Cardano Blockchain Explained | BTC wires

November 4, 2018 17:30 UTC

| Updated:

November 4, 2018 at 17:30 UTC

fromKapil Gauhar

Cardano has turned out to be one of the most interesting projects in recent times. Cardano, like Ethereum, is a blockchain smart contract platform. However, it offers security and scalability through a layered architecture.

Cardano has a unique approach of its own as it is based on scientific philosophy as well as scientific research with peer review. This guide provides you with a detailed study of Cardano and helps you learn about some of the most interesting innovations it brings to the table.

Cardano – the origin

Not many know that Cardano was conceived by Charles Hoskinson, who happens to be one of the co-founders of Ethereum.

While Ethereum does a remarkable job as a smart contract platform, according to Hoskinson it is a second generation blockchain that needed further development. What makes Cardano so remarkable is the care with which it is looked after. There are three organizations working to develop and maintain Cardano. These include IOHK, Emurgo, and The Cardano Foundation.

The 3 generations of blockchain, Cardano is the latest

As suggested by Charles Hoskinson, we’ve gone through the three generations of blockchains so far. Let’s start with the first generation!

Generation 1: Bitcoin

Bitcoin and money transfer

Bitcoin was invented because everyone kept asking the same questions over and over again. The questions are

  • Will it be possible to create money that can be transferred between two people without a middleman?
  • Will it be possible to create money that is decentralized and can work on something like the blockchain?

After a few years, Satoshi Nakamoto answered these questions with the development of Bitcoin. After all, we had a decentralized monetary system that can transfer money from one person to another.

However, there was an issue with Bitcoin that occurs with all first generation blockchains. They are only allowed for monetary transactions. So there was no other way to add conditions to these transactions.

Generation 2: Ethereum

Ethereum and Smart Contracts

With Ethereum, the term Smart Contract came about.

What are smart contracts?

Smart contracts help you to exchange money, shares, property or other valuables transparently and without conflict. This helped individuals by avoiding the services of a middleman.

Vitalik Buterin’s Ethereum is the mainstay of this generation. Ethereum has shown the world how blockchain technology can evolve from a simple payment mechanism to something out of the ordinary, more meaningful, and more powerful.

But this generation also had some problems with it.

As more and more interesting use cases of blockchain technology emerged (such as Blockchain Use Case: Digital Identity), they found more and more acceptance.

The problem, however, was that these blockchain generations did not have adequate provision for scalability. In addition, the Blockchain Use Case: Governance was not really well thought out. A case in point is that Ethereum is a perfect example of bad governance.

This is how the third generation came into being.

Generation 3: Cardano

Cardano's invention

Hoskinson knew that the blockchain should develop even further than in the times of Ethereum and smart contracts (Check out – Smart Contracts: A Guide For Beginners). He took the positive elements from the previous two generations of blockchain and then added some of his own interesting elements that led to the development of Cardano.

Cardano worked on three elements and solved them exactly

As mentioned earlier, Cardano is uniquely based on scientific philosophy and peer-reviewed academic research. All engineering that goes into its development has the ultimate goal of being “High Assurance Code”. This is done to ensure that there is a much higher level of confidence in the quality of the code being used. This will prevent future cases like the ETH-ETC split from occurring, according to Hoskinson.

Element 1: scalability

When you hear the term SCALABILITY, you inevitably think of the transactions that are processed every second. However, that’s only part of the problem. The general scalability is a three headed hydra, to speak of. For this you have to pay attention to three things –

  • Transactions per second
  • network
  • Data scaling

Element 2: interoperability

Cardano's interoperability

Now that we know how Cardano works with its scalability side, we come to the second pillar in this regard, which is INTEROPERABILITY. As Charles Hoskinson says, the long and short of interoperability is that there won’t be one token that rules them all.

Let’s look at the ecosystem that is currently running. We have different crypto coins in the cryptosphere including Bitcoin, Ethereum, Litecoin etc. We also have systems like the traditional banks that use ACH, SWIFT etc.

The problem is that it is difficult for these individuals to communicate with one another. It is difficult for Bitcoin to understand what is going on in Ethereum and vice versa. It gets even more difficult when banks try to talk to cryptos.

Element 3: sustainability

Sustainability is the third pillar of Cardano!

This is the hardest thing to solve, according to Hoskinson. It usually means how is Cardano willing to pay for its future development and growth?

When something needs to be developed in the system and grants are needed, a few things can happen, including patronage and ICOs. However, both have a problem.

  1. With patronage, the potential problem is centralization. If a company grants a significant grant to a blockchain company, it can steer the development of the approach in the system.
  2. With ICOs, it’s like a surprising push of money without a sustainable model. Plus, it adds a whole unnecessary token to the ecosystem.

In this way, something more sustainable and different needs to be done. In this case, Cardano plans to take inspiration from Dash and start a treasury.


Cardano is based not only on solid scientific philosophy, but also on hardcore science. Cardano in itself gives it a significant advantage over its competitors. Also, the fact that someone likes Charles Hoskinson only adds to the credibility. We have to wait until 2019, even if they can all keep their high promises. You Shouldn’t Miss This Post – A Beginners Guide To Blockchain.


Kapil Gauhar

Kapil Gauhar is the founder of Blogger’s Gyan. He is a passionate blogger, great thinker, and creative writer. His passion for making friends with words and informing people about the wonders of the digital world motivates him to choose writing as a profession.

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