A history of Cardano and its Ada coin

April 17, 2018
Chris Wheal

Cardano is a public blockchain and smart contract platform supporting the Ada cryptocurrency. But this altcoin’s singularity stems from the fact that it is based on scientific philosophy, academic theory and peer reviewed research.

Concept of Cardano (ADA Coin), a Cryptocurrency blockchain platform Source: Shutterstock.com

This academic cachet is one factor helping to drive its popularity and sets it apart in the crypto sphere given its relative newcomer status having launched in September 2017. Bitcoin by contrast was released in January 2009 and Ethereum in July 2015.

Cardano claims to be the digital platform built from the ground up to fix some of the industry’s biggest problems.

If Cardano is a third-generation cryptocurrency, Bitcoin is the first generation the developer of blockchain technology. The second is Ethereum, which brought you smart contracts, which allowed a transparent exchange of anything of value without an intermediary. Now Cardano which builds previous generations adding more features to make blockchain scalable, secure and sustainable through layered architecture.

It had a boost in April when Huobi, China’s largest cryptocurrency exchange listed the coin and Binance added Ada trading pairs. Some see it as inevitable that Cardano will become a listed coin on Coinbase. It has a rising popularity and boasts intense loyalty among its die-hard proponents.

Cardano also added to its lineup of partnership, with a recent tie up to a leading South Korean mobile payment platform, Metaps Plus. Emurgo announced Metaps will integrate Ada into its mobile payment platform which means its tokens will be accepted in more than 33,000 offline franchise stores and immediate digital payments and settlements to its South Korean users.

A brief history

Jeremy Wood and Charles Hoskinson are co-founders of Cardano. Hoskinson is a self-described “crypto-currency entrepreneur”. He also happens to have co-founded Ethereum and endured a bitter split.

Hoskinson’s mathematics background is evident in the choice of appellation for the platform, which is named after Girolamo Cardano, an Italian polymath and physician known for the first systematic computations of probabilities.

The digital coin Ada is named for Ada Lovelace, the daughter of poet Lord Byron, a mathematician and considered the first computer programmer.

Three in support of one

There are three organisations in support of Cardano blockchain:

  • Input Output Hong Kong (IOHK)
  • The Cardano Foundation
  • Emurgo

IOHK is a science and engineering firm and is contracted to build, design and maintain its main project, Cardano until 2020. IOHK is split between the two, the science side is dedicated to studying the foundations of cryptocurrencies, which involves the theoretical questions such as what is the consensus algorithm and what is cryptocurrency privacy? The engineering side takes the theory and tries to build usable systems and creates cryptocurrencies using formal methodologies.

The Cardano Foundation is a non-profit entity and not only protects the protocol technology but also standardises and promotes it.

Emurgo is a Japanese incubator that focuses on commercial ventures advancing the use of blockchain technology.

Third-generation Zen Master

Previous generations addressed various problems. The first generation created a payment system. The second tried to expand its capabilities and now the third is about creating more usefulness, addressing flaws and inefficiencies.

Other players in the market may attempt to resolve an issue but Cardano wants to sit in the middle and resolve them all, as Hoskinson describes, kind of like a “Zen Master of this space”.

“Let’s say we have an opinion on all three of these things and we think we have kind of built the right protocol stack that will allow us to do them in a very elegant way that is concise, that is peer reviewed. It is validated through the use of formal methods and third-party auditing and it’s really done with a long arc view,” says Hoskinson.

A view that could make the protocol become like infrastructure, similar to Voice over Internet Protocol (VOIP), making it accessible across browsers, cellphones and anywhere else.

To get to that reality, Cardano is addressing the three pressing issues in the crypto-verse that of scalability, interoperability and sustainability through design principles and engineering best practices, married to academic rigour.

Scale, govern, secure

Briefly, scalability is the need to develop a protocol like Bitcoin where as you gain users you gain resources but have the ability to keep up with users as they come in and avoid a theoretical bottleneck. Hoskinson provides a good comparison to Netflix’s early days when peak periods saw users facing decreased speeds and problems watching films.

Bitcoin transactions can run from 10 minutes to several days and transaction fees are rising too as more users join. Alternatives will be sought by users and there is a corresponding rise in interest in other currencies and platforms such as Ripple and Litecoin.

A key difference between Bitcoin and Cardano is that the former is a proof-of-work type cryptocurrency, while Cardano makes use of a proof-of-stake approach to reach consensus, which it says encourages honesty and long-term participation. Cardano calls its proof of stake Ouroboros, after alchemists said to know about individuation.

The next big issue is interoperability, with the thousands of cryptocurrencies and even governments beginning to issue coins, a system of governance has to be built in to the blockchain that allows you to sort out where, how, when to fork, how to add new features and basically how to upgrade the system.

There is growing awareness between currencies but there is the task of safely speaking to each other. Decentralisation is key to the crypto-verse yet standards are still necessary to navigate a chain. This raises other concerns such as how to manage privacy and security; how to prevent gatekeepers from forming; All questions falling under the umbrella of inoperability.

Ahead of the curve?

At the time of publishing, Cardano’s market cap was $7bn placing it eighth on the digital currency rankings just ahead of rival Stellar and its price is $0.26088 on volumes of $96.82m. It’s far off its best level reached on 29 April of $0.38824.

