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Directed Acyclic Graph (DAG)

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In mathematics and computer science, a Directed Acyclic Graph (DAG) is a finite directed graph with no directed cycles. It consists of finitely many vertices and edges, with each edge directed from one vertex to another, such that there is no way to start at any vertex v and follow a consistently-directed sequence of edges that eventually loops back to v again. A DAG is a directed graph that has a topological ordering, a sequence of the vertices such that every edge is directed from earlier to later in the sequence.

Directed Acyclic Graph (DAG) technology has been touted as the next iteration of blockchain technology, and while relatively new, has shown its technology has the potential to become the distributed ledger architecture of choice in the cryptocurrency industry. Bitcoin was Blockchain 1.0 and the decentralized Ethereum is Blockchain 2.0 and Blockchain 3.0 could be Directed Acyclic Graph.

 

Directed Acyclic Graph v Blockchain

A Directed Acyclic Graph (DAG) model works differently than a blockchain. A common blockchain requires miners to maintain blocks, but a Directed Acyclic Graph (DAG) wouldn’t need either proof-of-work or blocks.

Quick Transactions

Due to its blockless nature, the transactions run directly into the Directed Acyclic Graph (DAG) networks. The whole process is much faster than those of blockchains based on PoW and PoS.

No Mining Involved

There are no miners on Directed Acyclic Graph (DAG) networks. The validation of transactions goes directly to the transactions themselves. For users, this means transactions go through almost instantly.

Friendly to Small Payments

With the advancement of  Directed Acyclic Graph (DAG), we’re looking at a future where high functioning and minimum transaction fee chains are possible. That means users can send micro-payments without heavy fees like Bitcoin or Ethereum.

Directed Acyclic Graph Structure

To reiterate, a DAG structure looks more like a web of individual transactions connected together with “edges”, or, a connection of transactions going in the same direction. This differs from the design of blockchain that groups transactions together in blocks with each block being strung together in a chain formation.

With Directed Acyclic Graph (DAG), because transactions verify each other, the need for miners to secure the network is eliminated, and with it, fees are significantly reduced, with some DAGs successfully testing feeless environments. This is where Directed Acyclic Graph (DAG) has the potential to knock the wind out of blockchain’s sails. Fast, scalable, on-chain transactions are a combination of factors that blockchain technology still struggles to complete. Yet Directed Acyclic Graph (DAG) has shown technologically that these things are possible in a way that the blockchain can’t compete with. Several Directed Acyclic Graph (DAG) projects have tested thousands of transactions per second successfully,

Another important factor is that Directed Acyclic Graph (DAG) eliminates the need for miners to secure the network, as each transaction verifies subsequent transactions. By doing this, the mining process, which is extremely energy intensive, is completely eliminated, making Directed Acyclic Graph (DAG) a more economically friendly distributed ledger for transactions.

Who is Using Directed Acyclic Graph?

 

Over the past year, DAG projects have picked up in popularity, with many of them taking market share away from traditional blockchains. IOTA, with its “Tangle” DAG technology, is one of the most well-known DAG projects with a top ten share of the overall cryptocurrency market. IOTA aims at creating a feeless platform to operate the internet-of-things (IoT) in which everything on the planet will be interoperable and able to talk to each other. The Tangle system is able to settle transactions across the ledger instantaneously with no transaction fees, making microtransactions a reality that was not possible before.

 

Nano has created a feeless DAG system, known as Block Lattice, which actually creates an entire blockchain for each individual wallet. This revolutionary technology has already tested sizable amounts of transactions at high speeds. Byteball is another DAG project that promises trustless smart payments, giving users the ability to customize parameters on payments that allow a payment to be made under certain conditions. This has created new markets on the Byteball platform including insurance, predictions markets, and even sending funds via email. By using DAG, Byteball is able to complete all of these transactions in real-time, with each user confirming transactions made by other users.

 

Consensus Mechanisms

All You Need to Know about Ethereum’s Move to PoS

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Ethereum’s move to PoS: radical shift from PoW to PoS

Ethereum, the world’s #2 cryptocurrency, with its impressive capabilities, has become a force to be reckoned with in the cryptoverse. One of its few criticisms, however, is it’s current mining method, PoW. That, however, is set to change. In this post we will explore Ethereum’s move to PoS.

With the first release of Casper, Ethereum will transition from pure Proof of Work (PoW) to hybrid PoW/PoS. According to Buterin “In this scheme, all of the proof-of-work mechanics will continue to exist, but additional proof-of-stake mechanics will be added”.

The main reason why PoS is seen as a necessary development is, of course, the need to reduce the energy requirements of PoW blockchains like the current versions of Ethereum and Bitcoin. A recent report claims that Bitcoin mining consumes as much power in a year as 159 countries, which is clearly far too much, and Buterin admitted that today’s Ethereum isn’t any better than Bitcoin in that respect.

