A subscriber asked me about Cardano so I thought I would make a post about it.
Satoshi Nakamoto (an anonymous alias) created Bitcoin in 2008 and released the code in 2009. He did not invent blockchain but he did create the first widespread use of the technology. Bitcoin, at its’ core, is very simple. It is a distributed ledger which keeps track of which address has Bitcoin and how many Bitcoins are in that address. You can think of it as a excel spreadsheet that is widely distributed that simply has debits and credits for each transaction. Of course it is much more than that, most importantly it solved the Byzantine Generals problem and created an immutable, decentralized ledger.
However, if blockchain was to fulfill its destiny, it would need to be much more than just a distributed ledger. That is where Ethereum comes in. Ethereum took what Bitcoin was doing and ran with it. It uses a PoW algorithm like Bitcoin, but also adds smart contract functionality. Not only does Ethereum utilize the distributed ledger to make financial transactions, it also allows for programmable financial applications and contracts. It does this by introducing a programming language into the mix. The language is called Solidity. The introduction of a programming language on top of a distributed ledger allows for all types of programs and applications to be built that can then be integrated into the distributed system. These dapps cannot be corrupted and operate with zero down time. However, given the nature of the system, if the smart contract is not 100% correct, if it has some type of fault or mistake within, it can be a major problem. We witnessed this with the DAO debacle when someone drained an entire organization of all its funds to the tune of 3.6 million ETH tokens.
Finally, after Ethereum hit the scene, many new blockchains also started popping up. One of these is called Cardano but there are many others like NEO, EOS, Zilliqa, etc. They all claim to have what it takes to unseat Ethereum and become the defacto blockchain solution. Each of them is different in their own way and according to them, their solution will reign supreme.
Cardano is the 12th ranked cryptocurrency based on market cap. It is valued at 2.8 Billion dollars with a circulating supply of 31 billion and a maximum supply of 45 billion.
Cardano is run by a man named Charles Hoskinson. He is a co-founder of Ethereum but left the platform to start his own journey not long after Ethereum hit the scene. He is well spoke and known around the cryptocurrency world. He frequently does AMA’s on YouTube if you want to get a better feel for who he is.
Cardano is an interesting beast. Charles claims to be “going where the puck is going, not where it is at”. He is slowly building his platform through a peer reviewed process. Cardano has been around since I joined the community in 2017 and is one of the few coins that is still relevant today. Cryptocurrencies come and go so if you see one that remains relevant for three years it is usually a good sign. The problem however is that the platform is not finished. It is hard to say how relevant it is when you can’t get a feel for the full product.
Charles claims that Ethereum and other platforms launched way too early. Although they are capable of handling today’s problems, they will run into limitations. When they do run into limitations they will need to upgrade the network which will be like changing a planes engine while it is midair. To be fair, this is a valid point. Ethereum is in the process of launching Eth 2.0 which involves a switch from Proof of Work to Proof of Stake. Essentially they are changing the consenus mechanism which is the very foundation the entire network is built upon. Switching the foundation out while there are thousands of dapps already running on the platform is a huge endeavor, and there is no guarantee that they can solve this problem.
Cardano on the other hand is slowly building its platform in the background. They plan to get the entire platform up to speed before they take it mainstream. The platform is live now, you can trade ADA tokens, but that is about it. Their smart contract capability is launching “soon” as is there Proof of Stake mechanism.
So….should you buy Cardano?
Well, to put it simply, I don’t know.
On one hand Hoskinson makes a valid point that launching these major platforms and then changing them down the line is a potential disaster waiting to happen. On the other hand Ethereum has grown massively and has propelled the space much further than any other blockchain by far. Ethereum also has faced its fair share of problems over the years and has found a way around them.
The one reason I am skeptical of Cardano comes down to man power. There are not that many blockchains developers. I think people have this idea that there is an endless supply of computer programmers. That simply is not the case. Blockchain is an extremely new technology and programmers have to learn an entirely new language to be able to build on it. Computer programmers as a whole are in dire need and blockchain is an even smaller niche within the computer programmer community. So if you can get the talent to build on your platform, that is a huge plus. And Ethereum has obviously achieved that.
After some quick investigative work, it seems that Ethereum has roughy 2442 decentralized applications running on the network. That is 2442 programs that someone out there took the time to build and deploy.
Cardano on the other hand does not appear to have any. That is because they have not released Goguen yet. Goguen is there major upgrade which will support dapps and smart contracts. I am sure when they have the capability to support dapps some programmers will migrate to Cardano and start building. But can they convince a significant amount of programmers to leave Eth to come to their own blockchain? That is a tall order.
Furthermore, Polkadot just released and they are yet another competitor to both Eth and Cardano. Polkadot seems very legit from the little research I have done. This is just another platform for Cardano to compete with for high level talent.
One last issue is that Cardano is built with the Haskell language. Haskell is a “functional” language. This is an entirely different family of computer language in comparison to “imperative” languages like Solidity, C++, or Java. Functional languages like Haskell are great and they provide very real advantages.
*I am not technical enough to understand these languages but I have read research from people who are. They claim Haskell is easier to mathematically prove things which improves security*
The downside however, is that Haskell is not popular. C++ and Java are closely related to Solidity and almost every computer programmer has some experience with C++ or Java. It is not a hard jump to go from these two languages to Solidity. This provides a huge advantage as people can start building quickly. However, to go from C++ or Java to Haskell involves a deep learning curve.
Cardano does have some promise however. They recently released a large upgrade called Shelley and Goguen is next. These are two major upgrades which will massively increase the capabilties of their platform. Furthermore, it does show that people are building with Cardano so the battle for manpower is not entirely out of their favor. They are also in the process of decentralizing the platform to an acceptable degree. This is a must for success in this space so if they can achieve it, it will shine a positive light on their platform.
One additional point that further confuses us. We are not computer programmers. I do not have the ability to go through Cardano’s code and compare it to Ethereum. I might as well be trying to read hieroglyphics. So I have to based my opinion on what others say which is never ideal. The only thing I do know is that right now the overwhelming majority are building on Ethereum. Could that change in the future? Definitely. But it doesn’t seem to be the case right now. You could create the greatest blockchain solution on the planet, but without developers building on your platform you’ve got nothing.
That was a very long winded response to a short question.
“Should I buy Cardano?” Honestly, I don’t know. If someone were tempted to start a position in Cardano I probably would not advise against that… however I would advise against dumping a huge percentage of your portfolio into it. It certainly has potential but it also is fighting a very long uphill battle and Ethereum is standing in the way.