Its circulating supply is 25 billion and it has a maximum of 45 billion. Digital coins have been less bullish but Cardano is still among the best performers in the month of April recording a change of +127%. However, it is still down 52% so far this year and on that basis is among the worst performers in 2018.

A philosophical tech blueprint

Cardano has lays bare its philosophy: “The overall focus beyond a particular set of innovations is to provide a more balanced and sustainable ecosystem that better accounts for the needs of its users as well as other systems seeking integration.”

It built what it called a “toolset of abstractions” and led to an array of research papers and literature and it learned a lot from its collaborative approach about the industry and its self-created problems, such as little layering in design and only a few cryptos making room for future updates.

In some ways, the efforts it expends to bring thought, experts and best practices together makes Cardano seem like the smartest cryptocurrency in the room. It built in layers. It has embraced proof-of-stake as a design, which means inherent flexibility to adapt to changes. It has also looked at the social elements of money fiat currencies survive political shifts without crisis unlike digital currencies which fragment or fork.

Cardano argues that users need incentives to understand the social contract behind the protocol and have the freedom to propose changes in a productive way without having it brokered by a central actor or co-opted by a well-funded minority group. The blockchain has included elements of a legacy systems into roadmaps to accommodate users’ needs.

“At the time I was pretty pissed off. Ether went up [to a market cap of] $120 billion, so what the hell do I know?” Charles Hoskinson

Meeting needs of unbanked

At heart, Cardano is still about driving access to the unbanked three billion and potential for blockchain in Africa (see highlights of Hoskinson journey to several countries and his vision of future in blockchain in Africa).

The advantage of blockchain technology to assist in countries where lack of access to banking is acute is compelling for Hoskinson who is on a mission to help educate people in lesser developed countries about the technology and how to use it as a tool.

He declares, “Why are cryptocurrencies important?… if you have the patience and desire and also the appetite for failure and experimentation and you are willing to have a bit of courage and go in to the developing world with an arc of time, several years…a decade. You can actually teach people how to use this technology and make it theirs.”

People like Cardano, sure, but it also has its critics, including that its global peer review approach moves too slowly. However, you don’t hear the same concerns around long-term potential that you do with Bitcoin and Ethereum. Bitcoin mining sucks up the same level of power as a country the size of Denmark.

Just don’t follow one critic about Cardano ADA’s price to which Hoskinson’s response summed up the project nicely: “If you see me trying to boost the price of Ada, then I’ve been compromised and sell all your Ada. Cardano will be valuable based upon hard work, real world use and the utility of the platform. I’m not here to make day traders rich. I’m here to change the world.”

Key players:

Charles Hoskinson, Founder, CEO of IOHK and evangelic of decentralisation

Charles Hoskinson is a technology entrepreneur and mathematician based in Colorado. He founded three cryptocurrency related start-ups – Invictus Innovations, Ethereum and IOHK. His current projects focus on education of cryptocurrency, evangelism of decentralisation and making cryptographic tools easier to use for the mainstream.

His media persona is very mild mannered and relaxed. In Forbes, he described the disagreements that arose at Ethereum around how to structure the organisation as a “boardroom brawl”. After leaving in 2014, Hoskinson told Forbes, “At the time I was pretty pissed off. Ether went up [to a market cap of] $120 billion, so what the hell do I know?”

Jeremy Wood, Founder, Chief Strategy Officer

Jeremy Wood is based in Osaka, Japan since 2008 and is a founding member of the Kansai Bitcoin Meetup. Prior he managed the operations at Ethereum at the end of 2013.

After leaving Ethereum, he consulted on other cryptocurrencies before starting IOHK with Hoskinson in 2015. Wood, according to his bio, “believes that the future of fintech will progress only through experimentation and research, and by promoting collaboration between diverse groups and organisations.”

Professor Aggelos Kiayias, Chief Scientist

Proof of its heavyweight status, Professor Aggelos Kiayias, a top academic and professor of cryptography at the University of Edinburgh joined IOHK as its chief scientist. Kiayias was credited with a leas role in the IOHK paper on the first provably secure proof-of-stake protocol.

In a press release, Kiayias said, “While other companies may consider taking shortcuts or focus on just engineering their products, IOHK makes long-term commitments in building basic tools that are available to the community as a whole and in advancing the science behind blockchain systems.”

Chronology of dates

  • June 2014 – Charles Hoskinson leaves Ethereum
  • 24 February 2017 – University of Edinburgh partners with IOHK (second hub after Tokyo Institute of Technology)
  • 29 September 2017 – Cardano after two years of research launches is listed on Bittrex
  • 1 October 2017 – Market cap of around $600mn
  • 28-29 November 2017 – Surge of 142.41% to $3.5bn
  • January 2018 – Daedelus-like highs to over $33bn

Notable quotable

Back in April, George Soros, one of a number of men in the old world financial sphere who declared cryptocurrencies dead in the water, took off the DNR sign and are trading in digital assets this led to Hoskinson tweeting:

“Rockefeller, Soros, and Rothschild money entering the cryptocurrency space….it sounds like regulations might be getting a bit more lax”.

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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