As Ethereum prepares to make a radical shift in its Blockchain consensus algorithm from Proof of Work (PoW) to Proof of Stake (PoS), here is a brief overview of all that transpired till now – and the changes that are planned.

So, what is Ethereum?

Ethereum was created in 2013 by the Russian-born programmer Vitalik Buterin when he was just 19. In basic terms, Ethereum is a distributed public blockchain network that runs smart contracts. For an in-depth analysis, check out our article on Ethereum.

Just how Bitcoin mining earns Bitcoin, in the Ethereum blockchain, miners work to earn Ether, a type of crypto token that fuels the Ethereum network. Ether is a tradeable cryptocurrency which is also used to pay for transaction fees and services on the Ethereum network by application developers.

Ethereum’s ultimate aim is to grow into a decentralized world computer that replaces server farms. Imagine it as one computer that can be used by the whole world, which cannot be turned off.  Each update of Ethereum is planned to align this mission. So, every stage is designed to help Ethereum to scale while adding new features and improving security and user-friendliness of the platform.

The road till now – the 4 developmental phases of Ethereum

There are 4 development stages for complete launch process of Ethereum. They are as follows:

  1. Frontier
  2. Homestead
  3. Metropolis
  4.  Serenity.

We will now look at each in turn.

Phase #1 Frontier: This was the first live release of the Ethereum network. Launched in July 2015, this phase introduced the mining of Ether and started building dApps and tools.

Phase #2 Homestead: This happened in March 2016 and was the first production release of Ethereum. This phase introduced many protocol improvements. These became the foundation for improving transaction speeds and for future upgrades.

 

Phase #3 Metropolis: This phase focused on building a lighter, faster and more secure Ethereum. It includes two hard forks – Byzantium and Constantinople.

Phase #4 Serenity: This would be the final phase wherein the long-awaited Proof of Stake (PoS) using Casper consensus algorithm will be brought in.

Ethereum’s move to PoS: why move from PoW?

The short answer – to reduce the power consumption of the Ethereum network and avoid enormous waste of energy. Proof of Work (PoW) and Proof of Stake (PoS) are both algorithms for reaching consensus on the blockchain. However, the approach is quite different.

In PoW, miners attempt to solve complex mathematical problems, which requires massive computing power and electricity. There are disadvantages like the possibility of 51% attack in PoW protocol. On the other hand, in PoS protocol, the miner putting up a stake – basically locking up an amount of their coins – to verify a block of transactions. So, the higher the stake, more the percentage of blocks that he can confirm.

Ethereum currently uses PoW algorithm and plans to move to PoS protocol shortly.

Casper – Ethereum’s PoS Protocol

Casper is the name given for the ‘proof-of-stake’ protocol for Ethereum. It is actually a combination of two research projects –   Casper the Friendly Finality Gadget (FFG) and Casper the Friendly GHOST: Correct-by-Construction (CBC). They are referred to as Casper FFG and Casper CBC. The final form of Casper is expected to draw from learnings from both FFG and CBC.

Casper FFG: Nicknamed as Vitalik’s Casper, this is a hybrid POW/POS consensus mechanism. Here, there is a PoS protocol overlaying on top of the normal ethash PoW protocol. So even though blocks are still going to be mined via POW, every 50th block is going to be a PoS checkpoint wherein finality is assessed by a network of validators.

In short, Casper FFG PoS system on the current PoW chain to create a PoW/PoS hybrid and it focuses more on a multi-step transition to introducing PoS for the Ethereum network.

Casper CBC: This is being developed by Vlad Zamfir. Casper CBC is intended to replace the current PoW system used by Ethereum so that the main chain produces blocks through PoS.

Casper could be a part of the Constantinople hard-fork of Ethereum’s Metropolis phase. This hard fork may be likely to occur between 2018 and 2019 to ensure that Ethereum would be resistant against Bitmain’s powerful Ethereum miner named the Antminer E3. For more information about Ethereum Casper click here 

Casper is pretty close, sharding number one priority, Buterin recently said at a conference in Singapore.

Ethereum’s move to PoS in the Serenity Release

Ethereum plans to move from 100% PoW to 100% PoS in the Serenity release. Developers have programmed a difficulty bomb into Ethereum’s Blockchain so that PoS Ethereum Blockchain would be supported. This is expected to eliminate any confusion on which chain to follow – the chain with PoW or the chain with PoS.

Casper is expected to fundamentally change the way the Ethereum network functions – hopefully helping Ethereum scale new heights!

