Cardano self-identifies as a third-generation blockchain protocol, which began with an unstructured collection of ideas addressing flaws in the first generation blockchain protocol (Bitcoin) and second-generation protocol (Ethereum). Cardano aims to inherit the successful features and lessons learned from earlier blockchain projects, discard flaws, and incorporate new technologies and best practices that emerge from a research-based approach. Cardano identifies three major problems with the Bitcoin and Ethereum protocols in the areas of scalability, sustainability, and interoperability.
Cardano is being developed by an international team of academics and engineers. Three primary organizations contribute to its development including cryptocurrency research company IOHK led by Ethereum co-founder Charles Hoskinson, the Cardano foundation, and a Japan-based startup accelerator called Emurgo. Cardano is developing a smart contract programming language, Plutus, that is derived from the functional language, Haskell, and leverages peer-review and high assurance software standards throughout the development process.
Flexibility is a key consideration as the development of the platform is planned in layers, to better facilitate ongoing maintenance and easier upgrades over time through soft forks. A core component differentiating their platform from other smart contract projects is “Ouroboros”, which they claim to be the first Proof of Stake (PoS) consensus algorithm that is scientifically proven as secure. As of early 2020, however, Cardano operates via a federated architecture and its public PoS protocol is in testnet with a planned upgrade to mainnet, called Shelley at some point in 2020. Following the transition to Shelley, the project aims to add smart contract functionality through the Goguen upgrade and increase scalability through the use of sidechains during the Basho upgrade.
The Cardano token, “ADA”, can be used to send and receive digital funds, and must be used with their digital wallet, “Daedalus”. Currently, the team is working to complete the settlement layer that will run ADA.