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Deep dive into Cardano – Why the Hype?
Anyone who has been following the cryptocurrency sector for a while will be aware that the industry is not confined to just Bitcoin and Ethereum. Several different crypto projects have arisen over the years, each with a particular use case, with some aiming to mimic and even improve on what Bitcoin and Ethereum offer. One such venture is the Cardano blockchain, which has just become the world’s third-largest virtual currency as network developers seek to capitalize on the rise in decentralized finance.
One of Ethereum’s co-founders, Charles Hoskinson, identified the need for a more standardized and scalable blockchain during the early days. With his expertise in mathematics, Hoskinson began to consider more scientific methods of constructing a blockchain. During this period, Hoskinson made contact with Jeremy Wood, a former co-worker at Ethereum who was aiming to build a better blockchain and smart contracts platform than the one that was already in use. They joined hands and began to pursue Cardano in its current form.
While Hoskinson and Wood are the brains behind Cardano’s key fundamentals and smart contract technology, they do not control or operate the Cardano blockchain.
The Cardano Foundation acts as a nonprofit custodial entity for the entire project to help market and ensure the security of the blockchain. Meanwhile, IOHK – Founded in 2015 by Hoskinson and Wood, is a research and development company that has helped with the design and engineering of the Cardano blockchain. There’s also Embargo, which acts as a large funding entity to support Cardano and assist with its development financially.
Now, let’s get into the project itself.
What is Cardano, and why is everyone talking about it?
Cardano separates itself from other competing blockchains by employing mathematical concepts in its consensus mechanism and a distinct multi-layer design. With a team that helped create Ethereum, many believe Cardano is the next generation of cryptocurrency solutions.
Cardano (ADA), like other cryptocurrencies, is a digital token that can be used to hold value as well as transfer and receive payments. Cardano’s blockchain can also be used to generate smart contracts, similar to Ethereum, which may then be used to develop decentralized apps and protocols. Furthermore, the capacity to transmit and receive cash rapidly and for low rates has far-fetching implications in business and finance.
Cardano refers to itself as a blockchain of the third generation. It aims to address some of the scalability and other difficulties Ethereum and Bitcoin are experiencing (BTC). Rather than building solutions on top of existing technology, it began from the ground up and created a whole new blockchain.
The network relies on the Ouroboros consensus mechanism, which is a specifically built, proof-of-stake (PoS) based blockchain ecosystem. This consensus method allows ADA to be simply and safely transferred and received at all times while also assuring the safety of smart contracts on the Cardano blockchain. At the same time, as a PoS consensus mechanism, Ouroboros rewards token holders who stake their ADA to the network and contribute to network consensus.
However, it must be noted that the network is yet to introduce smart contracts. Thus, in anticipation of the planned “Alonzo” update, which will be published on September 12, ADA investors are driving Cardano’s value upward. Cardano will be able to establish itself as a genuine participant in the decentralized finance (DeFi) market because of the Alonzo update, which will introduce the smart-contract capability to the blockchain. But there’s more than what meets the eye.
Going Global with a Great Cause
When it comes to financial technology, African countries have traditionally been early adopters. Across the continent, emerging technology has been at the forefront of key solutions. Earlier this year, IOHK announced a collaboration with the Ethiopian government to develop a blockchain-based system to track student performance in local schools as part of what it claimed to be the biggest blockchain deal in history.
Source: The New York Times.
Since then, the firm has been establishing a physical presence in the country, opening an office in the capital, Addis Ababa, and starting work on the large-scale blockchain ID project, which is expected to go live in January 2022.
As part of the deal, students throughout Ethiopia will be assigned a digital identity (DID). This metadata contains all of the information regarding their academic progress during the course of their education. It makes use of Atala Prism technology, which is linked with the Cardano blockchain.
The system is innovative as it records each stage of a student’s academic progress. For example, a student who excels in mathematics throughout their academic career but fails their final paper may be denied admission to their preferred university. Such a scenario often has far-reaching consequences for the student’s future.
This one-strike method is replaced by a comprehensive assessment of their skills with the DID. This method also safeguards against fraud or forgery. A blockchain’s structure makes it immutable and freely accessible to everybody.
That’s not all. They have also collaborated with the World Mobile Group to deliver critical services to Tanzania and Ethiopia. The companies are collaborating to deliver sustainable internet to Tanzania using renewable energy. They will collaborate to provide low-cost network nodes based on the Cardano blockchain technology.
These network nodes will serve as local relays for internet access. Subscribers will also be able to access the Ethiopian identification solution. Instead of this solution in schooling, they will be able to access services such as digital banking (since the platform being deployed by Cardano has several other use cases).
Cardano’s potential will be limitless if it succeeds in Africa. In the future, the potential number of users will not be counted in millions but in billions. Cardano’s creators have proven their dedication to the project over the past five years, as they’ve been to several countries in Africa, including Nigeria, Rwanda, Uganda, and South Africa.
Much of Hoskinson’s vision for the African continent is based on his faith in the nation’s acceptance of modern technology. He believes that the appetite is greater in developing countries, making them the best places for these kinds of advancements.
The recent hype surrounding Cardano is quite justified if we are looking at the bigger picture. The project has a lot to offer, and the real-life implications that are already visible to stakeholders further add to the project’s credibility.