Ethereum: where PoW falls short, PoS is expected to thrive

In conclusion, Ethereum’s move to PoS will be beneficial for the following reasons:

  • As no mining, in its traditional form, will take place, the issue of unnecessary energy wasting will be forgotten about.
  • No competition in solving computational puzzles will mean no demand for advanced mining hardware. Therefore, more people will be encouraged to participate in the validation process.
  • PoS will make attacks on the blockchain even more expensive, despite significantly reducing energy costs.  If anyone decides to buy up 51% of ether to try to alter transaction blocks, they’ll have to pay millions of dollars to get the coins (due to limited supply and increased demand ether price will be increased drastically) and then risk losing their money by destabilizing the very blockchain they’ve put their funds in.

Updates:

20/04/2018 – it was announced at a developers meeting on 20th April that the Ethereum Casper consensus protocol is ready for review.  The Ethereum Improvement Proposal (EIP) 1011 – also known as Hybris Casper FFG (Friendly Finality Gadget”) – is the long-awaited code that will serve as a bridge in the transition from the energy-soaking proof of work (PoW), to a safer, less power-intensive proof of stake (PoS). This process is called “minting”, and it is meant to be more environmentally friendly. EIP 1011 developer Danny Ryan reported, during a meeting, that the code is “ready for reviews and community discussions, etc.” He also stated testing phase for clients using the Ethereum blockchain would begin soon. “As these pieces of the puzzle are getting closer to being completed, I’ll signal that it’s time to start talking about fork block numbers.

10/05/2018 – the release of the first version of the Casper “Friendly Finality Gadget” has been announced.  Danny Ryan, the developer behind the Casper protocol update announced its first version on GitHub. This upgrade will help the client, auditors and other external parties to integrate the source code into their software more easily as explained by Ryan: “v0.1.0 marks us more clearly tagging releases to help clients and external auditors more easily track the contract and changes.”

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Analysis

Cardano

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Cardano Logo

Cardano – also known as the “Japanese Ethereum” – takes many of the pitfalls of Bitcoin and Ethereum and attempts to improve upon both networks

chart-14

ADA Percentage Increase Compared to the Average (Bit20 ETF) Starting in 2017

For example, Cardano uses proof of stake as its validation method rather than the proof of work systems employed by many cryptocurrencies including Bitcoin. This significantly reduces the amount of processing power required to validate the network. Furthermore, unlike Ethereum, Cardano utilizes a two-layered system (i.e. two sets of processes occurring simultaneously): (i) a settlement layer similar to Bitcoin to record transactions, and (ii) a control layer for executing “smart contracts” similar to Ethereum. By separating the network into multiple layers, Cardano can address problems with each layer independently. This is similar to the communications protocol for the Internet, which uses several layers including an Internet layer for routing data to the appropriate destination, and an application layer for defining the protocols used to exchange the data. The ADA coin is utilized as the “gas” for executing the smart contracts on the Cardano platform, which means users have to pay a certain amount in ADA to run a contract.

Pros: Executes Turing-complete smart contracts; platform for developing dApps; strong development partner in IOHK; multi-layered network that separates the transaction from the terms and conditions of the transfer; proof of stake validation method increases transaction speed and significantly reduces computing power necessary to run the network compared to proof of work used in Bitcoin, Ethereum, and many other decentralized networks

Cons: Unproven and untested – the Plutus programming language for writing smart contracts is still in development; proof of stake can lead to centralization as only a select few may have enough coins to participate in staking

Analysis

To perform an objective analysis, each cryptocurrency is rated based on the following factors: (1) validation method; (2) leadership; (3) community participation in development; (4) transaction volume and market capitalization; (5) industry participation; (6) security; (7) usability; (8) technical features; (9) growth; (10) legal risks; and (11) estimated time of arrival.

Validation Method

Unlike Bitcoin, Ethereum, and many other cryptocurrencies, Cardano uses a proof-of-stake (POS) system to validate transactions rather than the more common proof-of-work system. In a POS system, the validator for the next block is selected based on a combination of random selection and account balance. For example, in a POS system if you own 2% of the coins, you can expect to validate about 2% of the blocks, and consequently, receive about 2% of the rewards.  In a POS system, the likelihood of a 51% attack is lower than in a POW system, because it is typically more expensive to own more than 50% of the coins than it is to have more than 50% of the computing power. Conversely, a POS system is vulnerable to the “nothing-at-stake” problem, where an attacker sends a transaction, forks the blockchain from one transaction behind the attacker’s transaction, and then rewrites the transaction to himself to double-spend the currency. Because there is no disincentive for validators to mine both chains in a POS system, they will continue to mine on both validating the attacker’s transactions. However, this problem is more theoretical in nature, and is not perceived as an imminent threat.

