Cardano Blockchain Explained

By Kapil Gauhar

Cardano has turned out as one of the most interesting projects to have come out recently. Cardano, similar to Ethereum, is a blockchain smart contract platform. However, it offers security and scalability through a layered architecture.

Cardano has a unique approach in itself since it’s built on scientific philosophy as well as peer-reviewed academic research. This guide will give you a detailed study on Cardano as well as help you check out some of the most interesting innovations which it brings to the table.

Cardano – The Origin

Cardano Guide

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

While Ethereum does an appreciable job as a smart contract platform, it is a second generation blockchain, according to Hoskinson, that needed evolution. What makes Cardano highly remarkable is the sheer amount of care which goes into its upkeep. There are three organizations which work to develop and take care of Cardano. They include IOHK, Emurgo and The Cardano Foundation.

Blockchain’s 3 Generations, Cardano Is The Latest

As indicated by Charles Hoskinson, we’ve been through the three generations of blockchains so far. Let’s begin with the first generation!

Generation 1: Bitcoin

Bitcoin and Money transfer

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

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

After a few years, Satoshi Nakamoto answered these questions by creating Bitcoin. Finally, we had a decentralized monetary system that can transfer money from one person to the other.

However, there was an issue with bitcoin that is with all first generation blockchain. They are only allowed for monetary transactions. So there was no other way to add conditions to those transactions.

Generation 2: Ethereum

Ethereum and Smart Contracts

With Ethereum, the term Smart Contract came into existence.

What are smart contracts?

Smart contracts help you exchange money, shares, property, or anything of value in such a way that is not only transparent but conflict-free too. This helped individuals by avoiding the services of a middleman.

Vitalik Buterin’s Ethereum is the stalwart of this generation. Ethereum showed the world how blockchain technology could evolve from a simple payment mechanism to something extraordinary, more meaningful and powerful.

But, this generation too had some problems with it.

Since more and more interesting use cases of blockchain technology were coming out (like Blockchain Use Case: Digital Identity), they were becoming more and more acceptance.

However, the problem was that these generations of blockchain didn’t actually have proper provisions for scalability. Along with that, the Blockchain Use Case: Governance was not really that well thought out. Case in point, the Ethereum is a perfect example of bad governance.

This is how the third generation came into existence.

Generation 3: Cardano

Cardano's invention

Hoskinson Knew that the blockchain was to evolve even more than at the time of Ethereum and Smart Contracts (Do 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 resulted in the creation of Cardano.

Cardano Worked On Three Elements And Solved Them Precisely

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

Element 1: Scalability

When people hear the term SCALABILITY, they invariably think of the transactions being processed every second. However, that’s only one part of the problem. Overall scalability is a three-headed hydra to speak. For this, one has to take care of 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 get 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 to rule all of them.

Let’s look at the ecosystem running currently. We have different crypto coins in the cryptosphere including, Bitcoin, Ethereum, Litecoin, etc. Similarly, we have systems such as the traditional Banks which utilize ACH, SWIFT, etc.

The problem lies in the fact that it’s difficult for these individuals entities for communicating with one another. It’s difficult for bitcoin to understand what’s going on in Ethereum and vice-versa. It becomes even more difficult when banks try to talk with cryptos.

Element 3: Sustainability

Sustainability is the third pillar of Cardano!

This is the toughest one, according to Hoskinson, to solve. It usually means, how is Cardano willing to pay for its future development as well as growth?

When some development has to be done in the system and grants are needed, there are a few things which can happen including Patronage and ICOs. However, both of them come with a problem.

  1. With patronage, the possible problem is centralization. In case a company gives a significant amount of grant to a blockchain firm, then they may direct the approach developments turn out in the system.
  2. With ICOs, it’s like a surprising jolt of money with no sustainable model. Also, it adds a whole unnecessary token to the ecosystem.

This way, something which is more sustainable and different has to be done. In this case, Cardano has plans to take inspiration from Dash and create a treasury.


Cardano is not just built on solid scientific philosophy, but also on hardcore science. Cardano, in itself, gives it a significant edge over its competitors. Also, the fact that someone likes Charles Hoskinson is leading the way is only about adding more credibility. We will need to wait and see till 2019, even if they can deliver all of their lofty promises. You shouldn’t miss out checking this post – A Beginners Guide To Blockchain.

Kapil Gauhar


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