Cardano is poised to be the king of scalability, but how long before it’s the king of crypto?
The team behind Cardano doesn’t believe there will ever be a “king of crypto” but rather a network of different currencies that operate for different purposes that collectively replace the fiat currency system that excludes so many from the market. This may be contrary to the rumor mill fueled by stock and currency investors who are used to using hyperbolic language to incite market activity. Traditional investment types understand the value of crypto, but not its implications.
Investors still believe that they will be able to push a single unifying global currency. They lack the sight of the failures of the world’s governments and centralized banking system caused by the push for a single world currency. Cryptocurrencies are built on the idea of decentralizing control of the economy. Cardano takes that a bit further than well-known coins like Bitcoin and Ethereum.
Ethereum co-founder and founder of Cardano, Charles Hoskinson, used the lessons learned from Bitcoin development and his experience with Ethereum to craft the roadmap of development for Cardano. Hoskinson saw the great obstacle of problems caused by scaling Bitcoin and Ethereum’s legacy protocols. He believed that the best way to solve the problem was to develop a new system that could solve two sets of problems: conceptual problems and actual problems.
Solving conceptual problems with blockchain technology has far-reaching and global consequences. Hoskinson believes that the smart contract system in Cardano isn’t only good for use as a currency, but also as a method of governance and rule done in a fundamentally different way. While the company’s main focus is on building infrastructure and completing Cardano’s development roadmap, the goal of Cardano blockchain technology is to be openly available for use by anyone anywhere with easy access.
How blockchain and smart contracts are used to govern is still a work in progress. Blockchains are essentially public trust engines. In order to be successful, they must function appropriately and efficiently as well as gaining the support and trust of enough of the population to survive. So far, Bitcoin and Ethereum lead cryptocurrency in adoption with Bitcoin as the reigning leader. Mainstream support for Bitcoin has come so far that banking institutions now offer a bitcoin debit card or bitcoin credit card option.
Cardano offers a more refined blockchain technology to make utilizing blockchain technology to manage digital voting systems, governance methods, and currency transactions a more secure and trustworthy process. Cardano and its native token ADA can provide Africa countries with a more stable monetary alternative to traditional banking. With this in place more countries would be able to utilize Crypto Cards in Africa.
The core design of Bitcoin’s protocol was made with such simplicity that it requires offsite infrastructure and multi-layered protocols to support scaling. This along with the reliance on the current proof of work consensus model puts unintended limitations on use and sustainability. Ethereum added upon the Bitcoin concept and implemented smart contracts, but still deals with difficulty scaling.
To lower the energy costs and speed up the consensus algorithm, Ethereum has begun the process of switching from proof-of-work which requires exhausting computational resources to work with extremely difficult mathematical equations to verify a transaction’s authenticity to proof-of-stake. Proof of stake works completely virtually. Instead of making use of ‘miners’, there are validators. Validators place a stake of cryptocurrency on blocks they feel will be added to the chain next. When it does, the validator receives a block reward based on their stake.
Cardano takes the lessons learned from Bitcoin’s simplicity and Ethereum’s push to proof-of-stake and combined them to create faster and less energy-consuming ledger transactions. Cardano implemented a dual-layer system(settlement layer and computational layer) and proof-of-stake into their five-part roadmap from the star. In 2020, launched their Shelley phase which brought their proof-of-stake protocol Ouroboros online.
Ouroboros is the key process that allows lower energy cost, faster transaction processing, easier management by validators(miners), and smooth scalability. It is designed as a modular adjustable process. It breaks each block into sections or ‘epochs’. A set of random numbers is created based on the distribution of tokens. These numbers are used to elect slot leaders. Slot leaders are essentially the same thing as bitcoin miners.
Unlike bitcoin miners, slot leaders use far less intensive computational power. This means one slot leader can maintain multiple blocks and chains. Ouroboros also allows epochs to be run in parallel. So not only can a slot leader work with multiple blocks and chains, they can do it at the same time. Cardano’s Ouroboros effectively increases transactions per hour exponentially as well as allows for easy scalability.
This year, their next phase, Goguen, has already begun adding support for smart contracts and issuing ADA, Cardano’s crypto token. Smart contracts are digitally facilitated traditional contracts. The fundamental difference lies in digital verification, control, or execution of an agreement being performed automatically rather than by a third party.
This step is what brings about the cryptocurrency hype. Cardano’s smart contracts are meant to help build a complete development cycle for decentralized applications. With the decentralized core provided by Ouroboros, Goguen is the step that will allow Cardano to be used as a platform for creating cryptocurrencies and tokens. They are working to bring Plutus, a smart contract development language and execution platform that uses Haskell, and Marlowe, a higher-level programming language meant for non-programmers, to fruition.
Smart contracts are thought to be a world-changing methodology. Agreements can be made and kept automatically without the need for a third-party broker or intermediary to negotiate and validate it. This allows for completely virtual, painless, and fast work agreements and transactions.
The biggest obstacles for smart contracts are confidence in their use and proper functionality. Both of these will be easily overcome the more smart contracts are utilized. Once Plutus is available for use, smart contract functionality will become efficient and available quickly.
The fight for the best blockchain is ongoing. However, I’ve often heard three names for a new leader in the crypto space: Ethereum, Cardano, and PolkaDot.
Cardano is founded by the co-founder of Ethereum. He has taken the time to scientifically pinpoint the shortcomings of previous blockchain technology and systemically devised a core structure that eliminates or minimalizes the complications of first and second-generation blockchain technologies.
As second-generation technology, Ethereum has the potential as a platform to be more widely useful than Bitcoin. However, Cardano was built with knowledge that Ethereum did not have in its inception. Hoskinson believes that both will end up surviving and serving a purpose even if he refers to Cardano as third-generation blockchain technology built upon Ethereum.
I don’t want to wash away anyone’s die-hard dedication to their blockchain preferences, but PolkaDot does not have the scalability to be a true competitor to Cardano. PolkaDot does hold a great token value compared to a lot of altcoins. It only has a third of the market cap of Cardano. Ultimately, Cardano will be able to outpace and scale beyond what PolkaDot can achieve. Those numbers are also only from current standings. The next few years of Cardano development will change the playing field more to their liking.
The stark differences between Bitcoin and Cardano have already been loosely defined above. That doesn’t mean the Bitcoin Maximalists will agree. There is an audience for Bitcoin that are die-hard fanatics. When it comes to currency, confidence matters. There aren’t many blockchain technologies that can boast a crypto debit card or crypto credit card. Bitcoin can. Its adoption rate by mainstream services and banking leads the way for cryptocurrencies across the board. For the same reason, Bitcoin maximalists will argue Bitcoin is king to the bitter end.
I don’t see Bitcoin disappearing from the market anytime soon. It was first in and best dressed. It also already has brand recognition that can give it amazing staying power. It may be annoying, but some people refer to all cryptocurrencies as ‘bitcoin’.
It won’t rule the world, but it will manage and facilitate a large portion of it. Just how much influence it will have over the world will become clearer as the fundamental roadmap for Cardano is completed. Once it is fully functional, there may be even more useful tasks it can be aimed at. What we know for certain, is that Cardano is here to stick around. When it’s ready, it will shake up the world.
This is an opinion article by Club Swan a lifestyle membership club designed for cryptocurrency enthusiasts. Club Swan member benefits include travel discounts, concierge services, and the ability to seamlessly buy, sell, send, and receive cryptocurrency. Club Swan members are eligible to receive globally accepted high limit payment cards in plastic, aluminum, stainless steel and gold.