Leadership/Community Participation

The Cardano Foundation partnered with Input Output Hong Kong (IOHK) – a technology company founded by Charles Hoskinson and Jeremy Wood who were previously involved in Ethereum. IOHK also employs Professor Aggelos Kiayias, a cryptographer from the University of Edinburgh, along with a team of researchers and scientists that have contributed to the protocol. With these great minds at the forefront of cryptography and distributed ledgers working together, Cardano has the potential to improve upon the existing platforms. Cardano is also the first academically peer-reviewed distributed ledger.

Transaction Volume and Market Capitalization

Cardano has the 7th largest market cap (~5.7B) and a daily transaction volume of over $200 million despite requiring substantial development before any token holder can participate in staking and smart contracts can be deployed on the network.

Industry Participation

A few companies have indicated an interest in the Cardano platform once the virtual machine and Plutus programming language are available for use. This includes Traxia a token for financing small and medium sized businesses, which plans to migrate to the Cardano platform at the end of 2018. However, as Cardano is still in its very early stages, the majority of companies seem to prefer Ethereum at this time.

Security

In terms of security, Cardano has many of the same advantages and disadvantages as Ethereum. In some instances, staking can lead to increased centralization as only a small number of users will have enough tokens to win a block reward. An attack directed at one of those accounts could severely disrupt the network.

Usability

ADA is a utility token used as fuel for operating the Cardano platform. This means that each time a developer creates a smart contract or issues a token on the platform, a designated amount of ADA is transferred. ADA may also be used as a store of value and/or for daily transactions, but its primary intended use appears to be as fuel for executing smart contracts.

Technical Features

To perform proof-of-stake, Cardano uses an algorithm named Ouroboros which has been extensively peer-reviewed. As mentioned above, the Cardano protocol is separated into two layers: a settlement layer and a control layer. The settlement layer is used to record transactions, while the control layer executes smart contracts through a virtual machine called IELE and a programming language named Plutus, both still under development. By separating smart contracts and transactions into two layers, the development team can address problems such as scaling with each layer independently. By contrast, Ethereum records all of this information in the same layer, creating large storage requirements and in some instances, slowing down the network. Finally, Cardano intends to enact an on-chain governance system, where token holders vote on updates to the protocol, and if a majority vote in favor of the update then it is enacted. In other systems like Bitcoin and Ethereum, updates to the network are made through a fork where the chain splits into two. Miners effectively vote for the update by continuing to validate transactions from the old chain or moving over to the new chain. However, this voting occurs after the fork, so the developers can add an update which does not end up being enacted if the miners continue to devote computing resources to the original chain. In Cardano’s on-chain governance system, updates are voted on before they are added into the protocol.

Growth/Legal Risks

Cardano has plenty of potential for growth as development proceeds further.  Eventually, Cardano may compete with Ethereum as developers and companies try out the Cardano platform for generating smart contracts. Moreover, the supply of the ADA coin is capped at 45 billion which it should reach in a little over 20 years.While the supply is several orders of magnitude larger than Bitcoin’s, Litecoin’s, or Ethereum’s, the ADA coin may see a spike in growth as it reaches the maximum amount.

Estimated Time of Arrival

Although ADA is readily available on many exchanges, a significant amount of development is still necessary before this coin becomes viable. Currently, the proof of stake system requires users to have at least a 1% of the total supply of ADA (or about $130 million) to participate in staking. Additionally, both the virtual machine (IELE) and programming language (Plutus) for writing smart contracts remain under development.

ETA: 2020

Conclusion

While the concepts behind Cardano are very intriguing and address many issues with other cryptocurrencies, there is still a lot of work to do to build the platform.  The ADA coin has tremendous potential, but it is yet to be seen how developers will adapt to the Plutus language, or how the IELE virtual machine and the Cardano network will handle a large volume of contracts/transactions.

Acknowledgment:

Analysis brought to you by the hugely talented cryptocurrency enthusiast Cameron Pick. Find out more at https://cryptonalysis.net and be sure to follow the cryptoanalysis Twitter account: https://twitter.com/Cryptonalysis1

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Proof of Stake

Is Nav Coin built for the future of cryptocurrency?

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Nav Coin graphic

What is Nav Coin?

The key differentiating factor between Nav Coin and Bitcoin is that Nav Coin is built on a proof of stake (PoS) platform and not a proof of work (PoW) platform like Bitcoin. This is a good thing for many reasons, with proof of stake being a much more modern technology. In fact, the fact that Bitcoin can’t adopt proof of stake like Ethereum is doing represents a massive problem for Bitcoin – and ultimately will lead to its demise.

Nav Coin Infographic

Nav Coin is a Privacy Coin

The cornerstone of Nav Coin is its privacy features. That is to say, that the blockchain is not publicly viewable, like bitcoin’s is. Uniquely, the coin runs on two blockchains, which serves to break any link there might be forged between sender and receiver. Compared to other cryptocurrencies, its ability for anonymous transactions is distinctive and will compete with other leading privacy coins like PIVX over the next few years.

