Ridiculed, Reviled, Revered: What is it about Cardano?

By lofiqtip | The 8th Ring | 29 Nov 2021

Excluding actual scam coins, there are few cryptocurrencies quite so controversial and talked about as Cardano.  In terms of market capitalization, Cardano and its native token ADA ranks up there with the largest of them, even including so-called stable coins. Excluding the stable coins and cryptocurrencies which are meant to represent a form of digital currency such as Bitcoin, Cardano is either the largest or second largest of the so-called ETH killers which includes Solana (SOL), Polkadot (DOT) Avalanche (AVAX), et al., and it has held that position for nearly its entire existence.  The number of subscribers in its Reddit subforum is half as numerous as Ethereum and 6x that of Solana which has a similar market capitalization and yet, Rodney Dangerfield-like, it seems that it “can’t get no respect”.  What is it about Cardano? 

No discussion of Cardano can occur without including Charles Hoskinson who himself has a Rodney Dangerfield-like charisma.  He is the face of Cardano and the co-founder of Input Output Hong Kong (IOHK) the entity he co-founded to pursue his ambitions in the crypto world.  This was shortly after a falling out at Ethereum, which he also helped to found.  The circumstances surrounding this disagreement are murky, Mr. Hoskinson intimates it centered around the governance and formal structure of the organization, the enmity and bitterness this feud engendered indicates a deeper but perhaps less complicated explanation that likely entails egos and issues of power.  Whatever, the cause, Mr. Hoskinson (Charles) made certain that he had near complete control of the reins of IOHK when he established that company.  It isn’t just the nature of his departure from Ethereum that sullied his reputation, and by extension that of Cardano, but also the actions he took subsequently.  Again, the details are murky, but he first launched an ICO of Cardano in Japan which was aggressively marketed by a network of 1400 odd sales agents, some of whom were evidently selling blue sky.  The resulting fallout caused many to hurl accusations of wrong doing at Charles with he, in turn, crying slander while disavowing some of his most effective sales agents.  Ironically, if the original Japanese holders of Cardano had waited to sell their tokens until August, 2021 when they could be legally traded in Japan they would likely have made an excellent return on their investment; putting aside the question of whether it was ethical to market a crypto that couldn’t be traded on a Japanese bourse.  It wasn’t just the sales tactics used to hustle Cardano that were questionable, it was also that mid-launch Charles, claiming he did it merely because IOHK was hired to do it, dedicated a lot of time, energy and funding to help push forward Ethereum Classic which was attempting to stake a claim as the ‘real’ Ethereum after Ethereum was forked to thwart the effects of the notorious DAO hack which spirited away millions of ETH; a maneuver ETH purists adamantly opposed because it negated the basic tenet of a decentralized organization.  Even taking Charles at his word, it is not difficult to understand how unseemly his actions must appear to even a casual observer of the fact pattern.  Somehow, Charles managed to alienate some of his Japanese customers at the same time as he inflamed the passions in the Ethereum community against him.  It seems to have made him a bit of a roguish laughingstock in the community, if one is frank.

Despite the inauspicious launch of Cardano, IOHK and Charles have made steady progress in building it into an indisputably prominent and important part of the blockchain community.  It hasn’t been smooth sailing, however, as it it has occurred against a constant chorus of criticisms not only of Charles Hoskinson personally but of the Cardano project itself.  The most unjust being that Cardano is merely vaporware comprised of lots of hot air with but little tangible progress.  Mr. Hoskinson’s retort is that he, and IOHK by extension, chose to use scientific method to develop the software that runs things.  Taking such a route requires, by definition, long periods of information gathering, formulating hypotheses, building experiments to test them, drawing conclusions from the results and making modifications based on these findings, and so on.  It is a particular point of pride to Charles that all of Cardano’s papers are peer-reviewed; although, strictly speaking this isn’t true.  Just as there is no definition of what comprises a truly decentralized autonomous organization, there are no defined parameters for the peer-review of a paper on cryptographic devices.

In addition to criticism of the apparently slow progress on Cardano, an even more vocal cohort of critics point to the design choices Charles made for Cardano which they say make it difficult to employ, build on, and inadequate to execute the tasks at hand.  On the most fundamental level, Cardano is built using the Haskell programming language which is often called difficult to learn and most appealing to mathematicians.  Unsurprisingly, Charles is a mathematician and he has principled reasons for choosing Haskell over more common programming languages.  Haskell is said to be difficult to learn because of its syntax, and that it uses functional programming as opposed to imperative programming.  This is important because the overwhelming number of programmers today are trained in the latter and few know how to program in Haskell.  This results in high costs, labor bottlenecks and other inefficiencies.  One could argue, as Apple effectively has, that having a smaller population protects the entire system from problems because fewer bad actors focus their attention on the smaller population set.  Having few Haskell programmers in the world is actually a feature and not a bug, yet it is difficult to argue that adopting Haskell endeared Cardano to the programming community.

