Public blockchain platform
Cardano is a public blockchain platform. It is open-source and decentralized, with consensus achieved using proof of stake. It can facilitate peer-to-peer transactions with its internal cryptocurrency, ADA.[4]
Cardano's development began in 2015, led by Ethereum co-founder Charles Hoskinson. The project is overseen and supervized by the Cardano Foundation based in Zug, Switzerland.[5][6] When launched in 2017, it was the largest cryptocurrency to use a proof-of-stake blockchain, which is seen as a greener alternative to proof-of-work protocols.[7]
Background
Charles Hoskinson and Jeremy Wood set out their plans for Cardano in 2015, with the platform launching in 2017.[8][9][10] Hoskinson had left Ethereum after a dispute with another co-founder, Vitalik Buterin. Hoskinson wanted to accept venture capital and create a company, while Buterin wanted to keep it as a nonprofit organization. After leaving, Hoskinson co-founded IOHK, a blockchain-engineering company, whose primary business is the development of Cardano, alongside the Cardano Foundation and Emurgo.[10] The platform is named after Italian mathematician Gerolamo Cardano, while the cryptocurrency itself is named after the English mathematician Ada Lovelace. The Ada sub-unit is the Lovelace; one Ada = 1,000,000 Lovelaces.[11]
Technical aspects
Cardano technical overview. (2019)
Atypically, Cardano does not have a white paper. Instead, it uses design principles intended to overcome issues faced by earlier cryptocurrencies such as scalability, interoperability, and regulatory compliance.[12] Cardano claims that it overcomes problems found in other cryptocurrencies: mainly that Bitcoin is too slow and inflexible, and that Ethereum is not safe or scalable.[13]
Cardano uses a proof-of-stake protocol named Ouroboros;[14] this is in contrast to Bitcoin and Ethereum, which use proof-of-work protocols (though the latter switched over in 2022).[15] Proof-of-stake blockchains use far less energy than proof-of-work chains.[15] This is achieved by eliminating the computing resources that a proof of work algorithm requires.[16] In February 2021, Hoskinson estimated the Cardano network used 6 GWh annually, less than 0.01% of the 110.53 TWh used by the Bitcoin network as calculated by the University of Cambridge.[17][18]
Within the Cardano platform, Ada exists on the settlement layer. This layer is similar to Bitcoin and keeps track of transactions. The second layer is the computation layer. This layer is designed to be similar to Ethereum, enabling smart contracts and applications to run on the platform.[13]
Like Bitcoin, Cardano uses a UTXO ledger model, though it is an extended version (EUTXO)[19][20] to facilitate smart contracts and scripting languages.[21]
"Voltaire" is the last of a series of development "eras" named after notable figures in poetry and computer science namely: Byron, Shelley, Goguen, Basho and Voltaire. The current era (Basho) focuses on scaling the blockchain. Voltaire, the final era, intends to bring voting and treasury management of the blockchain and network through previously introduced smart contract functionality. It is important to note that once Voltaire is complete IOHK intends to release the development of the network entirely to the community.[16]
Decentralized Finance
Cardano implemented decentralized finance (DeFi) services on September 12, 2021, including an upgrade to enable smart contracts and the ability to build decentralized applications (DApps).[22] Also included is Plutus, a Turing-complete smart contract language written in Haskell, and a specialized smart contract language, Marlowe, designed for non-programmers in the financial sector. Cardano's smart contract languages allow developers to run end-to-end tests on their program without leaving the integrated development environment or deploying their code.[23][24]
History
Cardano was funded through an initial coin offering (ICO).[25] Cardano reached a market cap of $77 billion in May 2021, which was the fourth highest for a cryptocurrency at that time.[26][27]
In 2017, IOHK partnered with the University of Edinburgh to launch the Blockchain Technology Laboratory.[28][29][30] The partnership with the School of Informatics in Edinburgh included six post-doctoral and professorial positions with up to 35 jobs created in total. The lab forms IOHK's international research headquarters with other partnerships including the Tokyo Institute of Technology.[31]
In March 2019, IOHK ran a free ten week Haskell blockchain development course for 30 female developers in Addis Ababa, Ethiopia.[32]
Advertising agency MBLM ranked Cardano 26th for brand intimacy out of 600 brands in August 2022, in between Ford and Nestlé and the highest rank for a cryptocurrency. Citing an MBLM partner, advertising industry magazine Ad Age said Cardano's high ranking "can likely be chalked up to the gambling element of crypto".[33]
Applications
Applications of the Cardano blockchain include:
- In 2018 IOHK signed a memorandum of understanding with the government of Ethiopia to consider the use of Cardano in its coffee supply chain.[34] The partnership with the Ethiopian government also investigate other ways to deploy Cardano in the country.[35]
- In 2019, the Ministry of Education in the country of Georgia signed a memorandum of understanding with the Free University of Tbilisi to use Cardano and Atala, IOHK's decentralized identity software, to build a credential verification system for Georgia.[36]
- In 2019, New Balance announced a pilot program on the Cardano blockchain so buyers could track the authenticity of OMN1S Kawhi Leonard basketball shoes.[37]
- In April 2021, IOHK and the Ethiopia Ministry of Education announced plans for an identity and record-keeping system on Cardano and Atala for the country's five million school pupils.[38]
- In 2021 Hoskinson began working with electronic dance music DJ Paul Oakenfold to release an album, Zombie Lobster, on the Cardano blockchain.[39]
- In 2021 IOHK, sometimes referred to as 'Input Output Global' (IOG), created a "strategic collaboration" with Dish Network to investigate the use of distributed ledger technology. The collaboration aims to improve customer loyalty programs and simplify connecting businesses with consumers. Dish Network's Boost Mobile Vice President (EVP), Stephen Stokols, cites a loyalty point system and a secure digital identity for customers.[40][41] [42] [43] [44][45][46]
- As of 2022, Hoskinson cites over 900 decentralised applications, many of which are involved in "GovTech".[47]
- Cardano's development company, IOHK, cites development in Africa with blockchain applications including: reducing corruption, provable identity/education certificates, micro-loans and land ownership documents.[47][34]
Regulation
In the United States, the proposed Digital Commodities Consumer Protection Act would treat Cardano and other cryptocurrencies as commodities, which could then be regulated by the Commodity Futures Trading Commission (CFTC).[48][49]