Providing Privacy Features to All Cryptocurrencies

Nav Coin has plans to combine NAVTech’s anonymous transaction abilities with Changelly’s instant exchange. This fusion of technologies will be called NAVTech Polymorph. It will enable users to send a wide array of cryptocurrencies anonymously. This anonymity feature is a major pillar of Nav Coin and making it interoperate with other cryptocurrencies through Changelly is something that has never really been done before. Now, for the first time ever, users wanting to buy and sell bitcoin anonymously would be able too, with Nav Coin acting has the intermediary anonymising service. The ability to anonymously send trade a variety of cryptocurrencies including those that have no privacy features of their own is a huge feature that really sets Nav Coin apart amongst the privacy coins.

Nav Coin to Join forces with Apple

A continued signal of Nav Coin’s bright future came early in 2018. On January 16th, 2018 Nav Coin announced it had passed Apple’s iOS Store technical review process which means the coin is on its way to being an approved currency within the Apple Store. This development lends serious credibility and momentum to the coin.

How to Invest in Nav Coin

Nav coins is available on all major exchanges and can be traded for a variety of cryptocurrencies.

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Proof of Stake

Cardano Shelley Update: Why Everyone’s Excited!

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There is a lot of excitement around the upcoming Cardano Shelley update. The ambitious crypto project, Cardano is fast becoming a trailblazer. Branded as the 3rd generation of blockchain after Bitcoin (generation 1) and Ethereum (generation 2), Cardano encompasses many unique characteristics and features. The upcoming Cardano Shelley update is expected to be the next big release of Cardano.

Before we explore why everybody is eagerly awaiting Cardano Shelley update, here’s a quick recap of what Cardano is all about and the functionalities that are available in its current release.

Cardano Shelley Update: The 3rd Gen Prodigy

When Bitcoin, the first generation of blockchain came into existence, it introduced a brand-new financial transaction technology that was peer-to-peer in nature and permitted borderless transactions without the need for a middle-man.

Then came Ethereum, the second generation, wherein it implemented smart contract functionality. However, both the first and second generation blockchain technology had a major flaw – it caused splits whenever there was any major upgrade.

In the third generation blockchain technology, the main features in focus are scalability, treasury systems, sustainability, interoperability (side chains), and on-chain governance. Cardano plans to support easy scalability on the network by implementing layers on the Cardano blockchain technology.

Catering to Users and Regulators

The innovative blockchain-based platform of Cardano is based on scientific philosophy and a research-driven approach. Usually, a cryptocurrency starts off with a basic whitepaper. But in the case of Cardano, investors have a plethora of academic papers to explore.

Cardano basically provides a programmable blockchain and smart contracts for dApp development. It is jointly developed by a global team of expert engineers and researchers who recognize that technology should be scalable, flexible, and secure in order to thrive as well as remain useful to millions of users.

The company aims to combine privacy with regulation, thereby giving best of both worlds – balancing the needs of the users with the regulators. In their words, “The vision for Cardano is that its new style of regulated computing will bring greater financial inclusion by providing open access for all to fair financial services.”

The 5 Special Features of Cardano

Launched in 2015 by Charles Hoskinson and Jeremy Wood, Cardano platform utilizes a rigorously and academically peer-reviewed open source code.

Charles Hoskinson

The important features of Cardano are its coding language, proof of stake (PoS) protocol, layered technology, governance model, and treasury.

Jeremy Wood

Coding Language: Cardano is built from scratch using the functional programming language, Haskell. Haskell’s mathematical approach allows for code to be written in a more reliable and secure manner.

PoS Protocol: Cardano uses a proprietary PoS protocol with mathematically proven security called Ouroboros. Ouroboros assures that all the blocks that are being dealt with are legitimate and tamper-proof. Ouroboros can also enable many advanced scaling options like sidechains (wherein there are multiple chains that all interoperate) and sharding (wherein the larger blockchain is broken down into manageable chunks)

Layered Technology: Cardano aims to use a layered technology. The first layer called the Cardano Settlement Layer (CSL) will focus on transactions and accounts. The native currency, ADA will be transacted over CSL. The second layer called Cardano Control Later (CCL) and it is the computational layer for smart contracts. Having two layers basically helps Cardano to have enhanced flexibility as well as easier upgrades.

Cardano: Features

Governance: The future of a blockchain depends on its Governance model to a large extent. Cardano’s aim is to implement on-chain governance. Here, community proposed updates to the blockchain would be voted by the ADA token holders. Once approved, the updates would be encoded into the blockchain.

