Raphael: School of Athens

 

Amazon Lending

Amazon, Facebook, and Google’s strategies focus on business lending — offering capital to the merchants, small businesses, or enterprises that they often already provide other services to.

Meanwhile, Apple is leaning on its sticky products and loyal customer base to offer consumer lending products like “buy now, pay later” (BNPL) options and credit cards.

Lending could be a lucrative opportunity for big tech, with the global SMB lending market alone estimated to be worth $3.4T by 2022. With extensive amounts of data on merchant business operations and consumer spending, tech giants are well-placed to make inroads with lending products and train algorithms to predict creditworthiness.

CARDANO - Key Facts

 A more democratic, fairer society with economic participation for all people – what sounds like utopia is the declared goal of one of the most exciting blockchain projects on the market: Cardano, the "third-generation blockchain" has set out to master the challenges that Bitcoin and Ethereum have so far been unable to solve: scalability, interoperability and sustainability. What also makes the project special is the scientific-methodical approach. This distinguishes the project from other networks.

The philosophy

The basic idea of Cardano is the interaction of scientific research, validation and implementation. For the inventors, this is the prerequisite for achieving the ambitious goals and shaping the future of blockchains and cryptocurrencies with the Cardano platform.

1. Research

Scientists from all over the world are working on the Cardano blockchain.

2. Validation

Independent academics and industry experts review the research results.

3. Implementation

The validated results go to the developers and the coding is finally checked for correct implementation using formal mathematical methods.

Three independent organizations are working together to bring the blockchain project to the world:

• The Cardano Foundation
• EMURGO
• IOHK

The Cardano Foundation , based in Switzerland, accompanies and monitors the further development of the Cardano platform. As a non-profit organization the multinational team works together with IOHK and EMURGO on the vision of establishing Cardano as a solution for positive global change.

EMURGO is a technology company that is primarily concerned with the marketing. For example, they focus on getting companies and institutions to use Cardano.

The actual development on the protocol of the platform is done at IOHK – Input Output Hong Kong. Founded by Charles Hoskinson and Jeremy Wood, the company develops crypto and blockchain solutions worldwide. For Cardano, a team of more than 30 scientists and engineers is constantly working to maintain and develop the platform.

The origins

The story of Cardano began in 2015. Even then, two years before the official start, the goals were formulated that still determine the project today: An answer was to be found to the three major challenges of all blockchain networks:

• Scalability
• Interoperability
• Sustainability

Charles Hoskinson and Jeremy Wood, the founders of IOHK, already knew each other from their time at Ethereum (ETH). Hoskinson was one of the eight founders of Ethereum, but left the project in 2014 after disagreements.

He brought the mathematical background and the intention to re-think blockchain technologies with a scientific approach. Likewise, Woods wanted to develop a better blockchain and pursue the idea of smart contracts. Eventually, in collaboration with the University of Edinburgh, the Tokyo Institute of Technology, the University of Athens and many other institutions, the blockchain platform Cardano was born.

The project

From the beginning, the development of Cardano was characterised by academic research and a strictly scientific approach. Each change goes through an elaborate peer review process. Further developments of Cardano are released in several phases, which are intended to gradually increase the functionality of the network and the application possibilities. The stages described in the roadmap are not yet fully developed. Rather, dozens of scientists and engineers are still working to implement the ambitious goals.

But it is not only the scientific approach that is demanding in this project. Cardano is also technically very challenging. For example, the Haskell programming language is nowhere near a mainstream language. It belongs to the functional languages and is mathematically very complex. However, Haskell applications can be modified very easily and are very reliable.

The goals

In order to create real use cases, the following prerequisites are essential for the developers:

1. Scalability

When it comes to scaling, the focus is on three topics: transactions per second, network bandwidth and data volume.

2. Interoperability

This is about the communication between the different blockchains and between crypto and traditional systems.

3. Sustainability

The Cardano founders' goal was to build a blockchain that would survive for generations. For this reason, it was important to them to establish processes in which the protocol can develop step by step.

The Cardano blockchain

The Cardano network consists of two layers: the Cardano Settlement Layer (CSL) and the Cardano Computational Layer (CCL) . That is another special feature because most blockchain platforms only have one layer. This can cause network congestion, which in turn slows transactions and increases fees.

The settlement layer handles all transactions. The computational layer processes account data as well as smart contracts and dApps. The division into two layers makes it possible to store metadata and personal data securely and independently of each other. Furthermore, updates can be carried out separately. Another advantage: The network is more secure in this way, because in the event of a hacker attack, only part of the platform would be at risk.

Ouroboros

With the proof of stake (PoS) consensus, the network only needs a minimum of the energy that Bitcoin or currently Ethereum consume. Moreover, significantly higher transaction numbers can be achieved with it. Cardano's consensus algorithm is called Ouroboros. It is the first provably secure blockchain protocol and it enables the decentralisation of the Cardano network. It also allows scaling without compromising security.

