A Quick Intro to Cardano
Cardano is a third generation cryptocurrency that wants take all the best features and lessons learned from the first two generations (Bitcoin and Ethereum) and add lots of new concepts and technologies on top of it. Rather than use the proof-of-work model where miners compete against each other by solving complex math problems, Cardano uses the proof-of-stake model where validators stake their tokens in order to be randomly elected to mint the next block. It takes a scientific approach by having all its work go through some notion of peer review and is built with high-assurance formal development methods. Cardano believes the third generation of cryptocurrencies is all about three principles scalability, interoperability, and sustainability.
Scalability
To solve the scalability issue seen in other blockchains where transactions per second is very low, Cardano has created a proof-of-stake protocol called Ouroboros. Ouroboros uses epochs which divide into slots and decide who validates certain blocks in the blockchain. Epochs can also be ran in parallel so when the network is experiencing high usage, its capabilities aren’t compromised.
Additionally, the team has designed a technique called RINA to handle network bandwidth issues as the network grows to handle thousands of transactions per second. RINA splits the network into subnetworks where each node is part of a specific subnetwork and can communicate with other subnetworks if needed.
Interoperability
The focus on interoperability comes from the teams thinking that there won’t be one token to rule them all. Instead there will be many blockchains that are here to stay as well as legacy financial systems and because of this Cardano plans to be the internet of blockchains. If successful, Cardano will be able to watch and understand what’s happening in other blockchains. Furthermore, when someone wants to do business in the legacy world there would be a way to elevate the transaction from a standard cryptocurrency transaction to one that a bank would accept.
Sustainability
To ensure Cardano is here in the future it plans to create a treasury that receives a very small percentage of all transactions. These funds ultimately will be used to finance all future work on Cardano. In addition to this, the project plans to create a system where anyone can create proposals for Cardano and a voting mechanism where the community, token holders, can decide which proposals get funded. See some active campaigns here and check out results from previous rounds of funding:
Eventually this voting system will also be used to determine the overall direction of Cardano.
Each day the Cardano ecosystem continues to grow as more and more people use it to build their projects. At the time of writing this article Cardano is the sixth largest cryptocurrency by market cap. Assuming the Cardano team can execute on its big vision, one can argue that it can eventually become the largest cryptocurrency by total market cap.