Treasury: The treasury is also decentralized, wherein 25% of the block rewards are planned to be placed. The voting by the ADA holders will decide how to spend this money.

Cardano’s Current Phase: Byron

Cardano is currently in the Bootstrap Era, which is code-named as the “Byron” phase.

George Gordon Byron

Interestingly, this phase is named after famed British poet George Gordon Byron.

Byron is the first major release of the platform. It basically establishes the baseline for Cardano for letting users trade and transfer ADA.

Here are the key developments in the Byron phase.

Cardano SL: The launch of Cardano SL MainNet was done on September 29, 2017.

Exchange Enhancements: The performance enhancements and improvements are being done to the code in Byron phase. This is to ensure that it can handle the increasing rates of activities on major crypto exchanges. Cardano aims to increase the number of users that can be served with a fixed volume of transactions. In order to support this feature, a brand new API (Application Programming Interface), is being delivered.

To ensure that Cardano can support multiple exchanges, many existing APIs are also being revised in this phase. There is already testing being done on Binance and Bittrex exchanges for quicker resolutions of any maintenance issues. A support tracking system is also created in order to monitor any incoming requests.

Improvements to the design of Daedalus: The graphical user interface (GUI) of Cardano wallet, Daedalus is being improved in this phase. The users will now be able to submit bug reports from within the Daedalus application.

All said and done, the fact remains that, right now, the only working protocol of Cardano is its settlement layer, wherein its currency ADA resides. Although Ouroboros is turned on, consensus is currently locked to private nodes (IOHK) until the system gathers momentum. Which means that Cardano is PoS centralized right now and the rewards are simply being burned.

If we strip all the frills, Cardano is now only a cryptocurrency and is yet to release other features for becoming a blockchain platform.

Cardano Shelley Update: Next Phase

By mid-2018, Cardano plans to roll into its next phase called Shelley. This is when things start to get exciting. This phase is named after the English poet, Percy Bysshe Shelley.

Percy Bysshe Shelley

The ultimate aim of Shelley phase is for the technology to become a fully decentralised and autonomous system. Once Byron is stabilized and refined, IOHK plans to make significant improvements to its core components in the Shelley phase.

The important developments expected in Shelley phase are open Ouroboros delegation, multiSig transactions, enhanced Wallet backend, consensus and incentive fees, quantum-resistant signatures, light client mode, human-friendly addresses, networking, voting centre, paper wallets.

Open Ouroboros delegation: In Cardano, the transaction confirmations are not done with hardware (PoW) but with the user’s already owned ADA (PoS). This means that Cardano SL makes use of a proof of stake approach to reach consensus and ultimately produce blocks in the blockchain. A key element of decentralization is the ability of delegating stakes by stakeholders. In Shelley phase, users will have the capability to delegate their stake or to act as stake pools and have stake delegated to them.

MultiSig transactions: In Cardano Shelly phase, multisignature transaction will be enabled. It is a very useful security feature that allows Daedalus to support wallets that are shared across multiple people and which enables joint control of funds.

Enhanced Wallet backend: In Shelley phase, the wallet backend is aimed to be enhanced. The wallet backend basically gives Daedalus HD wallet capabilities as well as provide the link between Daedalus and the Cardano network. By enhancing the wallet backend, the performance of Daedalus would be increased, and also make it easier for third-party systems to integrate with Cardano.

Shelley Phase

Consensus and incentive fees: The incentive scheme in Shelley phase would be based on sound foundations of mathematics, economic theory, and game theory. This scheme is planned to be introduced to make sure that stakeholders will fully participate in the protocol and also setup the required infrastructure for running a node. The incentive scheme will have appropriate rewards for operating full nodes, a mechanism to set transaction fees, incentives to delegate stake, and more.

Quantum-resistant signatures: One of the major worries in crypto-verse is the development of quantum computers that would break cryptography. Cardano plans to mitigate this by adding a new type of transaction. This transaction will use a quantum-resistant signature scheme called BLISS. Even if the cryptography is broken, this would allow funds to be secured against being stolen.

Light client mode: Currently, using a wallet for the first time or after a while requires a long wait time. This is because of the time necessary for the entire blockchain to finish downloading. In the Shelley phase, Cardano plans to include light client mode feature that would significantly reduce the blockchain syncing time. For doing this, Daedalus wallet would subscribe to a trusted blockchain checkpoint provider. A checkpoint is basically snapshots of the Cardano blockchain in time. With this update, Daedalus would only need to sync the blockchain from the most recent checkpoint, rather than the entire blockchain, thus saving time.

Human-friendly addresses: The addresses of Cardano are presently a string of letters and numbers that are a lot longer than Bitcoin addresses. In the Shelley phase, the length of the address would be significantly trimmed, making them easier to communicate. This is planned to be done by minimising the information represented in the addresses and improving the way that stake delegation information is represented.

