Cardano is a smart contract platform for financial applications.
Cardano started in 2015 with a few simple principles. Inspired by Ethereum, Cardano team wanted to make a platform with smart contracts. They relied on the knowledge from the academic environment and informational security specialists to make a truly secure system.
While having smart contracts makes Cardano look like another Ethereum clone, it has several key features.
First, Cardano separates accounting and computing. In Ethereum, smart contracts and EVM regulate both who owns the money and how the money is transferred. That may be unnecessary complex, as everything relies on one big system. In Cardano, there are Cardano Settlement Layer (CSL) and Cardano Computing Layer (CCL).
CSL implements accounting in Cardano. In other words, it defines who owns the coins. CSL has a scripting language. Unlike Bitcoin, which also has a scripting language, CSL is domain-specific, which means it has a set of operations created specifically for money settlement operations. This language allows conducting most of the transactions, while still looks easy and accessible.
CCL represents smart contracts in Cardano. It is a fully functional decentralized computer that runs on every node and can execute arbitrary programs. CCL is still a work in progress, as Cardano team does research to make this layer effective in terms of security and clarity. Developers plan to support both Solidity and Plutus, Cardano-specific programming language.
Second, Cardano relies on a proof-of-stake algorithm called Ouroboros. Ouroboros was designed by academic cryptographers and was peer-reviewed. This is one of the most reliable PoS algorithms. Ouroboros will be used to validate both CSL and CCL transactions.
Third, Cardano tries hard to make a protocol implementation error-prone. The code is written in Haskell. Haskell is a functional language and fits perfectly to describe mathematical expressions presented in the white paper. It has strong typing, which allows static code analysis. Furthermore, every proof covered in the white paper is machine checked.
Fourth, Cardano has a funding system, which is similar to the Dash proposal system. There is a decentralized trust fund. The goal of this fund is to reward those who make Cardano more functional and accessible. Makers can propose improvements, and other users can vote on whether these improvements are valuable to Cardano.
Cardano also plans to implement on-chain governance. What this means is that users will be able to vote on major improvements and hard forks by the means of the blockchain. Many cryptocurrencies had the situation where it was unclear what to do next and the voice of the crowd was required to make a decision. For example, Bitcoin had a vote on whether to adopt SegWit. After the DAO hack, Ethereum team organized a vote on whether or not the money of hackers should be frozen. Cardano wants to make a simple and convenient system to conduct votes like that. That way, any user will be able to know that there is an active debate, make a vote and be sure that the voting will be fair and the majority will decide the future of the project.
Cardano will support the KMZ protocol for sidechains. This will allow moving coins from Cardano to any other chain that also supports this protocol, thus providing interoperability.
Cardano plans to support multiple signature schemes. There are two reasons for that. First, every signature scheme eventually becomes weak and easy-to-attack. This usually happens because computational abilities of PCs are always rising. In the event of strong quantum computers, all modern widely-used signing algorithms will become useless. Second, some organizations accept only one specific algorithm for their operations.
Cardano also works on enabling user-created fungible assets. These assets should be interoperable with Ada, native Cardano token, and enjoy the same level of security, while not congesting the blockchain. This will likely to be done via the network partitioning, where users will be able to decide what coins they want to keep track of.
As almost every cryptocurrency, Cardano has potential problems with scalability. Cardano plans to solve them by selecting trusted quorums of nodes for a short period of time. These quorums, selected via PoS, can work as centralized servers and thus require fewer resources than fully decentralized consensus. That quorums are not permanent, and bad quorum participants won’t be selected again.
There are 3 organizations involved in Cardano development: Cardano Foundation, IOHK, and Emurgo. Cardano Foundation sets the vision for the project, promotes the technology, and builds the community. IOHK works on research and development of Cardano. Emurgo is working on integrating blockchain technologies into working businesses and investing in relevant startups. All 3 organizations are working together and cooperate when needed. For example, Cardano Foundation serves as an auditor of IOHK’s work, reviewing source code, documentation, and making sure that designed protocols satisfy claims made in papers.
- October 1, 2015—November 13, 2015: The first period of voucher distribution. Vouchers were then converted into Ada tokens at network launch. cardano.org
- September 27, 2016: Initial commit on Github. github.com
- October 16, 2016—February 8, 2017: The fifth, and last, period of voucher distribution. cardano.org
- June 16, 2017: The paper describing Ouroboros, proof-of-stake algorithm used by Cardano, was accepted at Crypto 2017. econotimes.com
- September 29, 2017: The launch of Cardano Settlement Layer mainnet. twitter.com
- February 8, 2018: The launch of Sp8de public sale, the first crowdsale of the token that will run on Cardano. twitter.com