Cardano's development began in 2015, led by Ethereum co-founder Charles Hoskinson. The project is overseen and supervised by the Cardano Foundation based in Zug, Switzerland.[6][7] 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.[8]
After leaving Ethereum in 2014 Charles Hoskinson and Jeremy Wood set out their plans for Cardano in 2015.[9][10][11] 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. Woods and Hoskinson co-founded the business IOHK to develop blockchains for use by corporations, governments, and education institutions.[11]
Cardano was initially released to the public in 2017.[3] That year, IOHK partnered with the University of Edinburgh to launch the Blockchain Technology Laboratory.[12][13] The lab had six post-doctoral and professorial positions with up to 35 jobs created in total, and was led by Aggelos Kiayias, developer of the Ouroboros protocol.[14]
Cardano reached a market cap of $77 billion in May 2021, which was the fourth highest for a cryptocurrency at that time.[15][16]
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".[17]
Design
Cardano technical overview. (2019)Cardano price volatility over time. (as of February, 2023) [15][18]
Governance
Cardano is controlled by three entities:
Cardano foundation aims to standardize and promote the ecosystem (based in Switzerland).
IOHK: an engineering company responsible for building the Cardano blockchain.
Emurgo: responsible for commercial applications.[3]
As of 2021, Frederik Gregaard is known to be the CEO of the Cardano Foundation.[19]
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.[20] Cardano differentiates itself from many other cryptocurrencies by focusing on scientific research and working together with universities.[3][21]
Technical design
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.[22] 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.[23] Like Bitcoin, Cardano uses a UTXO ledger model, though it is an extended version (EUTXO)[24][25] to facilitate smart contracts and scripting languages.[26]
Cardano uses a proof-of-stake (PoS) protocol named Ouroboros;[27] this is in contrast to Bitcoin and Ethereum, which use proof-of-work protocols (though the latter switched over in 2022).[28] Proof-of-stake blockchains use far less energy than proof-of-work chains.[28] This is achieved by eliminating the computing resources that a proof of work algorithm requires.[29] 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.[30][31][3]
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 and is designed to be similar to Ethereum, enabling smart contracts and applications to run on the platform.[23]
The cryptocurrency Ada (ADA) can be stored on Cardano's native digital wallet named "Daedalus".[3] The wallet downloads a full copy of the entire Cardano blockchain transaction history. Users face the risk of losing access to funds if the wallet's seed phrase is lost or stolen. The review in Investopedia highlighted the wallet's security and noted the lack of: mobile support, support for other tokens, and "onramp" to purchase assets with money.[32]
Development phases of Cardano, or "eras", are named after notable figures in poetry and computer science: Byron, Shelley, Goguen, Basho and Voltaire. The first three stages implemented a basic blockchain, and then implemented decentralisation and smart contracts. The Basho era focuses on scaling the blockchain.[33] Voltaire, the final era, adds voting and treasury management functionality to the blockchain.[34]
Once Voltaire is complete IOHK has said it plans to release the development of the network entirely to the community.[29]
As with other proof-of-stake cryptocurrencies, Cardano offers "staking", which allows token holders to set-aside (delegate) tokens to potentially "validate" transactions on the same blockchain (see Figure 1). The quantity of tokens staked corresponds with the likelihood of being chosen to validate a transaction, and thus be rewarded by the algorithm with more of the same token.[35][36] Cardano's Daedalus wallet allows for staking.[32] For Cardano, users participate in "staking pools" with other token-holders.[29]
Figure 1: Epoch schedule for the Cardano blockchain. In Ouroboros time is divided into slots of roughly 20 seconds, with epochs (aggregations of slots) lasting approximately 5 days. (2021) [37][38][39]
Applications
Cardano enthusiasts gather for Consensus conference, 2022.ADA symbol.
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.[40] The partnership with the Ethiopian government also investigate other ways to deploy Cardano in the country.[41]
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.[42]
In 2019, New Balance announced a pilot program on the Cardano blockchain so buyers could track the authenticity of OMN1S Kawhi Leonard basketball shoes.[43]
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.[44]
In 2021, Hoskinson began working with electronic dance music DJ Paul Oakenfold to release an album, Zombie Lobster, on the Cardano blockchain.[45]
The Cardano blockchain was cited in Quartz as having the potential to help citizens in Zanzibar, Ethiopia and Burundi get digital IDs.[47]
World Mobile Token (WMT), a project built on Cardano, offers remote mobile network access in Africa with approximately 150 nodes in East Africa (2022). Mark Cuban is cited as being skeptical about the project and Cardano adoption.[48]
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).[49] Also included is Plutus, a smart contract language written in Haskell, and Marlowe, a language designed for non-programmers in the financial sector.[50][better source needed]
Legal status and regulation
In 2023, the Securities and Exchange Commission (SEC), a US regulator, issued a complaint against the cryptocurrency exchange Kraken for offering unregistered securities (in violation of the Securities Act) and promising returns on investment for staking in multiple proof-of-stake cryptocurrencies, including Cardano.[36] Without any admission of wrongdoing, Kraken agreed to pay a fine of $30 million and halt its staking program in response.[51][36]
In June 2023, the SEC sued Binance. Among the allegations was that Cardano was a security and so the cryptocurrency exchange was trading illegally in the US.[52] IOG made a statement in response claiming that the filing was inaccurate and asserting that Ada was not a security.[53] The Ada price fell from $0.38 to $0.26 in a day on the FT Wilshire index. Both the Wall Street Journal and The Times linked a fall in the price of Cardano – 19 per cent in June – and a slide for other major coins to the SEC's actions.[54][55]
^"Bitcoin's Smaller Cousins". Bloomberg L.P. 20 December 2017. Archived from the original on 26 June 2018. Retrieved 25 December 2018. Cardano, backed by the Zug, Switzerland-based Cardano Foundation, is a decentralized public blockchain that aims to protect user privacy, while also allowing for regulation
^"ICOs explained". CNBC. 6 October 2017. Retrieved 25 December 2018. ethereum co-founder Charles Hoskinson says it has become increasingly more challenging to regulate this new asset class" and "ICO market could crash
^ ab"Cardano: a rising cryptocurrency". Mashable. 24 February 2018. Retrieved 25 December 2018. Cardano claims it will solve most of the issues that plague well-established cryptocurrencies such as Bitcoin and Ethereum
^Chakravarty, Manuel M. T.; Chapman, James; MacKenzie, Kenneth; Melkonian, Orestis; Peyton Jones, Michael; Wadler, Philip (2020). Bernhard, Matthew; Bracciali, Andrea; Camp, L. Jean; Matsuo, Shin'ichiro; Maurushat, Alana; Rønne, Peter B.; Sala, Massimiliano (eds.). "The Extended UTXO Model". Financial Cryptography and Data Security. Lecture Notes in Computer Science. Cham: Springer International Publishing: 525–539. doi:10.1007/978-3-030-54455-3_37. ISBN978-3-030-54455-3.
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