A Quick Example Cardano Application

In summary, with Cardano’s two-layer system, a decentralized application might keep some things on the computation layer (CCL), such as:

the details of the house you rented

the item you purchased

the kind of event you attended

the people you messaged and the messages you sent

On the computation layer (CCL), these activities can be private. At the same time, they can be subject to censoring by the whole community, in case the application is facilitating something repugnant to society.

But the actual transfer of value would be on the settlement layer (CSL), where it would be uncensorable, immutable, and available to regulators.

In this way, Cardano applications can offer both privacy and regulatory compliance.

For this application, value transfer on the CSL could be handled in a way that is immune to many kinds of bugs, while computation on the CCL would be flexible enough for a full-featured application.

Consensus: Ouroboros

Cardano has selected Proof of Stake as its consensus model. According to the principles detailed at whycardano.com, this is because PoS can “introduce secure voting, has more capacity to scale, and permits more exotic incentive schemes.”

Since the security of Proof of Stake as a consensus model is still relatively unproven, Cardano has developed Ouroboros, its own Proof of Stake model.

Ouroboros was designed by a diverse team of cryptographers. It is modular, allowing for delegation, sidechains, checkpoints, light client optimization, and more.

An Ouroboros. Having studied Ancient Greek, I agree that some find self-consumption more desirable.

Cardano will support multiple signature schemes to keep ahead of developments in cryptography. As I mentioned above, this includes quantum-resistant signature schemes.

Like most cryptocurrencies, Cardano plans to focus on “scaling methods … in 2019 and 2020.”

As the CCL (computation layer) is released, Cardano additionally plans to support a new kind of sidechain that relies on PoPoW — proofs of proofs of work. PoPoW will also allow funds to be securely moved from the CSL to the CCL, or to any other blockchain that supports the same protocol. Users moving their funds off from the CSL will have “certain guarantees about accounting and the ability to recall funds once computation is complete.” I don’t know details on the implementation of this, but I look forward to hearing more.

The Languages of Cardano

Cardano has not one but two new languages: Simon, a language targeted to financial applications and designed just for working on the CSL, and Plutus, a language for smart contracts and for interoperability.

The CCL will also support Solidity for “low assurance applications,” while Plutus will be for “higher assurance applications requiring formal verification.”

IOHK, the entity behind Cardano, has announced plans to develop a Plutus reference library to help developers with their projects, as well as formal verification tools.

The advantage of several languages is that one can be specific and limited and thus less prone to bugs and unforeseen consequences, while another can be more flexible. Applications can use whichever language is better for their objectives.