Coin Highlight

Coin Highlight: Cardano

6 minutes

History

Cardano began development in 2015 and was finalised in 2017 by Charles Hoskinson. A co-founder of Ethereum, Hoskinson left the project after reported disputes between himself and Vitalik Buterin, another Ethereum founder. After leaving the Ethereum project, Mr Hoskinson co-founded IOHK, a blockchain engineering company that's main focus is the development of Cardano. Cardano uses Proof-of-stake protocols on its blockchain, this is named ouroboros. This is in stark contrast to ETH and BTC which both use proof-of-work chains. As such this makes Cardano an interesting alternative to the traditional top two coins of ETH and BTC.

Purpose

As described by the Cardano team and Charles Hoskinson, Cardano's mission is to provide an environmentally sustainable blockchain network that is also more scalable. This is done by depending less on a high amount of energy consuming miners. The most important way this is completed is the proof-of-stake mechanism mentioned earlier. When using the Cardano network, ADA users can participate in verifying transactions on the blockchain. This is made possible by ADA owners staking their holdings with other 'pool' operators. These 'pool' operators then act as traditional miners by processing transactions which in turn creates new blocks.

Features

One of the main differences from BTC, ETH and other coins is the philosophy behind Cardano. This being, that the coin and the technology it was built on, have been based around peer-reviewed research. This research was aimed to ensure Cardano hits three major goals: Scalability, interoperability and sustainability.

Cardano meets the sustainability benchmark due to its implementation of proof-of-stake instead of proof-of-work technology. Proof-of-work blockchain can be slower to process transactions due to the amount of computing power that can be required. Another argument suggests Proof-of-Work is not as purely decentralised as it may seem. As the difficulty of proof-of-work increases, the amount of power required does as well. Essentially meaning that only those who can afford high powered machines or more powerful application-specific integrated circuits computers have a chance at entering the Bitcoin mining market. In the case of Cardano, Proof-of-stake has been implemented to avoid this issue.

There is also a large and experienced team working behind the development of Cardano. The development team behind it, IOHK or Input Output Hong Kong, were founded in 2015 by Charles Hoskinson and Jeremy Wood, Charles being a co-founder of Ethereum. IOHK rely heavily on the academic world and peer reviewed reports when it comes to development positions.

Under the Hood

The main feature of Cardano is their use of Proof-of-Stake. A basic layout of Proof-of-Stake is as follows; Firstly the creator of a new block is chosen, this depends on the blocks wealth. Unlike in proof-of-work, there are no block rewards for miners, instead Proof-of-Stake miners receive the transaction fee. This ends up making the process thousands of times more cost effective compared to the enormous amount of processing power required to mine in a Proof-of-Work system.

Applications

Currently ADA has multiple different uses. Many of these relate to using the Cardano network in different circumstances and professions. The Cardano blockchain is currently being used to authenticate pharmaceutical products, and this is being done in order to avoid counterfeit medications. Also in the agriculture sector, Cardano technology could provide very reliable and sustainable supply chain tracking for farmers around the globe. Not only this, but ADA has a market capitalization of close to $90 billion. This puts ADA behind only ETH, and BTC. ADA is looking to become a staple of the crypto space and should be watched into the future.

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