Cardano Analysis

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Cardano Analysis

Post by Miketay » Wed Feb 07, 2018 5:45 am

What is Cardano?
Cardano is a decentralised public blockchain and cryptocurrency project and is fully open source. Cardano is developing a smart contract platform which seeks to deliver more advanced features than any protocol previously developed. It is the first blockchain platform to evolve out of a scientific philosophy and a research-first driven approach. The development team consists of a large global collective of expert engineers and researchers

How does Cardano work?
Cardano consists of two collections of protocols, a provably secure proof of stake based cryptocurrency called the Cardano Settlement Layer (CSL) and a set of protocols called the Cardano Computation Layer (CCL)Cardano Computation Layer (CCL).
The design emphasis is to accommodate the social aspects of cryptocurrencies, build in layers by separating the accounting of value from complex computation and address the needs of regulators within the scope of several immutable principles. Furthermore, where it is sensible, there will also be attempts to vet proposed protocols through peer review and check code against formal specifications.

Popularity Score (How many vendors/users are using it for transaction, how easy to use, average transaction speed)

Development Score (How developed is the coin in terms of software, and how competent is the current team developing it)

Risk Score (How safe is it to invest, and profitability in the 1 year)

Verdict: (As of 5th Feb 2018, 0600 UTC)

Explaination for the scores above:
Scores are calculated from taking the average of each component in the categories.

Popularity Score
Adoption Rate
As Cardano is only launched during the September of 2017, it is currently still in its infancy stage. Currently, there are no news about any merchants accepting it as a valid payment method, also none on the actual usage of it in the real world. However, Cardano comes paired with their own debit card system, called Spend Ada. Through the usage of this card, it vertically integrates Cardano to the current payment norm, possibly making it more convenient to use compared to other cryptocurrencies. Even without any real world application yet, Cardano has already made it to the top 5 most traded coins out there, and still growing. If this continues, adoption numbers will be a non-issue once people starts testing it. Since the coin is still in its early phase, this area can only be rated a 2/10
Trading Volume
Even though the adoption for Cardano is low, the trading volume is currently 5th across all coins. The current 24hr volume is at 1.12billion, placed 6th on the scale. The main reason for the rise of Cardano was due to the sudden surge in popularity to invest in cryptocurrencies. Novice investors seen the price of the major coins as too high, as they do not know they can buy less than 1 coin, therefore Cardano became the prime candidate for their investments. They trigger a sudden surge of 120% increase in price in less than 24hr, highest ever compared to other coins been traded at that time, leading to many dumping the major coins and joining the gold rush with Cardano. This became even greater with the network effect, as people saw the opportunity to make money, causing Cardano to rise 400% in that week alone. Even with the price of cryptocurrencies crashing now, Cardano remained on the top 5 traded coin with its exposure from the top few trading sites, therefore this area will be rated a 9/10.
Transaction Speed
The confirmation time for ADA is currently around 2-5min after the transaction, which is ranked as one of the fastest on the major coins. The block size is still undefined, as the project is currently running in IOHK's centralized server. This will only be known after it is released to the public for decentralization in a few months' time. Due to that, this area will be rated a 7/10.
Ease of Use
The only method to store and use Cardano right now is through the Daedalus Wallet that they had made. This wallet has many functions, it could browse your transaction history, other people's transaction through Cardano Block Explorer, informations about the state of the blockchain, and many more. They are also planning to include Ethereum and Bitcoin support in the future. Cardano can be transferred just like any other cryptocurrencies, a simple wallet and address will be suffice to send and receive it. Through that, this area will be rated a 8/10
Total Score = 26/40 (6.5/10)

