In the myriad of cryptocurrencies that have appeared on the scene in the last decade, ADA, the Cardano-related cryptocurrency, is among the most successful. One of the key elements of its success is certainly the fact that Cardano, which is a blockchain platform, uses Proof of Stake as its consensus algorithm and not Proof of Work like many other cryptocurrencies including Bitcoin. Another important factor is that among the founders of Cardano there is Charles Hoskinson, co-founder of Ethereum.
Creation of Cardano
Hoskinson had left Ethereum due to a different view on the strategy with Vitalik Buterin, the former believing that it was necessary to transform Ethereum into a commercial organisation, while Buterin thought it was more convenient to continue on the non-profit line. Hoskinson, who had left Ethereum, founded Input Output HK, becoming its CEO, and in December 2016 launched the ADA token offering with the aim of raising funds to build an innovative blockchain platform that would go beyond Ethereum and the platforms that had existed until then.
According to Hoskinsons, the time had come, after the Bitcoin and Ethereum experiences, to arrive at a next-generation blockchain technology. The goal was to combine the best of what had been developed so far. The new platform would overcome the existing limitations: scalability, security, interoperability, sustainability.
Cardano therefore was designed as a better performing and more eco-friendly system than Bitcoin and Ethereum and ensured its success also thanks to the good reputation of Hoskinson who, while witnessing the failure of many projects and companies born from Initial Coin Offerings (ICOs), had already proved to have created a successful project, namely Ethereum.
By the end of the ICO, the Cardano project had raised USD 62 million. After the launch, the value of the ADA token quickly rose from USD 0.02 to over USD 1. And today, following various phases of depreciation and recovery, it stands at USD 2.35. Even more remarkable is the fact that in terms of market capitalisation, ADA ranks third among cryptocurrencies. It is only behind bitcoin and ETH, which have a capitalisation of 10 times and 5 times that of ADA respectively.
The name Cardano was a tribute to Gerolamo Cardano, a 14th century Italian medical doctor and inventor who, among many other innovations, invented the combination lock. ADA, on the other hand, derives from Ada Lovelace, a 19th century mathematician and daughter of the poet Lord Byron, who is the inventor of the first algorithm to execute on a machine. It is no coincidence that the first version of Cardano’s name was Byron.
The project and the platform
The Cardano project aimed to create a platform based on a multilayer architecture and Proof of Stake consensus algorithm. It would support also smart contracts. The Proof of Stake algorithm is much more energy-efficient than Proof of Work and is also faster to execute. Hence the predictions of better performance and scalability of this blockchain platform, and greater economy in terms of energy consumption.
The organisation of the platform is in two layers:
– a lower layer (the Cardano Settlement Layer) which deals with the recording of transactions, similar to Bitcoin
– a higher layer (the Cardano Control Layer), more similar to Ethereum, which allows the development and execution of smart contracts and Dapps, the distributed applications
The first version of the platform went live on 29 September 2017, and various updates took place in the following years. Further elements that characterise Cardano are the Haskell programming language, which is based on mathematical principles and functions and therefore less prone to human error and easier to verify, and the Daedalus wallet, which not only manages ADA tokens but also acts as a node.
Three independent entities govern Cardano: the Cardano Foundation, OHK, Hoskinson’s company and Emburgo. Each of the three organisations has specific tasks:
– Cardano Foundation based in Switzerland, is a non-profit organisation that fosters the adoption of the protocol and its ecosystem.
– Most of the research and development is carried out by IOHK, a commercial technology organisation that works with researchers from various universities around the world to develop and maintain the technology.
Finally, Emurgo is a multinational company that develops and supports commercial solutions based on Cardano.
The scientific mind behind Cardano and its Proof of Stake Ouroborous consensus algorithm is Prof. Aggelos Kiayias who currently holds a chair in Cyber Security and Privacy at the University of Edinburgh. The Cardano’s governing organisations have numerous relationships and collaborations with universities around the world. This gives a scientifically proven value to the innovations that are in the platform. It gives them an aura of greater seriousness and reliability.
Cardano has undergone several updates since 2018. Eventually, the introduction of the smart contract functionality on Cardano’s public blockchain took place in recently with the Alonzo fork. In fact, smart contracts were not available in the first four years of the platform’s life. This had led to much criticism of the governing organisations.
According to Cardano’s developers, what has been done is an important step. However, they are aware that much work remains to be done. The smart contract system has to work well, the first Dapps encountered problems. It is also necessary to create an ecosystem of distributed applications in the field of DeFi based on the platform.
The Cardano project has certainly been a success despite the delay in releasing key features. ADA has a large capitalisation and is among the cryptocurrencies that had the greatest growth in value in recent years. With the release of smart contract support, it will become clear whether there will be a migration of DeFi apps and non-fungible tokens (NFTs) to Cardano. Those applications now face expensive and slow transactions on Ethereum.