Cardano is an open sourceproof-of-stake blockchainproject that began in 2015 to address existing blockchain challenges in thedesign and development of cryptocurrencies. It aims to provide a more balancedand sustainable ecosystem that better accounts for the needs of its users aswell as other systems seeking integration.
The first generation of blockchains (like Bitcoin) offered decentralized ledgersfor secure cryptocurrency transfer. However, such blockchains did not provide afunctional environment for complex deal settlement and decentralized application(DApp) development. As blockchain technology matured, the second generation(like Ethereum) provided more enhanced solutions for writing and executing smartcontracts, application development, and the creation of different token types.On the other hand, the second generation of blockchains often faces issues interms of scalability.
Cardano is conceived as the third-generation blockchain as it combines theproperties of the prior generations and evolves to meet all the arising needs ofusers. When comparing blockchain properties, many aspects should be considered.Thus, the best solution must ensure the highest security, scalability(transaction throughput, data scale, network bandwidth), and functionality(besides transaction processing, the blockchain should provide all means forbusiness deal settlement). Moreover, it is important to ensure that blockchaintechnology is constantly developing in terms of sustainability and isinteroperable with other blockchains and financial institutions.
To address these needs, Cardano has been built focusing on such core conceptsas:
- Scalability – ensures that the Cardano network is capable of processing anincreasing number of transactions as user demand grows. Scalability alsoprovides higher bandwidth capabilities to allow transactions to carry asignificant amount of supportive data that can be easily managed within thenetwork. For these needs, Cardano is implementing various techniques (likedata compression for instance), and introduces such scaling solutions asHydra andMithril, for example. Read more about theresearch underpinning Cardano's scalability here.
- Interoperability – ensures the most multi-functional environment forfinancial, business, or commercial operations by enabling users to interactwith different blockchain systems. Cardano aims to support cross-chaintransfers, multiple token types, and commonly used smart contract languages.Read more about the concept ofpartner chains.
- Sustainability – designing a proof-of-stake blockchain means it is vitalto ensure that the system is self-sustainable. To drive growth and maturity ina truly decentralized manner, Cardano is built to allow the community tomaintain its continuous development by participating, proposing, andimplementing system improvements. This is now being implemented throughCIP-1694 on-chain governancemechanisms.
Cardano advantages
- Academic research – formal methods, such as mathematical specifications,property-based tests, and proofs, are the best way to deliver high assurancesoftware systems and give confidence to users for the management of digitalfunds. Cardano has been built using formal methods to achieve strongguarantees on the functional correctness of core components of the system. Allof the research and technical specifications that underpin Cardano arepublicly available, and all Cardano development activity is published online.
- System design – Cardano is written in Haskell, a secure functionalprogramming language that encourages building a system using pure functions,which leads to a design where components are conveniently testable inisolation. Advanced features of Haskell enable employing a whole range ofpowerful methods for ensuring code correctness, such as basing theimplementation on formal and executable specifications, extensiveproperty-based testing, and running tests in simulation.
- Security –Ouroboros(the Cardano proof-of-stake protocol) establishes rigorous securityguarantees; it was delivered with several peer-reviewed papers presented intop-tier conferences and publications in the area of cybersecurity andcryptography.
- Energy efficiency – Cardano is a proof-of-stake blockchain. In contrast toproof-of-work blockchains,Cardano requires much less energyand computational power. The Bitcoin network is secured through computersdoing ever-more-energy-intensive computations – proof of work – which isunsustainable in the long term. Cambridge University has an online tool thatshows the computers powering Bitcoin already consumemore electricity than some countries, likeSwitzerlandfor example.
- Seamless upgrades – traditionally, blockchains upgrade using hard forks.When conducting a hard fork, the current protocol would stop operating, newrules and changes would be implemented, and the chain would restart – with itsprevious history being erased. Cardano handles hard forks differently. Insteadof implementing radical changes, the Cardanohard fork combinator technologyensures a smooth transition to a new protocol while saving the history of theprevious blocks and not causing any disruptions for end users.
- Decentralization – Cardano is maintained by over 3,000 distributed stakepools that are operated by the community. All blocks and transactions arevalidated by network participants without any reliance on a centralizedauthority.
- Functional environment for business use cases – Cardano is establishing afoundation for global, decentralized finance to develop a range of DApps thatcan run using functional and domain-specific smart contracts, providingmulti-asset tokens for any needs.
