The „cryptocurrency” Cardano sweats again a deadline and continues to run on three servers

The „cryptocurrency” Cardano sweats again a deadline and continues to run on three servers
The turtle Shelley. Coincidentally, a good illustration for the Shelley upgrade from Cardano. Image by Richard Gillin via Flickr.com. License: Creative Commons

Cardano shifts the Shelley update again. The cryptocurrency therefore continues to run on the servers of two companies and one foundation – which does not matter, since nobody uses it anyway. This does not prevent Charles Hoskinson’s founder from continuing to throw the greatest and the greatest promises.

In the realm of cryptocurrencies you occasionally come across projects that are always extremely revolutionary, but never completely completed. This is normal for startups. The difference, however, is that startups burn the money from professional investors in this way, while crypto projects are in the money from private investors. One of these projects is Cardano (ADA). Since this coin always makes smaller and larger news, we look at its story and present today.

Cardano emerged from an ICO that took place between 2015 and 2017, and has not yet been fully built, since he still has still not made the leap to decentrality.  There are always deadlines when it comes to the time, but they are moving continuously. While most investors in Cardano made massive losses, the founder Charles Hoskinson became one of the richest and most prominent people in the crypto universe.

But let’s start at the beginning.

The solution to the Proof of Stake problem

Cardano is based on the scientific work of Charles Hoskinson and others. Ethereum co-founded the almost 30-year-old American, but then bumped into the question of how the future development was to be coordinated with Vitalik Buterin and the others. A little later, he supported his company Iohk Ethereum Classic, which had split off from Ethereum as a result of the DAO hacks, but soon focused on his own project: Cardano.

Cardano is a proof-of-stake cryptocurrency used by the Ourobous protocol. This protocol was formulated in a paper in mid -2016. According to Cardano’s website, it was “the first Proof of Stake protocol that has proven mathematically.”

Proof of Stake is an alternative consensus procedure. While Bitcoin burn the miner electricity to secure the blockchain, the „Stakers” simply deposit their coins at Proof-of-Stake. Instead of the Hashrate, the number of stored coins decides on the chance to find a block. This procedure is obviously less resource -hungry and probably less climate -damaging.

Even though there have been cryptocurrencies for a long time that use proof-of-stake, such as peercoin, whitecoin, blackcoin or gridcoin, the method was never considered to be completely safe. There are several problems, such as the Nothing-AT-Stake problem or the lack of real entropy. It would be too much to explain these problems in detail here. They are about preventing false incentives and forks under which the safety of the blockchain crumbles. In a tweetstorm some time ago, Vitalik Buterin explained how the Ethereum developers try to solve these problems in search of their perfect proof-of-stake system without how to use the „classic” POS coins such as peercoin centralized checkpoints that are also used manually after an attack.

With Ourobous, the developers now claim to have written a mathematically safe proof-of-stake protocol. The paper went through several peer reviews and seems to meet the high promises.

Pure losses for later investors

So far so good. After that, something happened that is relatively typical for the crypto world. Charles Hoskinson took this ideal protocol and hired some developers to „form the precise constructed cryptocurrency” (according to the website).

This cryptocurrency, called Cardano, should not only use the perfect protocol, but also be the first to be written in the Haskell programming language, a language with a strongly academic origin. In addition, Cardano separates the blockchain into two layers, one for the setting of the values, the other for the execution of smart contracts, which promises, to solve all scaling problems and also perfectly connect privacy and identification. One could say that Cardano is a „ivory-bone blockchain”: a blockchain that is perfect on paper, but often fails to win the market in practice.

Hoskinson financed Cardano by an ICO that took place between 2015 and 2017.  In this, vouchers for the Ada tokens were sold on the Cardano blockchain, probably at a price of about $ 0.0024. Hoskinson’s company Iohk took more than 100.000 Bitcoin, which at that time was significantly less worth than today. Good 8.000 Bitcoin he transferred to the Cardano Foundation for the newly founded. When Cardano went live at the end of 2017, the team generated another 20 percent of the Ada token distributed as vouchers, which were distributed to Hoskinson’s company, the Cardano Foundation and the Emurgo company.

In November 2017, the tokens for 2 cents were to be bought, which meant a good profit for the participants in the ICO. In the shortest possible time, however, prices exploded. From two to ten cents in early December, then from 10 to 40 cents to the end of December, to 66 cents on 1. January, and from there on 8. January to more than one euro. boom. Anyone who invested at the right time was able to increase their investment by fifty times within two months. Then it went downwards. Back to 60 cents. To less than 30 cents. In September 2018, the course was under 10 cents again, since 2019 it has almost always been below 5 cents. Today a Cardano token (ADA) is worth 2.7 cents, which means a loss of value of more than 97 percent from the top.

Or, to say it differently: Anyone who has invested in Cardano since December 2017, no matter what time, has made losses. There are really little cryptocurrencies that have cut so badly.

