Why I believe in Cardano
Some people are investors. Some people like the technology and the benefits of using it. Would you like to know why I believe in Cardano?
Sometimes somebody asks me why I believe in Cardano. It is actually a very good question. I am not shilling Cardano since I hold a heavy bag of ADA. I support the project since I can see the future potential and chance for all of us to use truly decentralized technology.
What I can see as a developer
I am a software developer with 15 years of experience in IT. I am able to check and evaluate things that many people cannot. I install a wallet and can easily see how much effort it could take to create it. When I saw the Daedalus wallet in 2017 it was the best wallet in the whole space. From that time there were a few updates and the wallet is better and better.
I can browse GitHub repositories and check the activity of the team and code quality. There is no other project with so many active repositories, amount of commits and peer-reviewed code: https://github.com/input-output-hk
You can find tens of very active developers in GitHub and it is just adequate to what Cardano is going to be. Such a project cannot build a few developers as a hobby project.
I was just amazed when I saw the IOHK team for the first time: https://iohk.io/team
There were tens of people, developers, and researchers. There are guys like Prof. Philip Wadler, Prof. Aggelos Kiayias, Prof. Elias Koutsoupias, and many others. They are famous and you can find videos on YouTube where they speak about Cardano. It is not only about the team. There is also probably the best leader in the crypto Charles Hoskinson. He makes AMA very often and it makes Cardano the most transparent project. Besides that, Charles travels a lot and visited many countries, where he spoke with politics, regulators, and business-men and discussed cryptocurrencies. I think it is very smart. It makes no sense to build something without knowing what to actually build. It is much better to find out what people need, what they wish and what is possible from a regulatory point of view. It is exactly what Charles does. I like it. And the result is 4 MOUs with Ethiopia, Georgia, Mongolia, and Korea. The team creates an Atala project on the fly just to be able to offer something usable for the countries. Atala could help the adoption a lot and can interoperate with Cardano.
There is not only IOHK behind Cardano. There are other 2 entities Emurgo and Cardano Foundation. Emurgo created a lightweight wallet Yoroi and blockchain browser Seiza. Yoroi is a web-browser plugin and besides Daedalus, it is one of the best lightweight wallets in crypto. Emurgo has a great blog about the project: https://emurgo.io/en/community#blog
There were some minor issues with Cardano Foundation at the beginning but now it slowly starts to be visible and I hope it will overtake some Charles activities.
As a developer, I appreciate a lot the scientific approach and the formal method of development. It is not usual even in commercial space where a product is delivered often with poor quality and fixed later. Cardano team researched every single part of the project, wrote a study for that, let them reviewed at conferences, and after all that there is a time for implementation. You can check all the studies here: https://iohk.io/research/library/
If some piece of software is not good enough the team does not hesitate to start from the beginning with the last mistakes in mind.
The team knows what exactly is a ledger, how consensus should be built, how game theory works for cryptocurrency, how programming language should look like to avoid silly mistakes. I named just a few things of many.
Blockchain is a mission-critical project and must be built very carefully by the best people available for that. I could continue talking about the team but let’s check other fundaments.
Three pillars of Cardano
Sustainability, scalability, and interoperability are three pillars of the Cardano project. If you think about that all three make sense and must be delivered if any project should succeed.
All current projects have not solved the most important thing and it is scalability. Scalability is an ability to serve all people who come to use the project without troubles. We can see what happened when people came to use Bitcoin at the end of 2017. Transactions stuck in the pool for days and fees rose to tens of dollars. So far there is no solution for that and I personally do not believe that Lightning Network could solve the issue for Bitcoin.
The protocol will not be used if it does not scale since people will not be able to use it. If we really need to have decentralized sound money we need to allow people to use it without limitations. Many projects sacrificed decentralization to scalability. We can see fast Ripple and Stellar Lumens. The projects are good for what they are going to do but they are not decentralized. Cardano team wants to resolve blockchain trilemma and will deliver a network that will scale, will be decentralized and provably secure. It is a tough problem but the team is able to overcome all obstacles.
I touched the interoperability when I talked about Atala. We need to connect the crypto project to current financial systems to be able to replace them one day. We also need to inter-connect all relevant crypto projects. Cardano takes it into account.
Sustainability is what I consider as the most important in the long term. Currently, we focus a lot only to the decentralization of the network. However, decentralization of the projects, the governance, is also a very important aspect. I think that the quality and level of decentralization of the team behind the protocol might one day be the most precious feature. The real world is unpredictable and there must be somebody to react to constant changes and conditions.
I think that we need more than just a decentralized transaction network to disrupt the financial world. You can send fiat payment to an unknown person or to an online shop and if anything goes wrong there is the legal system to resolve all troubles. We do need to build something similar above the transaction network. If there are troubles in the decentralized system then the system must be able to resolve conflicts or ensure the trust also in a decentralized way. At least as much as possible.
