Cardano at Christmas (and what to say if anyone asks…)
You may be taking some time out from crypto this holiday season. But if table talk does flow towards Cardano, here’s your conversation starter…
21 December 2021 7 mins read
'twas the night before Christmas, when all thru the house,
Not a crypto was stirring, not even Cardano
When American scholar Clement Clarke Moore wrote A visit from St. Nicholas, cryptocurrencies were certainly not in his mind. According to historians, Clarke wrote the piece as a Christmas treat for his daughters, and read it aloud as the family gathered together on Christmas Eve, 1822.
Christmas celebrations were probably less complicated in the first quarter of the 19th century, and perhaps more truthful to the spirit of the season than in later decades. Conversations around Christmas dinner today also involved family matters, for sure, but the topic of cryptocurrencies and blockchain does come up, more and more frequently. People are getting curious about this new and seemingly inscrutable digital world.
There are many big names out there. For better or worse, everyone has heard of Bitcoin. And some may have heard of Ethereum, too, or become aware of the dog-meme coin craze of past months. But the question is, how do you explain Cardano to the family?
The stake pools were hung by the chimney with care
Christmas and the holiday season is all about food, family, and fine spirits (not necessarily in that order.) The day is long and merry and full of inquisitive minds. Certainly, we’d advise putting the phone down and switching off from the crypto craziness that will still be waiting for you when you return. But should you find yourself cornered at the hearth by some crypto-curious relatives who just need to know about ada, and Cardano, and blockchain, and all that, well, this is how the tale goes.
Cardano is a digital ledger that uses ada as its native currency. This digital ledger, which you can think of as a fancy version of the old-fashion accounting book, is called a blockchain because new blocks are appended to the ledger all the time, so it keeps growing. Those blocks contained transactions with ada, and other digital tokens.
Cardano is decentralized. This means that, unlike a bank for example, there is no central authority regulating what happens in the network. Cardano is effectively a piece of software run by thousands of people to create a network that can be used by millions. And over time, Cardano will become an entirely self-regulating network, with decisions about its future taken by the community.
Who produces the blocks that make up the blockchain? Well, that’s the job of what are called stake pools. These are network nodes (think computers) that are responsible for processing the transactions, and these add new blocks to keep Cardano growing. Stake pools really are at the heart of Cardano. People who hold ada can delegate some (or all of it) to these stake pools – via a wallet application they can run on their phones or computers – and get rewards regularly.
So decentralization is a key aspect of blockchain, and one that you need to understand. It is an environment where trust is implicitly established by something called consensus protocol. In Cardano, this protocol is Ouroboros, named after the ancient symbol for eternity. Think of Ouroboros as a behind-the-scenes music director orchestrating all the different components within Cardano. A ‘conductor’ that ensures all the different instruments are in tune, on tempo and playing the same score.
And you want to know one of the best things about Cardano? You have probably heard about climate change, energy crisis, etc. Cardano is very much a green blockchain, as it consumes far less energy to produce new blocks than the Bitcoin or Ethereum networks. That is because Ouroboros is a proof-of-stake protocol.
Let’s talk about decentralized finance
Banks and credit unions charge a lot for their services, and when you deposit your money with them, you get next to nothing in return. There was always an imbalance with traditional finance. But it just isn't working anymore, right?
Blockchain technology offers a way to move away from all that, thanks to something called decentralized finance, or DeFi. In legacy finance, the bank dictates and regulates what happens with the money you deposit. And every time you need a loan or access credit, the bank has the ultimate power to decide whether or not you are granted access to those facilities. That's because traditional banking is centralized around banks, or credit unions.
DeFi turns the tables and empowers the individual to make the decisions. This is possible because DeFi works in peer-to-peer fashion. Person to person, with no need for banks.
Why do I tell you this? Because Cardano is part of DeFi. And we want to take that a step further with RealFi, providing millions around the world with a digital identity to allow them to access this new breed of financial services. Cardano is built by people, for the people. Cardano wants to create a financial environment that is fair and inclusive, where people can make the decisions that have, for many years, been made by all those institutions on people's behalf.
Banks may have acted as middlemen, facilitators. But people keep the economy going, you see. And often, people need access to finance to do just that. Maybe they need some liquidity to open a business, or they might be smallholders in developing nations who might have to buy fertilizer, or simply pay their providers. And often, banks might not be able to help, because of past credit issues, or quite simply, because some people in remote or rural areas of the world cannot prove who they are. Did you know that there's about a billion people in the world who have no legal identity?
There's where Cardano steps in, thanks to real finance, or RealFi. Cardano can give those billion people an identity. A digital identity, in fact, which they can use to access finance. RealFi creates value and opportunity for the real people who really need these things.
Down the chimney ada came with a bound
Remember we mentioned ada, the currency that Cardano uses to pay for transactions, rewards, etc.? (And by the way, the coin is named after Ada Lovelace, a mathematician, and the daughter of Lord Byron.) You can purchase ada with fiat through some websites called exchanges. Or swap it for other cryptocurrencies through decentralized exchanges. So you buy/swap your ada, and store it in a wallet. Cardano uses two ‘official’ wallets, Daedalus and Yoroi. Yoroi is a 'light wallet,' that is, it's an extension that you add to your internet browser. Daedalus is a ‘full’-node’ wallet that stores the entire history of the blockchain making it more secure but slower. You can also choose from a number of community-build wallets - remember, as an open source decentralized project anyone can build products or solutions for Cardano.
Once you have ada in your wallet, you can use it to pay for transactions, delegate to stake pools (remember the stockings?), or trade it for other cryptocurrencies by using exchanges. Or of course, you can exchange it for NFTs – but if your relative hasn’t picked up any of the news about that in recent months, you’ll probably need boxing day to get them fully up to speed…
Make Cardano part of your New Year's resolution
So there we have it, a very simplified, concise introduction. But hopefully, it means explaining Cardano to your friends or family needs not be a chore nor a complicated matter. So as the glasses clink and the turkey gravy flows around the Christmas table, tell a tale of awe, of a blockchain merry and full of wonder, one that will make the crypto world go yonder.