Decentralization is a bold concept. Achieving a financial system without centralized control requires a concerted effort from different stakeholders. Creating such an ecosystem requires time and innovative brilliance.
Bitcoin was the first successful implementation of virtual currency. However, scalability and efficiency issues soon emerged. Ethereum had to change its mining consensus to adapt to demand. Ideas came from all over. Some analysts contend that Ethereum borrowed from how Cardano’s Staking Works to implement Eth 2.
Bitcoin mining is still relatively popular. Miners have to use sophisticated equipment and find ways of harnessing cheap power. Mining difficulty fluctuates but has generally got more efficient with time. Regardless, Proof of Work mining is on the decline because Proof of Stake is more energy efficient. Cardano is arguably the best Proof of Stake project in existence. Let’s find out more;
Cardano is a unique Proof of stake crypto currency. A team of engineers, mathematicians, and cryptography experts came together to actualize this project. Charles Hoskinson, a prominent blockchain innovator, played a key role in creating Cardano.
He is also notable as one of the five founder members of Ethereum. Hoskinson left Ethereum over developmental differences and helped create this platform. Hoskinson founded a company called Input-Output Hong Kong (IOHK), which has Cardano as its main crypto project.
The expertise and research-based approach showed up in the final result. Cardano stands out among other proof-of-stake networks and large crypto platforms. Its blockchain shows the importance of extensive experimentation and peer-reviewed research.
It has earned a reputation as the “Ethereum killer” as its blockchain is said to be capable of more. Cardano is still in its early stages and that prediction remains viable. That said, Ethereum is considerably ahead due to the success of its decentralized financial applications.
In the long run, Cardano intends to be a financial operating system. This objective means that the platform will look to offer decentralized financial products similar to Ethereum. Additionally, Cardano will have solutions for chain interoperability, voter fraud, and legal contract tracing, among other things.
Cardano aims to process more, cheaper, and faster transactions than older block chains. ADA is the native crypto currency of the Cardano blockchain.
The Cardano blockchain deploys smart contract technology. To achieve greater efficiency, the Cardano network has two layers:
- The Settlement layer- this layer facilitates ADA transactions. It is already complete and allows users to transact peer to peer.
- The Computation layer- the computation layer will allow users to create and execute smart contracts.
Having two layers separates Cardano from earlier block chains. The network implemented Proof of Stake Consensus, which Ethereum is migrating to. Cardano developers built a unique protocol called the Ouroboros on top of the regular POS model. Ouroboros creates a random way of selecting validators and helps ensure that decentralization is more entrenched.
The Roadmap to Achieving Decentralization
Cardano has five eras in its roadmap:
- Byron-this was the first stage back in 2017. Byron saw the delivery of the Daedal us wallet, IOHK’s official desktop wallet for ADA. This era was about crucial technology and building a community. It was a success as ADA is now on all major exchanges with a market capitalization of over $9 billion.
- Shelley– This era began in 2020. Cardano began the transition into a fully open, decentralized ledger. Shelley shifts node operation to the Cardano community to ensure that the blockchain is secure and decentralized. This era also sees the introduction of delegation and an incentive scheme to allow and encourage users to delegate their stake to stake pools always on community-run network nodes – and be rewarded for honest participation in the network. The objective is to reach equilibrium of around 1,000 stake pools.
- Goguen– This era will see the introduction of smart contracts and give developers the ability to create dApps. Developers will benefit from the robust blockchain and well-researched foundation. Work for Goguen is ongoing parallel with Shelley’s rollout.
- Basho– this will be the era of optimization, improving the scalability and interoperability of the network. The idea is to improve the performance of the Cardano application to scale to growth and adoption and high transaction volumes.
- Voltaire-Voltaire is the final piece of the jigsaw. The decentralized network will need maintenance and improvement over time. Voltaire will allow network participants to present Cardano improvement proposals through existing staking and delegation systems. This era is vital because blockchain networks need constant tweaks to remain useful and efficient.
The Big Picture: A Functional Decentralized Hub
IOHK CEO Charles Hoskinson has indicated that decentralization is set to be complete by March 2021.
By then, more than half of all the blocks will be made by the community, not the OBFT (Ouroboros Byzantine Fault Tolerance) nodes.
This milestone would represent success for Shelley and put Cardano on an unstoppable path. By the time the network reaches Voltaire, it should be a functional decentralized hub.