet some of the headline features are listed below.
The wallet encrypts private keys and spending passwords to add an extra layer of protection for users.
Users can export their digital certificates to paper certificates which can be stored off-line. Paper certificates/ wallets generally comprise of both a private key and a public key and are virtually impossible to hack.
The wallets support both encrypted and decrypted redemption of Ada tokens.
The wallet also allows the configuration to allow monitoring and assurance of transaction.
Going into the future it is expected that the Daedalus wallet will implement additional features to support Ethereum Classic and Bitcoin which are the two biggest cryptos today. The team is also focused on building a mobile wallet and enhancing staking support. Other developments to create an application store for community-based apps are also underway.
Like its parent blockchain network(Cardano), Daedalus uses the Haskell programming language to enhance its security and encryption mechanisms. Haskell is a fairly complex language that utilizes advanced mathematical logic to implement resilience and fault tolerance. Consequently, the Daedalus wallet is highly fault-tolerant and resilient. With a highly distributed network of cryptographic codes, the system’s security is further fortified against attacks. The wallet further deploys an encrusted structure with formal verifications codes. Using its advanced and experienced research teams Cardano has been able to implement cutting-edge features that other wallets can only dream of.
How to use the Daedalus wallet.
Since Daedalus is a web-based platform it is extremely simple to set and use. All you need is to install the application, set up a wallet and you are able to send and receive funds. Below are the steps to follow:
The first step is to download the wallet installer from the official website daedaluswallet.io. When downloading users should download from a secure website and ensure that the application is compatible with their devices. Once downloaded you can run the installer to install the software on your device.
After installation, the user is allowed to set up their wallets by clicking on the “+” sign. When creating a wallet user are required to provide a username, password and a recovery password which should be kept safely and securely.
Upon creation of a wallet, users can receive fund using a QR code associated with their wallets or through a special address highlighted by a series of letters. When sending users can also scan the receivers QR or send using the wallet’s special address.
Unlike, other wallets Daedalus does not have a fixed transaction fee. Instead, the rate is calculated by adding a special figure of 0.155381 with a byte of 0.000043946 multiplied by the transaction’s size in bytes. The resulting figure is the total transaction cost.
The Ouroboros proof of stake algorithm is probably the most important part of the Cardano blockchain. Ouroboros is used to define of the nodes in the ledger reach consensus on mining. Ouroboros is one of the first proof of stake algorithm to be proven as scientifically secure. Since, the inception of Bitcoin, most blockchain networks have used the Proof of Work algorithm to reward users with new tokens. However, as the blockchain networks continue to grow in usage and size, the energy and resources required for proof of work have escalated immensely. Researchers have therefore come up with alternative algorithms such as proof of stake to help in reaching consensus.
But what is proof of stake in the first place? By definition, proof means to show evidence while stake refers to the relative value held by an entity. Generally, in a proof of work system users are rewarded with tokens after proving that they indeed own some tokens on the blockchain network. In contrast, under proof of work users are rewarded with tokens after solving complex mathematical equations. Overall these two mechanisms are used to secure the network.
Ouroboros slot leader.
Essentially, nodes with a positive stake (>0) are the ones allowed to participate in running the Ouroboros protocol. These nodes are usually referred to as stakeholders. In order to be able to generate new blocks, a stakeholder must first be selected as a slot header. The slot leader is responsible for listening to the transactions conducted by other nodes and generate a block from those transactions. The slot leader then signs the block with a secret key and publishes the block on the network.
Epochs and slots.
Ouroboros protocol measures physical time by dividing it into epochs and slots. A slot is usually a subset of an epoch and is around 20 seconds long. Each slot has its own slot leader, which generates a single block during its assigned slot. By implication, the number of slots leaders in an epoch is the same as the number of slots. Whenever a slot leader fails to generate a block in its assigned period it forfeits to do so until its re-elected.
Election of a Slot leader.
Slot leaders are predominantly selected from a group of stakeholders with more than 2% of the total stake. This group is normally referred to as electors. The election is conducted by picking out random slots to generate the blocks. Any stakeholder can be selected as a slot leader but those with more stakeholders stand better chances of being elected.
To eliminate bias and promote fairness, Ouroboros has implemented a multiparty computation system(MCP). MCP allows every elector to choose their preferred candidate using a coin toss technique. Thereafter, each elector shares its results and they eventually agree on one value.
Overall, Ouroboros is based on the assumption that the majority of shareholders are honest. The assumption holds that stakeholders with major stakes are concerned with the security of the network. Adversaries are therefore not able to break the blockchain’s persistence and liveness.