Improved networking: A new network layer that gives a degree of protection to large-scale distributed denial of service (DDoS) attacks, and enables decentralization while supporting a wide and dynamic network topography over common internet infrastructure is planned for Shelley phase.

A voting centre: Instead of central authorities deciding on protocol and software updates, Cardano plans to have a voting centre for this decision making. Users can use their stake or delegate it to the stake pool to vote on upcoming updates and protocol changes.

Paper wallets: Paper wallets are now becoming increasingly popular as they can be used for placing funds in cold storage on a physical medium. Shelley update plans to make paper wallet available in Daedalus.

The Cardano Shelley update will prepare Cardano for a range of impressive features, including smart contracts, metadata, side chains, multi-party computation, and more. Those protocols will be added gradually over time.

What’s next after Cardano Shelley Update?

After the Cardano Shelley update there will be 3 more releases for Cardano. First will be Goguen, which centres on the integration of smart contracts. For this, they plan to launch an IELE Virtual Machine. The testnet version of IELE will be running on the Ethereum Mantis client. After that is Basho, which focuses on performance improvements. Voltaire would be the final phase, wherein IOHK will add a treasury system and governance.

Charles Hoskinson has made it clear that the Cardano Shelley update is an important step in Cardano’s grand scheme of things. The goal of Cardano is to create a secure, reliable platform that will span decades, and they have numerous experts working tirelessly towards it. We are living in amazing times indeed!

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Discussion

Next Generation Blockchains: Ethereum vs Neo vs Cardano

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Introducing the next generation blockchains

Satoshi Nakamoto brought in the whirlwinds of change. Almost a decade ago, he introduced blockchain technology and the peer-to-peer digital currency Bitcoin. This went on to completely revolutionize the very landscape of global finance and economy. Since then, the original blockchain concept has found a multitude of uses and applications that transcends beyond digital currencies. Today, Ethereum (ETH), NEO (NEO), and Cardano (ADA) are the frontrunners among the next generation blockchains. Let’s explore more about them.

Ethereum, NEO & ADA: race is on for the next generation blockchains

Think of blockchain as the internet. Then, digital currencies can be compared to say, emails. You can use the internet for emails of course. But then again, the internet has a plethora of other uses than just emails! This is exactly the case with the blockchain, as it has now evolved into something much bigger.

…because the Internet is more than just emails

The blockchains can be used for amazing new business applications like smart contracts, peer-to-peer sharing economy, creation of crowd-sourced venture capital funds, governance though transparent elections and polls, file storage, supply chain auditing, prediction market via crowdsourcing, protecting intellectual properties and automating sale of creative works online, automation of IoT (internet of things), identity management, microgrid energy management, Anti-money laundering (AML) and know your customer (KYC) practices, data management, stock trading, land title registration and record keeping, and much much more!

Ethereum, NEO & ADA: next generation blockchains

What is Ethereum?

Ethereum is an open, decentralized software platform where transaction fees and services are paid using ether. The Ethereum network introduced the concept of ‘programmable blockchain’, as Ethereum bought in the capability of developing “distributed applications” (dApps) on top of the blockchain. Ethereum uses POW algorithm but is slowly moving to a new hybrid PoW/PoS as part of the Casper release.

But there were some major challenges faced by the Ethereum network after it witnessed massive growth. There have been issues in the past with smart contract safety and scalability. These are both being addressed by Ethereum’s ‘Sharding’ architecture which should enable several things.

  • It will facilitate multiple domains or “parallel universes” to exist on the same network.
  • These universes will share consensus and there will be protocols to link the different universes.
  • Sharding will create new types of addresses on the network. This, in turn, will allow Ethereum to adopt new backward incompatible protocols without disrupting the main blockchain.

What is NEO?

NEO is often referred to as the Chinese Ethereum. Neo is the rebranded AntShares (ANS), (which was formed in 2014) and is a decentralized blockchain protocol. Neo calls itself as the blockchain for the “Smart Economy”.

According to NEO whitepaper, “NEO is the use of blockchain technology and digital identity to digitize assets, the use of smart contracts for digital assets to be self-managed, to achieve “smart economy” with a distributed network.”

What is Cardano?

Cardano is a proof of stake cryptocurrency that will support smart contracts and dapps in the future. We have extensively covered Cardano already and encourage readers to check out our deep dive piece on it.

Ethereum vs Cardano vs Neo – comparison of next generation blockchains

Let us now compare the three heavyweights of next generation blockchains – Ethereum (ETH) vs Cardano (ADA) vs Neo (NEO).

