Cardano (ADA) is one of several Ethereum challengers currently occupying the top ten of CoinMarketCap. While all blockchain projects are ambitious, Cardano is especially so. It not only wants to displace Ethereum as the primary blockchain developer platform, it wants to do so via a very long, complicated product roadmap that will be rigorously peer reviewed by academics.
The problem is, Cardano will take years to build. Ethereum already has a functioning public and decentralized blockchain with full smart contract programmability. Cardano isn’t decentralized yet (current nodes are controlled centrally) and smart contract functionality is unlikely to be released this year. So how realistic is it that Cardano will eventually usurp Ethereum?
Cardano at least has similar goals to Ethereum. It aims to be a smart contract platform running its own blockchain, just like Ethereum. Cardano raised about $62m for this vision, mostly from Japanese investors, in a multi-stage ICO that was completed in January 2017. Indeed, some people call Cardano the “Japanese Ethereum” because of its close business ties to Japan.
What makes Cardano different?
The Cardano project is fronted by Charles Hoskinson, a personable entrepreneur and mathematician from Boulder, Colorado. After meeting Ethereum’s creator Vitalik Buterin early on, Hoskinson became a core developer at Ethereum in 2013. But he left the project in June 2014 and in 2015 co-founded a crypto engineering company called IOHK. Cardano was born inside IOHK, but has since been released as an open source project.
As Hoskinson tells it, Cardano is part of the third wave of cryptocurrencies. Bitcoin was obviously the first, followed by Ethereum and its smart contract programming platform. Cardano aims to do what Ethereum does, but at the same time solve three of its key problems: scalability, interoperability, and sustainability (by which he means a system of governance).
Cardano’s defining feature so far is its proof-of-stake consensus algorithm, called Ouroboros. It has already been peer reviewed and declared provably secure by academics.
What is proof-of-stake? Vitalik Buterin himself explained it best, back when he was still blogging: “rather than requiring the prover to perform a certain amount of computational work, a proof of stake system requires the prover to show ownership of a certain amount of money.”
Ethereum is also working on a PoS solution, Casper, but has yet to go-live with it. So Cardano can at least say it has bested Ethereum on this front.
Cardano’s looooooooong roadmap
Other than bragging rights for proof-of-stake, how much other progress has Cardano made towards its grand vision? [aside: I feel like I type the words “grand vision” into nearly every post I write on Blocksplain!]
Well, according to its roadmap Cardano is presently in a “bootstrap phase,” which it has nicknamed Byron. In this phase, the platform is being built to (among other things) trade and transfer ADA, its native token.
However it’s important to note that Cardano’s blockchain network is not yet fully decentralized. That will happen in the next phase, nicknamed Shelley. The roadmap states that in Q2 and Q3 of 2018, “the features of Shelley will be released, starting with delegation and stakepool testnets.”
Cardano also doesn’t yet have functioning smart contracts. That won’t happen till the Goguen phase of the project – after Shelley. It’s unclear when that will be, but it probably won’t be this year.
If you scroll down the roadmap, you’ll see there is a lot of work to be done. So the biggest risk in Cardano is that, a) it is over-reaching in terms of what its blockchain should achieve, and b) it will take far too long to get even close to making its vision a reality.
I think some of the criticisms about Cardano – that it’s ambition is too big and not much actual progress has been made – are valid. Cardano is clearly far from being a usable decentralized, smart contract platform (which Ethereum provably is). And Cardano’s coin, ADA, has little use at this point.
Charles Hoskinson defended the long, exhaustive process Cardano has undertaken in a January blog post. This part is especially relevant:
The point of the Cardano project has always been to build something from first principles using a functional programming approach, embracing formal methods, and checking our progress through peer review. We chose these three pillars because experience tells us that humans are good at self-deception, forming personality cults and making extremely subtle mistakes that eventually cascade (heartbleed is a great example).
(Note: he defined functional programming as “getting code close to math.”)
Later in the post, Hoskinson mentions The Dao as an example of how a less than rigorous code approach can have disastrous consequences. The Dao led to Ethereum undergoing a hard fork, and Hoskinson wants to avoid that kind of calamity happening to Cardano.
Conclusion
At the start of this year, Cardano reached a market cap of over $32 billion. That’s an absurd number for a purported Ethereum competitor that hasn’t even released a decentralized public blockchain yet. Since that peak, Cardano’s market cap has dropped significantly, to just over $5 billion at time of writing. Even that number is ridiculous. But in the context of general crypto over-valuations, it’s at least defendable in terms of the market that Cardano envisions for its product.
I do want to cut Cardano some slack, because it has put serious legwork into planning its blockchain and building the first stages of a solid foundation. I admire the goal to be mathematically rigorous; I just wonder if it’s realistic, when Ethereum is already making (and yes, sometimes breaking) stuff in the real world.
I also like that the company, and Charles Hoskinson himself, keep people up to date on progress. Hoskinson recently posted this video during a work tour of Vietnam:
update on the update https://t.co/JasCoNDSVV
— Charles Hoskinson (@IOHK_Charles) March 6, 2018
So Cardano is an interesting company with a grand vision (there I go again). But it reminds me too much of Magic Leap in the AR world: there’s very little to see right now.