Hoskinson’s principled obtuseness carries over to the implementation of functionality on the Cardano chain.  The biggest knock against Cardano is it has been wholly incapable of performing its primary purpose:  The execution of smart contracts.  When Cardano’s smart contract capability was first rolled out it was almost immediately attacked for being slow and ineffective.  The problem was ‘concurrency’ meaning whether multiple transactions can occur in simultaneity in a single block.  Much to the delight of Cardano’s many critics, the smart contract platform codenamed Alonzo almost crashed immediately due to the way it handles unspent transaction outputs or UTXO’s.  Alonzo employs the extended UTxO, which is unlike Ethereum and the overwhelming majority of similar accounting-based cryptoledgers.  Cardano decided to diverge from the crowd by using a system that only needs to validate the transaction itself, with all the logic being performed off-chain thereby enabling tremendous scaling.  Once Cardano improves the concurrency issue for the Plutus platform it should be hugely more scalable due to eUTxO efficiency:  Problem solved!

Another broad criticism of Cardano is that, despite promising to deliver substantial contracts it has failed to.  In response to critics of Cardano’s lack of deal flow, Charles redoubled his efforts to woo certain African governments over to the Cardano network.  He speaks inspirationally to his large youtube fanbase about the transformational effect that Cardano can have not only on the African continent but on the lives of potentially billions of so-called “unbanked” people impoverished by their lack of access to the fingers of commerce.  Cardano eventually managed to partner with the Ethiopian Bureau of Education to create a wallet system for its students from which grades and certifications will be added to an immutable blockchain.  He imagines a world where graduates must show proof of obtaining a degree in the face of widespread document forgery and sclerotic bureaucracy; Cardano allowing them to electronically prove their degree.  How often this kind of scenario plays out for the average Ethiopian high school graduate is an open question, but the convenience of having an electronically accessible and immutable record is obvious; at least as obvious as having a cloud-based resource that one can access in much the same way.

Another finance-related bludgeon used against Cardano is the relative failure of its token ADA to appreciate in value.  This isn’t factually accurate.  As of late November, 2021 ADA is actually up more than 8x yoy while ETH is up 7x, and at its best in 2021 its value relative to ETH was even greater.  The explanation for this is that, in a world of Number Go Up, a chap who says he doesn’t care about the price appreciation of ADA, as Charles has done, may be like goading a bull.  Others may think it unseemly that a billionaire who made his money through the price appreciation of his crypto professes not to give a whit about price appreciation, certainly on some level such an avowal brings joy to the cynic’s heart.

Another thing that Charles Hoskinson has been quite vocal about is his belief that Cardano is going to best Ethereum in the long run.  He believes that his creation is built on a stronger foundation that enables it to outlast all or all meaningful competition.  He cites other instances in history when an earlier inferior technology is overtaken by a later superior one.  He believes that he has chosen better technology; that this technology has better vetting and implementation; and that Cardano has a better strategy for mass uptake and adoption.  He speaks of his desire and mission to bring light to the benighted through blockchain technology and he has acted by doing broad and persistent outreach in a number of African nations.  Charles Hoskinson believes that his efforts are going to have a transformative effect upon humanity by working with national governments to reach and help those on the lowest rungs of the economic ladder.  He believes that there is untold wealth locked up in the interior of Africa that is only waiting to be freed through the use of Cardano.

When examined as a whole, it is not hard to conclude that everything he has been working for these past five years or so will come to fruition.  Especially since it is being implemented by a top notch, economically well-endowed organization run by a charismatic, driven, deeply intelligent and capable leader.  At the same time, if one has had any experience with using the Daedalus and Yoroi wallets to move and stake ADA, he will know that they look, act and feel like they were designed for a large bureaucratic organization.  Daedalus, especially, is slow and somewhat temperamental, and while everything works, it is not a joy to use.  Transactions are inexpensive, but so are those on many modern networks.  Confirmations aren’t as slow as they are on the Ethereum chain but Ethereum is a known slowpoke, which is why it is undergoing a massive change from Proof of Work to Proof of Stake.  Frankly, there are competitors out there which are nimbler, faster, cheaper, easier to use and purpose built for just the population Charles is wooing.  The Celo Foundation in particular comes to mind.  Its system can use one’s cellphone number to send and receive tokens, and the online wallets available are infinitely easier to use than Cardano’s and it had the strategic foresight to pair with Germany's premier cellphone service provider Deutsche Telefon.  One suspects that Cardano has built the perfect blockchain solution for third world governments and large organizations to use to help bring them into the 21st century.  As such Charles Hoskinson has possibly overseen the build of the world’s first Digital NGO, and that's what it is about Cardano.

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The 8th Ring

Lots of talk about cryptocurrency. Will blockchain technology be endlessly fascinating? Certainly it has become a spectacle. Although there are few people genuinely expert in writing the code that runs this stuff lots of people hold genuinely expert knowledge of the scene. Then there are the rest of us.

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