Business requires the ability to make a contract. People need to borrow money. Decentralized crowdfunding might be a key service if we want to build a decentralized society. There must be an easy way to add some context to the transactions. If we want to build decentralized banks and companies then there must be some form of voting.
Peter Thiel said that technology must be 10x better to be able to compete with currently used technologies. The bitcoin transaction network is not 10x better since we are not able to do the things I mentioned above. For all that we need smart contracts. Cardano offers smart contract language Plutus and Marlowe (domain-specific language).
If you agree that smart contracts might be an important part of the decentralization movement then it is better to have all in a single project than have more separated networks. We could tokenize bitcoin and use it the Cardano network. Well, but why not use ADA right away for the same purpose?
Adoption and utility
People do not adopt cryptocurrencies since they do not offer many utilities or they do not see the options. Some have already noticed that they can cheaply send a cross-border transaction and it settles in seconds. But that is basically all. Well, we have some dApps and decentralized stable coin. Unfortunately, nearly nobody uses it. People will adopt crypto once something will be faster, cheaper, more transparent, more convenient, more secure, more accessible or fraud-resistant. People will have to learn and practically verify that decentralization makes sense and can help us a lot.
Sound money and store of value is a big deal. If we want to have it in a digital form then it should be usable for all people and stay decentralized forever. Digital money or gold should keep the basic principles of the internet. So transactions should be fast and cheap. Still, we need to have it decentralized and secure. ADA fits well into the internet world. It is really about the quality of the technology. If there is a superior network for some purpose why then use something worse?
I know you can say that Bitcoin has the first-mover advantage. Well, I am fine if it becomes digital gold. But it is not probably the network all people in the world can use on a daily basis. I do not think that second layers, like Lightning Network, can be more secure and decentralized as Cardano’s first layer. The adoption of cryptocurrencies is still very low and people probably even do not know what they want. There are still enough possibilities to succeed.
Adoption is about speaking with people. People must understand what Cardano can offer them. Contrary, the team must know what people want. It is not smart to just build a project and throw it to people. You can find that they are not going to use it. If they can be involved from the beginning it is something else. It is just common sense. We do not need to do revolution but slow evolution towards a better world. The majority have to agree with the change.
Cardano consensus protocol Ouroboros will be a masterpiece and no IT giant will be able to deliver something like that fast. From the technological point of view, it seems it will be a great step forward in the decentralization effort. Ouroboros will be more scalable, will be 50x more decentralized and provably secured as Bitcoin’s PoW. I think it could be even more secure since part of the security is the quality of decentralization. Hash-rate is a great protection of data immutability. However, if there are only a few pool operators controlling it then it can hardly be considered as a secure network.
I am not sure whether PoW is sustainable technology in the long term. PoW depends on electricity and special ASIC hardware. We can see geographic centralization, mainly in China, where is probably 70% of hash-rate. ASIC manufactory can be monopolized. We have seen in the past that Bitmain used new technology for own mining a long time before it started to sell it. Electricity can be cut and taxation might be higher in the future what again centralized the consensus.
Decentralized networks are mainly about the quality of decentralization. The quality of decentralization should improve in time or should be kept at the same level. The Bitcoin network was decentralized at the beginning and is now quite centralized. I consider that as a failure and the team behind the project seems not to care a lot or is scared to make bigger changes. I would expect some transparent improvement plan.
I think that we need to create another consensus algorithm and PoS is a good option. Dependency on the internal resource, on native coins ADA, seems to be very smart. Besides that, it is more friendly to the environment. There is a direct relationship between fiat value and ADA. In PoW, there is electricity as a middle-man between fiat and BTC and it is not necessary.
Some mystery behind
If you look at the Cardano roadmap you will find interesting names of development phases: https://cardanoroadmap.com/en/
There are more mythological names in the project like Daedalus, Yoroi, Jormungandr, etc. If you miss something mysterious in other projects you can deep dive into Cardano. I know that it is not like famous Satoshi but still, it is interesting or at least funny.
I also like many small details you can find. For example, have you noticed that ADA begins with a letter A and thus it will be in the first place, before BTC, when the list will be in alphanumerical order? It is not just an accident. It probably was a smart decision made by the smart team.
I decided to support Cardano since I clearly see technological advancement and future potential. Some people say that Bitcoin can absorb any usable technology but it is not true. We will never see Ouroboros PoS in Bitcoin. Bitcoiners will never allow to adopt smart contracts and take part in tokenization. Nobody wants that. Bitcoin is Bitcoin and Cardano is Cardano. Bitcoin will be the transaction network and Cardano will be the same with the programmable layer above that.
As you can see I have many reasons to be with Cardano and support the project. I do think there is enough space for more projects to succeed and we cannot go fully decentralized with only a transaction network. The world already has a lot of wealth and the issue is distribution and access to it. Many issues will not be solved by new precious asset mostly in the hands of a few early adopters.
We can unbank the banked and bank unbanked. However, we can do it only if we have the technology for that. Cardano can remove unnecessary middlemen from many financial and maybe even political processes and give people more freedom. We must try it and if we fail, we try it again.