Cardano is a multi-layer protocol that comprises of foundational settlement layer and a control layer. The settlement layer acts a ledger for supporting protocols while the control/computational layer supports smart contracts and decentralized applications. This distinction is a shift from the traditional approach that involved intertwining of the settlement and computation layers. This separation enables soft forks to be conducted on the system without distorting the underlying network. The two layers of settlements and computation are connected using side chains.
Cardano settlement layer. (CSL)
Overall, the CSL is used for accounting and supporting the ledger transactions. The settlement layer uses scalable randomness to secure its encryption and authentication scheme and not PVSS as earlier stated in Cardano’s whitepaper. Cardano’s settlement layer further utilizes a network diameter to maximize the time taken to broadcast a block to all the nodes in the blockchain.
The settlement layer focuses on two major principles; a user’s balance and a user’s stakes. Whereby balance refers to the real amount of coin owned by the user and stake is the ability of the user to control the network. By delegating their stakes users are able to alter the relationship between balance and stake.
Cardano settlement layer is further divided into three group of nodes, the core nodes, relay nodes, and the edge nodes. The core nodes are predominantly slot leaders used in the creation of new nodes, they, however, do not create currency transactions. The relay nodes create a connection between the public internet and the core nodes. Finally, the edge nodes run on a user’s computers and are responsible for creating currency transactions.
Cardano computational layer. (CCL)
This layer is responsible for supporting smart contracts and decentralized applications. Cardano utilizes two testnets KEVM and IELE in the CCL. KEVM is essentially a modified version of Ethereum Virtual Machine(EVM) that conforms to the K Framework. K Framework is simply a standard required for programming languages to be formally verified and proven. KEVM is also a stack-based machine.
IELE testnet is another different virtual machine that transforms code into its own language. These testnet serve as a uniform lower-level platform for translating and executing smart contracts from high-level languages. IELE is readable by the human eye and is used for catching errors and exceptions. Like the KEVM testnet, IELE is K framework conforming. Finally, the mallet is used in the network to interact with the testnets. Mallet can also be used as a library for chain interactions in decentralized applications.
During its initial launch in 2017 around 26 million Ada tokens were released for sale, each token cost $0.00242 bringing the total amount raised to $63 million. 5 million tokens were distributed to the three partners Cardano Foundation, IOHK, and Emurgo, bringing the total supply of Ada to 31 million. Ada tokens are capped at an arbitrary 45 million hence there are 13 million more tokens to be issued through mining.
Since Cardano is in its initial phase of bootstrapping there are no coins being minted or fees being collected. However, in future, the network aims at creating a treasury fund that will be governed by ADA holders. The treasury fund will be funded using newly minted coins and the ensuing transaction fees.
Currently, the price of one Ada coin is marked at $0.074963 USD, with 31 million coins in circulation the total market cap is currently at $1.9 billion. This figure places Cardano(ADA) at position seven amongst the largest cryptocurrencies. With an average of $65 million worth of ADA traded in 24 hrs. the coin remains to be one of the most heavily traded cryptocurrency.
The figure below shows the movements in the price of ADA over the last one year.
Challenges of Cardano.
While Cardano has generally received positive reviews and feedback from experts and critics due to its unique approach to development and implementation, the project is not without its share of bottlenecks.
One of the biggest criticism leveled against Cardano is that most of its impressive features are still under development. The platform has gained significant popularity due to its current ability and its futuristic promises. The Cardano Computational Layer which has generated significant interest for its smart contracts is still being developed. Overall in terms of providing smart contracts and decentralized applications, Cardano lags far behind Ethereum. However, if the network is able to develop and install its wide variety of features and functionalities, Cardano is definitely going to be a major threat to the Ethereum blockchain dominance.
Besides, the challenge of delivering on its promises, Cardano is faced with stiff competition from Ethereum and other upcoming blockchain networks. While competition will generally keep the networks on their toes, excessive competition might be detrimental to a fledgling network. This is because the development teams are faced with increased pressure to deliver even when they do not have the requisite capacity and resources.
Another challenge faced by the Cardano network is one of governance and treasury problems. There are concerns that a group of unscrupulous people can gain control over the network to rig the system for their selfish benefits. Other possible challenges may include the slow adoption of the blockchain and the loss of value in the ADA token.
Over and above Cardano is a genuinely promising project that can achieve significant progress going into the future. Its initial impressive performance acts to indicate the inherent potential of this revolutionary project. The project has managed to address issues of privacy and scaling that had plagued other blockchains. With sophisticated proof of stake protocols, layered foundations and a security-oriented framework Cardano inspire confidence in investors, traders, and developers. With the continued developments and advancements, Cardano will continue to solve problems in the real world and those associated with other cryptocurrencies.