At the same time, Charles Hoskinson poses on Twitter and other social media with his many trips and amusements. Sometimes he is in a bunker at a party, then he smokes cigars with friends, is on the ski slope and on the beach in Lisbon, New York, South Korea, and so on. The lousy performance of the ADA token and the self-staging of Charles Hoskinson as a crypto beta-promi appears so absurd to some observers that they “a study on the correlation between MR. Charles Hoskinsons travel, dishes, amusements and the Cardano Ada Prize ”wrote.

But let us not reduce the currency to the price or the person Charles Hoskinson. What has happened to Cardano since then?

The three-server ghostchain

Let’s take a look at how much Cardano is used. A look at the blockexplorer shows a ghostchain. Most of the blocks have exactly zero transactions. After two years of Cardano there is no significant economic activity.

According to the Cardano website, it is a „decentralized public blockchain” – a description that is very doubtful because of the circumstances. This can be seen in a blog at the latest, the Charles Hoskinson on 28. December 2017 published. In it, he explains-in addition to a far-evident celebration of the great progress of Cardano-where the cryptocurrency is currently and where it goes: “We have formed Byron (the September publication of Cardano) as a minimal work-capable product to test the concepts on which Cardano builds up.”The experiment was an” tremendous success „. The most exciting thing, however, is “that Cardano will start to open up to the world in 2018. Delegation and staking are rolled out during the first and second quarter.“And that is exactly the crucial point.

Cardano is not a real proof-of-stake cryptocurrency in the Byron stage. One could even doubt whether the term cryptocurrency is appropriate. Because the „delegation is”, explains Hoskinson in a later post, „to the core nodes under the control of Iohk, Emurgo and the Cardano Foundation, and block rewards are switched off.“In other words: only the three parties behind Cardano are able to form blocks.

Cardano is a centralized blockchain with a privately negotiated consensus that is not used by anyone. That is the current state.

When will Shelley finally come?

But this condition is only temporary. It was clear from the start that he would change soon. Hoskinson had already announced that Cardano would be decentralized in the first two quarters 2018. The update that this should initiate is called Shelley.

The first quarter of 2018 passed. Hoskinson announced a research program to make Cardano quantity -proof and in front of the London School of Economics talked about how Cardano would improve the world in Africa through a decentralized, safe blockchain. There would be an endless potential, assures an “African Operation Manager” by Cardano on the blog. On 9. April finally informed Hoskinson about the Shelley update. The developers are fantastic, you are on a very good way. However, he did not name a specific date. In autumn, Hoskinson finally announced that Shelley would be released in the first quarter of 2019.

But the first quarter of 2019 also passed. Instead of the live version, Cardano presented Shelley’s “formal specification” in April 2019. It then took until September before Shelley was finally activated – in a testnet. Hoskinson said confident that Cardano will overtake most, if not all cryptocurrencies on the market, thanks to the scientific methodology. From the first quarter of 2020, Shelley would open in the live network.

Now the first quarter of 2020 is coming to an end – and Shelley is still not activated, after two years of delay. Cardano continues to run on the three servers of Iohk, Emurgo and the Foundation. After all, there is a „testnet with incentives” in which participants can stake real ADA-of course without taking part in the consensus process for Cardano. Hoskinson said there was a high probability that Shelley would have been ready in the next two months, but this time he does not want to call Deadlines anymore. For this he promises that Cardano will become „the most decentralized cryptocurrency” and that the 2020s will become Cardano’s age, which becomes the prevailing power of cryptocurrencies.

In a video he was also annoyed by the criticism of investors and the community. Cardano is a scientific project, and that takes time. In addition to all the other challenges that Shelley brings, the developers would also have to optimize the Haskell programming language in order to revise libraries and solve compatibility problems.

Not so atypical ..

There are some striking structural similarities between Cardano and IOTA: Both projects promise everything, but have so far still been very little. Both projects are still extremely centralized and have been sensible for years to all deadlines they have set for decentralization.

In addition there are a few details, for example that both also work on secondary construction sites such as security against quantum computers or have chosen an exotic infrastructure for unclear reasons – at Cardano the Haskell language, at Iota the Ternaren Design – and now surprisingly have to fight with the consequences of this decision. After all, both projects for investors have been a source of disappointments and losses for more than two years.

Iota and Cardano, so to speak, mark the tip of an unsightly trend: a revolutionary design is announced, publishes a „minimally work-capable prototype”, catches up ICO funds, promises to catch up, misses one deadline after the other, but directs with new projects, secondary construction sites and partnerships. This is particularly blatant with IOTA and Cardano, because the two projects are celebrating themselves from the beginning than the reinforcement of cryptocurrencies, but has conveniently avoided the absolute core property of cryptocurrency – decentrality -.

But the phenomenon is not so rare in a milder form. With ICOS, the promise without a product is already a prerequisite, and even Ethereum builds that the developers succeed with Ethereum 2.0 to reinvent the blockchain. But at least Ethereum has a work capable and decentralized, even if it does not afford what Ethereum actually promises to do.

For investors and investors, as well as for companies who want to use blockchains, only one thing can follow: take a close look at what you are involved in.