Development Score
Development Progress
Cardano is still its early development phase, with its software still centralized in the IOHK server. They are developing the coin around the Proof of Stake concept, whereby the higher the amount of Cardano you have, the more voting rights you own to decide on the future updates. However, with their "πDPoS" in place, only people who owns 1% or more of Cardano has the chance to be chosen as the Producer of the block. This will create a likely scenario whereby a small group of people has a total control over what blocks are made and what aren't. If they ever wanted to rig the system, the public has no say in, since their votes will be counted as "discarded" if they vote for anyone holding below 1% stake. Realistically speaking, this is a very bad concept, less than 20 people will ever get to be the producer due to the distribution of the coins. But because this coin is still under development, there could be updates in the future to alter the lower staking limit.
As Cardano is an open source project, this meant that anyone who is willing to help with the development will be able to do it through their Github. With the above mentioned, this area will be rated a 5/10
There are 3 teams developing this project, they are the Cardano Foundation, IOHK and Emurgo. Cardano is also frequently sending their progress for peer-review, taking the feedback into consideration for any improvements they are making next. The Cardano team is all about transparency, with their peer-reviewed progress, details about how the teams operate, their exact work schedule, and their release timeline. No other cryptocurrencies have been so transparent before. This helped Cardano to be ranked as one of the most trustworthy coins out there, therefore this area will be rated a 8/10.
As a new project, there will bound to be many flaws, one of them will be the above stated "1% stake block producer" issue, the rest are things like high block interval of 20s or irreversibility of block after more than 5hrs, to list a few. Apart from the technical aspect of it, the human aspect could become corruptible. As Cardano was premined heftily, thus it went onto the Bittrex exchange with a sky-high 500million marketcap, people took noticed and bought into it, till now the teams are probably already holding onto billions worth of ADA. There could be a chance in the future that they might dump their holdings for gains, killing the entire coin and disappear with the money, but the chances of it happening looks like it came straight out of a movie, but nevertheless possible. Through the analysis on both technical and human factors, this area will be rated a 6/10.
Total Score = 19/30 (6.3/10)

Risk Score
Investment security
The sudden appearance of Cardano and the incredible price surge of it certainly brought forth a lot of investors wanting a piece of that rich pie. The early investors definitely got paid well, as the price of the coin soared nearly 500 fold, from USD0.026 to USD1.27 during the beginning of January 2018, but plummeted to USD0.36 later on. The reason for the price increase is mainly due to the hype that Bitcoin created, triggering a frenzy buying of cryptocurrencies for a chance to get rich fast, coupled with the vastly different approach of validating the coin progress made by the team, lead to the price been skyrocketed. But recently, the price of ADA has plunged to USD0.36 per coin, alongside the Bitcoin on its market correction. ADA do show a lot of promise, but the development however still lacked substance. The transparency they had shown also showcased that the coin is not even close to been ready for mass market decentralization, as such, on a technical standpoint, this coin actually should not be invested yet due to their slow progress since 2015. The current Cardano at best could only be consider a centralized coin that talked a big dream, and that although there is a decent chance of that dream coming true due to their current wealth of funding, if the technicality doesn't work out, this will still end in a disaster. The current price of it is holding well, meant that the investors who are not panic selling do indeed believe in the future of this coin. Therefore, this area will be rated a 7/10.
With the price gouging coming to an end, the price will stabilize to show ADA's true value. With the current price of USD0.36, it is still a 1400% increase since the launch. Profiting from investment of Cardano is definitely viable, and it is still not too late to join in, as the coin does look more appealing to the rest of the novice investors due to the low price. Once more of them comes in, the chart will undoubtedly trend upwards as the traded volume increases. However, it is uncertain if the price is at the end of the market correction, as the price of BTC is still fluctuating across thousands per day, it is not the unlikely that the price will fold another time, or rise even more. Cardano has also yet to partner up with the other major exchanges, so when more of the exchanges accepts it as a trading commodity, the price will certainly rise again. Therefore this area will be rated a 8/10.
Total Score = 15/20 (7.5/10)

Cardano is still at its infancy stage, there are many uncertain factors, and also many issues yet to be solved. However, its technical potential and market acceptance has ranked it as one of the hottest cryptocurrency today. There is certainly a high risk in investing Cardano, but the potential for it to go up will be so much greater when more people comes onboard to trade it. Therefore this will be a good time to BUY it if you have excess cash and are looking for a potentially lucrative investment of at least 2 folds.
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