Cardano has been making waves in the cryptosphere as one of the most exciting and intriguing cryptocoins of 2018. In the weeks following its public launch, Cardano’s ADA coin has quickly risen to become the fifth-largest cryptocurrency in the world in terms of market cap.
Finance Magnates spoke with Charles Hoskinson about Cardano’s technology, the future of Cardano, and some of the controversy surrounding the coin.
This article is the second in a series of two. To read the first, click here. To hear the full interview, click the Soundcloud and Youtube links.
Cardano has risen pretty quickly to the top of the industry in terms of coin market cap. It’s been hovering around fifth or sixth place for several weeks now. Why is Cardano worthy of this position?
Charles answered this question with another question: “Why is anybody worthy of their positions in the market cap? Bitcoin is advertised as a payment system and a means of exchange, and then everybody who’s ever tried to use it for that, it’s been a miserable failure. They usually stop taking it, or they find ways to take cash, and through a creative structure like what Bitpay has done. Ethereum claims to be a world computer, but then CryptoKitties breaks it.”
He continued by acknowledging that “the reality is that everybody, all of our competitors are living in speculative land. They’re saying that at some point in the future, there is a belief that these systems will change the world. These systems will, within their own domain, really innovate and really change things.”
He continued by saying that Cardano’s position has been earned by popular opinion. “People are taking their bets. People are looking at the science, people are looking at the team, they’ve looked at the progress made already, they looked at the philosophy, how we go about doing our business, and they made a bet that Cardano seems to be a contender.”
To be frank, within 6 months or a year, we will be pound-for-pound better than Ethereum and Bitcoin in every dimension and aspect, just based on how our roadmap is rolling out. That’s just generation one. We’re still moving our way forward to be able to shard, and scale, and we have a great strategy for that. I think a lot of people that have entered our ecosystem are betting that Cardano is going to be the strong contender.
Charles conceded that Cardano isn’t the only strong player in the market. “Ripple could certainly be a strong contender. They have a very strong philosophy of when and how these things ought to structured. The same for Ethereum, the same for Bitcoin. That’s why most people diversify and they bet on five, or ten, or fifteen.”
He continued: “I think a lot of people are making a strategic bet. Now if i’m wrong, you can vote by your feet and leave. If I’m right, well, welcome aboard. Regardless, I’m building this over a long term. I want ADA and Cardano to be used 50 years from now, I want this to be like TCP IP. Our vision is for Cardano to be the financial stack of the developing world.
“We want this to be used throughout Africa, and the Caribbean, and South America, and to run in parallel with the financial system of the developing world, and eventually consume it, and transform it from the outside, as opposed to what Ripple is trying to do which is transform it from the inside. I don’t wanna go down that road.”
I’d like to know more about the special security features ADA is bringing to the table. You’ve heard of the Coincheck Exchange attack that happened recently–in response, NEM introduced a tracking feature to there Blockchain to render the sale of coins useless. Is there anything similar being planned by ADA?
Charles began his response to this question with concerns about the philosophical implications of modifying a ledger to make coins traceable: “I think the entire purpose of cryptocurrency is that when you give a centralized actor the ability to breach fungibility, and label tokens bad vs. good. So, what happens when you’re a political opponent of the government and they decide to turn off your money by blacklisting you? I have very strong philosophical disagreements when you introduce centralization for consumer protection purposes on an open protocol.
He continued to say that while subsets of a ledger may act in a traceable or more centralized fashion, he takes issue with the modification of a protocol. “When it’s built into the protocol itself, I think that that’s an incredible moral hazard, it’s a huge danger. The whole point of cryptocurrencies to avoid capital controls and civil asset forfeiture, and these types of fungibility attacks, which damage liberty and personal property. We already have a system that works.”
Charles explained that in order to make sure that a blockchain’s protocol is secure, “you need high assurance that the Crypto is right, and that the protocols are correctly designed. What we do there is we take our protocols through peer review. For example, Ouroboros is the proof of stake algorithm that guides our system. The follow-up paper we took to Eurocrypt. “
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Dr. Peter Gazi lecturing on Ouroboros https://t.co/Cdl9wWa2Jy
— Charles Hoskinson (@IOHK_Charles) February 15, 2018
He added that educating the user to use crypto correctly is also incredibly important to We do it in stages and layers, and they’re called refinement iterations. The final stage of it is, okay you have the protocol, you have the software, then you have the user. You have to train your user.
“You need to educate people. It takes quite a bit of time and effort to do that. You do that through meetup groups, regular publications about things, podcasts, and training series. That’s why we have a whole education division at IOHK… to teach people how to properly use Daedalus, how to properly use cold storage, how to use paper wallets, how to use how to avoid being scammed, these types of things.”
Charles concluded that “The only way you can really have a high assurance there is using formal specification and verification. Then there’s user education, and when you do these three things you end up having a very secure ecosystem. Now, there is a question of what will we support to be able to enhance security in the ecosystem. So multisig hardware wallets, and paper wallets, are absolutely required for people to safely secure their funds.”
ADA has been listed on Bittrex. Are there any plans underway to list it on any more exchanges? I know that it’s listed on a few others, but Bittrex is by far the most notable.
In response to this question, Charles said that “The challenge for us was that when you build something 100% new code (Cardano is a completely new way of going about things) it’s great because you have unlimited dimensions of freedom to do whatever the heck you want to do. The downside of that is that you’re gonna have to spend a little more time in QA, and learning the ropes, and getting your APIs right, and so forth.”
Charles explained that the choice not to list on a lot of exchanges at the beginning of ADA’s journey was a deliberate decision. “There are kind of two dimensions. One was user experience from using a wallet, and the other is exchange experience when they list in high-performance demands. They really stress their wallets, because they’re dealing with hundreds of thousands of concurrent accounts–lots of ins and outs, and so forth.
He continued, “So we said, “hey, we would be bloody mad if we tried to list on ten or fifteen exchanges right at the beginning, because what’s gonna happen is if we’ve made any mistakes, or if the wallet is not optimized, then all of those wallets are gonna break on the exchanges. Then we’re gonna spend 95 percent of our engineering time fixing that, and never making any progress on Shelley or any future releases until we get over some technical humps.”
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— Cardano Community (@cardanocom) February 12, 2018
Charles added that education and dialogue with exchanges and users was another important reason to take time to roll out Cardano onto myriad crypto exchanges. “What we can do is have a dialogue with the [exchanges], and learn a little bit about what’s the best way to deploy on exchanges, and have an enterprise API specifically for exchanges. Once that’s done, we can roll it all out and it’s much easier to list on ten, twenty exchanges, and they can list it by themselves. Then they won’t really need a lot of support from us, because they have the stuff already there.”
He explained that there are some changes coming up on the immediate horizon. “In about the next two weeks we should have all of those upgrades done for exchanges, as well as an exchange listing manual. Then there’s gonna be another wave that comes onboard, maybe five or six of them. There’s been a lot of negotiations. So more exchanges are coming, and certainly there.”
According to Charles, Cardano has brought a lot of new users into the crypto space–users that need to be educated about how to use exchanges correctly. “About half of the people who bought ADA, had never bought a Cryptocurrency before. They’re completely new, they’re like Bitcoiners. So as a consequence, these people kind of needed some training wheels.”