The Ouroboros protocol is responsible for adding new blocks to the blockchain. With the proof of stake mechanism, creation of blocks differs fundamentally from mining, as is known from Bitcoin, for example. On the Cardano blockchain, time is divided into epochs that last about five days. Each epoch consists of short time units, the slots. New blocks can be created within these slots.

ADA

ADA is the native token of Cardano and it's one of the leading cryptocurrencies by market capitalisation . It is named after the English mathematician Ada Lovelace (1815-1852), who is considered a pioneer of computer programming. The smallest unit of ADA also owes its name to her: 1 Lovelace equals 0.000001 ADA. There will be a maximum supply of 45 billion coins on the market, with about 31 billion currently in circulation.

ADA fulfils various functions in the Cardano network:

• Payment
• Staking
• Smart Contracts

Cardano offers two specially developed wallets for the secure storage of ADA coins: the full-node wallet Daedalus and the browser-based Yoroi, which is also available as a mobile version. In addition, the market offers various wallets from other providers on which you can secure and manage your ADA.

Staking

To illustrate the proof of stake system, it is often compared to a lottery. Each ADA coin represents a lottery ticket and the more you own, the higher the chance of winning the lottery, i.e. being able to create a new block. In return, there is a reward in the form of ADA. An algorithm randomly selects who is allowed to validate transactions on the Cardano blockchain. Accordingly, the participants with the most ADA have a higher chance of being selected.

With the hard fork from Byron to Shelley in July 2020, a new phase began at Cardano. Staking pools could now be set up and ADA owners could delegate their coins. To ensure decentralisation in the event of a concentration on a few pools, the Cardano programmers have taken appropriate precautions. Here, mathematics comes into play again, which prevents a pool from becoming too large. For this purpose, the developers determine how many pools there should be, although there is no limit here. As soon as a pool becomes larger than 1:number of pools, the amount of rewards is capped. As a result, there is no financial incentive for potential interested parties to join such a "saturated" pool. Instead, participation in a smaller pool becomes then more lucrative. Thus, the system naturally maintains decentralisation.

Smart Contracts

One of Cardano's most important developments are currently smart contracts. At the moment work is taking place on the testnet. But in the course of 2021 it should be possible to use smart contracts on the Cardano platform. As soon as the programming for the Alonzo hard fork is ready, all the necessary functions can be moved to the mainnet. After Allegra in December 2020 and Mary in March 2021, Alonzo will complete the upgrades necessary to usher in the "Goguen" era.

The roadmap

Cardano is a blockchain project that has yet to reach its full potential. Its development is divided into five eras, each representing a milestone. They bear the names of historical figures:

• Byron – Foundation
• Shelley – Decentralisation
• Goguen – Smart contracts
• Basho – Scaling
• Voltaire – Governance

Although the chronological sequence of the development steps is described in the Cardano roadmap , work on the phases takes place in parallel. So the shift from one era to the next is not abrupt. Rather, smooth transitions should ensure safe maintenance of the network.

The official founding of Cardano in September 2017 marked the beginning of the Byron era, named after the British poet and important representative of Romanticism Lord Byron. Incidentally, he was the father of Ada Lovelace, after whom Cardano's cryptocurrency ADA is named. During this era, the basic architecture of the network was created, the functionality was verified and the community was built. One of the most important achievements during this phase was the launch of Ouroboros. Last but not least, the Cardano coin ADA was introduced.

In July 2020, a significant evolution of the Cardano project began with the Shelley era. Because this phase sets the stage for a fully decentralised network. Cardano is expected to be 50 to 100 times more decentralised than other leading blockchain networks. Up to 1,000 staking pools will take an active role in consensus and governance, ultimately giving voting rights to the community.

With the Mary upgrade in March 2021, Cardano became a multi-asset blockchain. (This time Mary Shelley, the author of Frankenstein, was the namesake.) Users of the Cardano blockchain will now also be able to create and transfer their own native tokens, similar to the ERC-20 token system. This results in completely new technical possibilities and use cases.

Currently, the network has entered the

Gougen

phase, at the end of which Cardano should fully support smart contracts. In the subsequent Basho era, scaling and interoperability will be the focus of development. Ultimately, Voltaire will be about establishing a system of governance so that the network can be self-sustaining.

Outlook

In order to maintain and further develop the Cardano blockchain, part of the rewards is not distributed to the staking pools but collected. The use of this money will be voted on the blockchain in the final stage. Finally, full control will be transferred to the users. This ultimately means the dissolution of the development teams. The community could then decide whether to commission the Cardano developers to make further improvements to the platform.

While things often take time at Cardano, this should be seen in a positive light: Those responsible prefer to wait with new releases instead of rushing to bring out something that has not been adequately tested. Many things that already work on the testnet are not yet visible on the mainnet. And while other projects often focus on transaction fees and speed, Cardano concentrates on real solutions. Among other things, great attention is paid to cooperation with governments, especially in Africa, which some believe has great potential in terms of crypto economy. Cardano is committed to places where people do not have access to banks. Long-term planning and continuous development are therefore all the more the way to the goal.