#1 Consensus

  • Ethereum uses Proof of Work consensus model. It is now testing a new hybrid PoW/PoS system with its Casper release
  • Cardano uses Ouroboros proof of stake algorithm to reach consensus.
  • NEO uses a delegated Byzantine Fault Tolerance (dBFT) to reach consensus. It is energy efficient and quicker than PoW.

Cardano takes the lead here with Ouroboros being the only consensus algorithm to have undergone formal academic review

#2 Current Ecosystem

  • Ethereum has one of the most robust ecosystems with multiple wallets, dApps, decentralized exchanges, decentralized banking, payments, etc.
  • Cardano launched several years after Ethereum and as such has a much more infantile ecosystem – although its gaining momentum steadily.
  • NEO launched under initially under the name Antshares and has been around longer than Cardano, but not as long as Ethereum. It currently has multiple wallets, dApps etc. There are also projects on other platforms like QLink, Zeepin, Trinity, THOR, NEX, TheKey etc.

Ethereum is leading the charge hands down in terms of established ecosystem and continues to reap first movers advantage as more and more ICOs launch on its blockchain.

#3 Transaction Per Second on Chain

With all projects still actively developing their scaling solutions this is an ever evolving landscape. Equally, while a project might claim a transaction rate, that’s not necessarily been proven. Therefore, making accommodations for all the work each project is doing, it seems unfair to call any project out now for current numbers or limitations. Safe to say, all projects, claim to be able to handle thousands of transactions per second by 2020. We shall see!

#4 Governance

  • Ethereum has a governance model similar to bitcoin and uses PoW mining to reach consensus now.
  • Cardano plans to provide an on-chain voting mechanism to make decisions regarding the future of the protocol by creating a constitution, treasury fund etc.
  • NEO has token holders as the network managers. Voting is expected to be enabled once the decentralization of bookkeeper nodes happen. Currently, NEO council is in charge of offchain governance.
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Proof of Stake

Cardano Staking Pools

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Cardano Staking Pools

Cardano Staking Pools will allow holders of Ada, the cryptocurrency on the Cardano blockchain platform, to earn money while they sleep.

What is Cardano?

Cardano is one of the world leading blockchain projects. Shortly Cardano will be completing its Shelley release as per its roadmap which will enable users to delegate the staking of their Ada. If you’re a little lost, fear not, all will be explained!

What’s a Staking Pool?

In a proof-of-stake network the act of staking enables new coins to be minted. This means that there are rewards available for those that stake their coins. By some estimations, roughly 5% a year can be earned through continually staking ones’ coins. Cardano is soon to enable its delegated staking features in its Daedalus wallet, enabling people to stake on behalf of others. Once staking goes live the Daedalus wallet will let you create a ‘proxy signing key’ or ‘staking key’ which can then be used to delegate your stake to another Cardano wallet. You can stake some, or all of your Ada but in general people will stake as much as they can.

So I can just stake my own Ada?

Yes, you can. And you should. In order to effectively stake your Ada, you need to run the Daedalus wallet 24/7 as a full node on the Cardano network. Essentially this means that you are contributing your electricity towards supporting the network, and in return, you will earn rewards for doing so. If however, you lose your connection at any time, then you are penalised for the downtime by having no chance of earning the rewards for that time. For those people that want a “set and forget” solution that guarantees their staking is happening on the network at all times, they have the option of using a staking pool. The pool will have published and measurable uptime values, so the most reliable pools will likely attract the most stakers, and will donate the electricity into the network on behalf of its stakers.

This is actually a great thing and something Cardano seeks to really get right. Properly incentivising staking pools increases the number of nodes on the network as, for the most part, individual users are not willing or able to stake their Ada themselves. Rather than these users missing out on rewards, there will be dozens of staking pools available for them to use to stake for them. The more pools, the more competition to have low fees and be highly reliable.

How do I join a Staking Pool?

Below is a selection of staking pools we’re aware of, with our Planet Cardano standing head and shoulders above the rest in terms of commitment towards customer satisfaction through engineered excellence. A relentlessly high quality, secure, resilient solution that guarantees world-class service

Planet Cardano Logo

Planet Cardano is engineered for stability and high availability. The team behind the Plant Cardano Staking Pool are all experienced technical professionals. Sign up here for more information about joining Planet Cardano’s Staking Pool.

How many Cardano Staking Pools are there?

As well as Planet Cardano, there are a number of other staking pools…

  • cardano-ada-mochizuki.com
  • lovelacepool
  • supportada.com
  • adastakes.com
  • narcissus.io
  • adafans.io
  • icaruspool.com
  • cardanostakingpool.com
  • cardanopool.com
  • cardanocloudpool.com
  • blushpool.com
  • ninjapool.io
  • delphinuspool.com
  • adapools.io
  • markov.dk
  • cryptogrill.io
  • ada-pool.online
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