The First Two Generations of Blockchains and Their Problems
Blockchain and cryptocurrency are defined as having three existing generations.
The first generation of blockchain and cryptocurrency technology started with the conception of Bitcoin. The Bitcoin project introduced fundamental technologies such as the blockchain and proof-of-work to the world. Hence, as the Bitcoin project scales, potential issues become apparent with its underlying implementation, such as the slow run time of its proof-of-work algorithm.
The second generation of blockchain and cryptocurrency technology entails the creation and evolution of cryptocurrencies such as Ethereum. Therefore, enabling the creation of smart contracts and extensive decentralized applications while leveraging the merits of blockchain and decentralized technology. Projects such as Ethereum follow a “move fast and break things” philosophy. In other words, new and exciting features are implemented quickly but may not follow an entirely rigorous peer-review of its implementations.
The Third Generation and The Solution
Another, Cardano, is the platform that describes itself as the “third generation” of blockchain technology.
Its foundation and motivation are primarily an improvement on all lessons taught from previous generations of blockchain technologies. Therefore, its aim is to ultimately build a comprehensive set of tools that will allow for greater scalability and accessibility of existing cryptocurrency concepts and technologies. As a result, improving global access to financial assets. Also, creating an infinitely scalable blockchain that will allow for user-created assets and smart contracts (much like Ethereum). The platform also places an emphasis on the importance of accommodating for financial regulations that may ultimately help increase the adoption of decentralized cryptocurrencies and assets.
Furthermore, the fundamental development philosophy behind Cardano involves a high degree of peer-review and high-assurance engineering.
Because of this, any concepts being implemented onto the platform must be peer-reviewed by a team of accredited individuals. For example, professors and engineers. Furthermore, the development of any code will be of high assurance. Therefore, it will be tested and mathematically verified to standards that are regularly seen in mission-critical and life-dependent software. The Cardano platform is also primarily developed in the Haskell programming language, which is a purely functional language. This provides additional benefits such as rigorous mathematical verifiability of code and a high degree of abstraction.
Ouroboros, Cardano’s Proof-of-Stake Algorithm
Cardano implements an iteration of the proof-of-stake algorithm to secure its network: the successfully peer-reviewed Ouroboros protocol1. Cardano’s native token that will be used for staking and settling transactions is called Ada (ADA).
In contrast, Ouroboros is much like other proof-of-stake algorithms. Similarly, Ada token holders will automatically be a part of the pool of potential validators of the network. Blocks are generated in 120 second slots on the network. Subsequently, the network deterministically chooses a leader for this slot from the pool of potential validators, dubbed the slot leader. After that, this leader now has the ability to publish one new block to the network within their allotted slot time. Similarly, like other proof-of-stake algorithms, the network then ensures the published block is valid therefore punishing malicious actors by revoking their staked currencies.
Cardano’s Layered Design
The development process of the Cardano network keeps in mind of the importance of network layers. Hence, allowing for greater scalability and integration of user-created assets and networks.
The primary layer that the Cardano network will maintain is the Cardano Settlement Layer (CSL). This layer acts as the fundamental layer that will manage staking of the Ada currency under the proof-of-stake algorithm while both establishing the standard for and allowing settlements of transactions conducted on a potentially limitless number of sidechains.
The second fundamental layer of the Cardano network is the Cardano Computational Layer (CCL). This layer is an abstract one that will allow for user-created functionality, assets, and projects to leverage the Cardano network. Therefore, sidechains can be created at this layer that each have their own set of rules that work seamlessly with standards set out by Cardano. For example, all instances of the CCL must use Ouroboros as the consensus algorithm and settle on the CSL layer. As a result, this allows for highly extensible projects to be created on the network that can be made to comply with the regulations of their intended jurisdictions.
For example, a financial services network layer that must comply to the United State government’s financial regulatory laws by tracking certain user data can be created as an instance of the CCL, without having to manipulate any fundamental aspect of the settlement layer.
Where can you buy ADA?
ADA can be found on several major global cryptocurrency exchanges. For example, Bittrex, Binance, BitMEX, and UPBit. A full list of exchanges that sell ADA can be found on the Cardano site.
Where can you store ADA?
ADA is stored exclusively in the Daedelus Wallet, which is the official open-source wallet of the Cardano wallet. This wallet has been created to be fully extensible with plugins and with a developer-friendly ReactJS framework. Finally, the Daedelus wallet will also have support for both Bitcoin and Ethereum Classic in the near future.
|What is it?||Token [Cardano Whitepaper]|
|Inventor||Input Output Hong Kong (IOHK), CEO Charles Hoskinson|
|Went live||September 2017|
|Supply Cap||31,112,484,646 ADA, 100% of which has already been distributed|
|Smallest Unit||1 ADA|
|Purpose||Enable the creation of an infinite number of financial networks layers to facilitate global
financial access and trade
|Utility||Used to secure the network as a part of its Ouroboros proof-of-stake algorithm|