[Article originally published by tradingonlineguide.com]

In 2018 new cryptocurrencies and projects have appeared. One of the most interesting ones to emerge is Cardano, but what is Cardano? In this article, we will explain step by step what this new project is about and why it is considered one of the most interesting news topics in the crypto world.

What is Cardano?

Cardano is a new smart contract platform, very similar to Ethereum which offers more scalability and security than the first virtual platform thanks to its layered structure.

Cardano has been invented by Charles Hoskinson who co-founded Ethereum.

While Ethereum is one of the second generation cryptocurrencies and has its limits, Cardano is born with the goal to improve the Ethereum concept and become the perfect form of a smart contract platform.

There are 3 different organizations fully working on the Cardano development:

The Cardano Foundation

IOHK

Emurgo

IOHK is the company founded by Mr. Hoskinson and Jeremy Wood with the goal to develop new financial services using the blockchain technology.

Emurgo is a Japanese company which incubates commercial ventures with the goal to revolutionize their industries through the use of blockchain technology.

These three companies ensure that the development of Cardano is not just in the hands of one company alone, unlike other cryptocurrencies.

Okay, so what is Cardano exactly?

Cardano is a smart contract, so it allows a situation where two people can exchange cryptocurrencies (i.e. Bitcoin), whilst also having some conditions to respect.

For example: Mr. White gives 10 Bitcoins to Mr. Green, but Mr. Green has to achieve some goals to respect the deal (smart contract).

A smart contract, however, has some limits:

Scalability Interoperability Sustainability

Cardano's goal is to be the smart contract without any of the three limitations.

1- Cardano's elements: Scalability

Scalability is a very difficult concept, but we will try to make it as simple and understandable as possible. What makes Cardano unique is its layered structure.

This structure is very relevant to make Cardano scalable.

The security of its transactions, or better the transactions happening on its platform, are secured by different controls and processes happening across different layers where the information is not shared from one layer to another.

To understand the concept better, picture a string and divide it in 3 different parts.

When a transaction moves from the end of the first part and enters into the second part, the information gathered and controlled in the first part will remain there and in the second part, the transaction will be processed under a new independent system.

This is a new concept because in Ethereum at the moment the security controls are made in just one single phase, so only 1 string - not divided.

2- Cardano's elements: Interoperability

One of the most problematic topics related to blockchain and mainly ICOs last year were compliance and communication with external entities to the blockchain.

For instance when a transaction was made, and a person exchanged Bitcoins to Ethereum or vice-versa, it was really difficult to know where those coins came from because of the privacy concept behind cryptos, and above all, it is very difficult to communicate between systems which speak a different language (codes).

Along with this concept, there is still a real divide and difficulty in communication between real entities (i.e. banks) and virtual entities.

This case has become very evident with ICOs: when investors want to fund an ICO and buy some of their Tokens in exchange of money, then for the ICO is very difficult to store the fund in a bank without giving an explanation where that money comes from. As we know, this last point is almost impossible to do in the crypto world where everything is decentralized and private, (there is no need to share own anagraphic data and documents to trade and own cryptocurrencies.)

Cardano is aiming to solve this problem and become the platform where every crypto entity can openly communicate with each other and external entities too.

On top of that, it is also trying to conform to all the compliance rules existing: KYC (Know Your Customer), AML (Anti Money Laundering), ATF (Anti Terrorist Financing), etc.

By doing this the platform is soon going to implement the meta-attribution of every transaction, which means knowing who is behind every trade in order to fulfill the above-mentioned compliance rules.

3- Cardano's elements: Sustainability

At the moment one of the biggest questions about Cardano is: what is Cardano's future? How long is it going to be financed for?

Today ICOs like Cardano is financed in 2 different ways:

by a number of different investors buying Tokens

by patronage (one single investor owning all the Tokens and financing the whole project)

In both these scenarios there are some issues, with patronage there is a centralized situation because everything is owned by one entity. Whereas with the former option there isn't a real sustainable, long-term model.

To find a solution to this, Cardano's founders are going to introduce a new system: liquid democracy.

What is a liquid democracy?

Liquid democracy allows people to vote or delegate their vote to approve the ownership of a block part of the chain.

For instance when a block is added to the chain, part of it will be added to the treasury and it will be eventually owned by a person.

This person can ask to buy it and the request will be granted or not by a liquid democracy vote.

In this way it is possible to keep the concept of decentralization, ensuring that there are many different owners of the blocks, and at the same time having a limited number of them.

It is the same concept we have in public companies, there is a vast but limited amount of stakeholders and to become one of them it is necessary to be appointed by the board of directors' approval.

What is Cardano price?

The Cardano ICO at the moment is worth 62 million dollars.

It is possible to buy some tokens, called ADA, in most of the cryptocurrencies platforms. It is also possible to speculate on its price on many trading platforms.

Today Cardano is still in development, but there are very good signals about its future: the concept behind it is very well thought out and elaborate. Its development is proceeding very well and the fact to have one of the Ethereum co-founders behind it, ensures this project has full credibility.