Cardano is a third generation cryptocurrency, after Bitcoin (1st gen), and Ethereum (2nd gen). The whole cryptocurrency movement began with Bitcoin a little over a decade ago, and since then it has exploded into thousands of different currencies.
The whole picture gets pretty complicated, but at its heart Bitcoin is pretty simple. It’s just a store of value. It has value because we agree it has value — because when you want to trade it, someone else will give you something else of value in return for it — just like dollars or gold. Its job is to hold that value for its owner, and increase that value over time. It doesn’t do a whole lot besides storing a number — or many numbers — in a digital wallet. Those numbers represent the amount of Bitcoin a person owns.
A few years after the debut of Bitcoin, Ethereum came along with a whole new trick up its sleeve, and launched the second generation of cryptocurrencies. Ethereum wasn’t just about storing value, it was about tying functionality to that value. In Computerland all functionality is expressed in the form of code, and Ethereum is no different. While Bitcoin simply stores a number, Ethereum also stores code in the form of smart contracts. Why is that a good thing? Because it makes money smarter.
Let’s imagine you own a song that everybody wants to hear. Using a smart contract tied to that song, you can decide you want to receive a certain amount of money every time the song is played. Since the contract exists in the form of code, and since the song is stored digitally and is tied to that code, the smart contract can automatically be executed any time the song is played. And since the smart contract is also tied your crypto wallet, every time the song plays you get paid. Smart contracts are kind of revolutionary.
Problems began to emerge
A few more years passed as people stared on in wonder. And then slowly the problems began to emerge. The biggest problem with Bitcoin is how much energy it consumes for just a single transaction. There have been some attempts at improving this, and if all you want to do is buy and hold for the long run, it’s somewhat manageable. But even at current usage levels, Bitcoin consumes the same amount of electricity as Venezuela. There’s no way it can scale to the level of transaction processing that would be required if billions of smart contracts were executing every day all over the world. Historically, Ethereum has been almost as bad, but that is now changing with the introduction of proof of stake.
Another problem is that, though there are thousands of different cryptocurrencies, for the most part they’re all siloed. That is to say they don’t work with one another, and you have to trade them in a crypto exchange, which can be time consuming and expensive.
Yet another problem is that many cryptocurrencies were basically just experiments. A decade ago, nobody knew if this stuff would even work. Understandably, the creators of early cryptocurrencies weren’t taking the long view. They were just trying to see if they could get the rocket off the ground. The good news was they launched spectacularly. The bad news was they didn’t always know where they were headed. Many of them had no long term plan for governance and growth.
Enter Cardano, at the dawn of the third generation of cryptocurrency. Cardano seeks to solve all of the above problems and to become the gold standard for a useful store of value for the whole world for as long as money is a thing. Hey, nobody’s saying the guy who created Cardano isn’t ambitious. That guy’s name is Charles Hoskinson, and he defines the 3rd generation of cryptocurrencies as being scalable, interoperable, and sustainable. These three attributes are the solutions to the problems described above. The bottom line is that cryptocurrency has the potential to change the world, and Hoskinson’s vision for Cardano is to live up to that potential.
Flanr.io is a legal technology company developing new economic models for valuing creative work. SLFEX is a platform that prioritizes sex positivity, diversity, and freedom while working for the rights of creators and artists. We’ve committed to building on the Cardano network, and we are excited about the prospects of growing along with Cardano.