Article published by tradingonlineguide.com In 2018 new cryptocurrencies and projects have appeared. One of the most interesting ones to emerge is Cardano, but what is Cardano? In this article we will explain step by step what this new project is about and why it’s considered one of the most interesting news topics in the crypto world.
What is Cardano ?Cardano is a new smart contract platform, very similar to Ethereum which offers more scalability and security than the first virtual platform thanks to its layered structure. Cardano has been invented by Charles Hoskinson who co-founded Ethereum. While Ethereum is one of the second generation cryptocurrencies and has its limits, Cardano is born with the goal the improve the Ethereum concept and become the perfect form of a smart contract platform. There are 3 different organisations fully working on the Cardano development:
- The Cardano Foundation
Okay, so what is Cardano exactly?Cardano is a smart contract, so it allows a situation where two people can exchange some cryptocurrencies (i.e. Bitcoin), whilst also having some conditions to respect. For example: Mr. White gives 10 Bitcoins to Mr. Green, but Mr. Green has to achieve some goals to respect the deal (smart contract). A smart contract however has some limits:
- Separation in different layers;
- Development of a decentralized funding mechanism for future work;
- Long-term view;
- Bringing stakeholders closer to the operations and maintenance running of Cardano;
- Finding a healthy middle ground for regulators to interact with commerce without compromising some blockchain core principles.
1- Cardano’s elements: ScalabilityScalability is a very difficult concept, but we will try to make it as simple and understandable as possible. What makes Cardano unique is its layered structure. This structure is very relevant to make Cardano scalable. The security of its transactions, or better the transactions happening on its platform, are secured by different controls and processes happening across different layers where the information is not shared from one layer to an other. To understand better the concept picture a string and divide it in 3 different parts. When a transaction moves from the end of the first part and enters into the second part, the information gathered and controlled in the first part will remain there and in the second part the transaction will be processed under a new independent system. This is a new concept because in Ethreum at the moment the security controls are made just in one single phase, so only 1 string – not divided.
2- Cardano’s elements: InteroperabilityOne of the most problematic topics related to blockchain and mainly ICOs last year were compliance and communication with external entities to blockchain. For intance when a transaction was made, and a person exchanged Bitcoins to Ethereum or viceversa, it was really difficult to know where those coins came from because of the privacy concept behind cryptos; and above all it is very difficult to communicate between systems which speak a different language (codes). Along with this concept, there is still a real divide and difficulty in communication between real entitites (i.e. banks) and virtual entities. This case has become very evident with ICOs: when investors want to fund an ICO and buy some of their Tokens in exchange of money, then for the ICO is very difficult to store the fund in a bank without giving an explanation where that money comes from. As we know, this last point is almost impossible to do in the crypto world where everything is decentralized and private, (there is no need to share own anagraphic datas and documents to trade and own cryptocurrencies.) Cardano is aiming to solve this problem and become the platform where every crypto entity can openly communicate with each other and external entities too. On top of that it is also trying to conform to all the compliance rules existing: KYC (Know Your Customer), AML (Anti Money Laundering), ATF (Anti Terrorist Financing), etc. By doing this the platform is soon going to implement the meta-attribution of every transaction, which means knowing who is behind every trade in order to fulfill the above mentioned compliance rules.
3- Cardano’s elements: SustainabilityAt the moment one of the biggest questions about Cardano is: what is Cardano ‘s future? How long is it going to be financed for? Today ICOs like Cardano are financed in 2 different ways:
- by a number of different investors buying Tokens
- by patronage(one single investor owning all the Tokens and financing the whole project)