CC 02/18/2019

Elevator pitch: Cardano is the first third generation cryptocurrency, after Bitcoin as the first and Ethereum as the second.

Third generation means scaling to billions of users, interoperating with legacy finance and self governance, and Cardano launched in 2015 with the Byron mainnet in September 2017 before Shelley brings decentralization.

An international effort with multiple companies, more than 10 universities, over 40 white papers with 20 peer reviewed, a community grown to a hundred thousand and listings on more than 25 exchanges.

A lot of the Twitter hostility is self inflicted, and old relationships from Ethereum and BitShares cascade into fanboyism with real money behind it.

The hard part of a first cryptocurrency launch was the basics: exchange integrations, a help desk, QA and release cycles that get shorter and more customer focused each time.

Icarus went from inception to customers in under six months as a one click Chrome Web Store wallet, became Yoroi with 15 percent of the network, written in Rust compiled to WebAssembly with the Daedalus front end ported by a parallel team.

A community member named Marcus is running the protocol on a RockPro, a Raspberry Pi on steroids costing $70 and drawing about four watts, so a global scale financial system could run on roughly 4 kilowatts.

Someone tattooed the Cardano logo on his arm so the logo can never change, though in hindsight the go to market strategy and the architecture would be done differently.

Competing wallets force the teams to talk in specifications rather than treat one code base as canonical, which is why the Cardano Rust project under Vincent Hanquez matters and now moves faster than the Haskell team toward a Shelley testnet.

Client diversity was the lesson from Ethereum with Geth plus the C++ and Python clients: it avoids a monoculture and prevents groupthink.

Software estimates are hard, but the Shelley testnet is still on track for Q1 and staking has to start on a testnet so people learn how to register pools.

The staking task force is asking hundreds of questions before a command line testnet, the whole Rust team is in Hong Kong for a month long hackathon, and stress tests will make nodes Byzantine and DDoS pools to validate the theory.

Once complete the Rust client connects to the decoupled Haskell wallet backend and Daedalus, and no mainnet ships before an end to end external security audit, already under discussion with Kudelski.

The OBFT hard fork is the first step to accepting a new backend, Rust already implements OBFT, version 1.5 has three bugs left, and the fork only activates once exchanges and Yoroi leave the deprecated v0 API for v1.

Shelley needs candidate specs for consensus, network, ledger rules and delegation plus Ouroboros Praos and Genesis, with three network specifications in Rust, Haskell and the Scala ScalaNet on GitHub to be hybridized into one standard.

Q2 2019 brings rapid testnet updates to a mainnet release candidate, then decentralization moves epoch by epoch every five days from a fully federated system, rolling back if blocks are not produced correctly and never disrupting users.

Open debate inside the organization on auto delegation to an algorithmically chosen subset of pools by default versus letting people delegate entirely manually.

Auto delegation never takes your money or your vote, you can override it, idle stake can become an enterprise address, and the parameters get tuned through soft and hard forks until full decentralization.

Goguen runs in parallel, so the extended UTXO model, Plutus smart contracts and multi asset accounting gradually merge with decentralization into a 1.0 product, then scaling, sidechains and governance.

The endless when Shelley questions miss how complex this is, and the line about Cardano being the first trillion dollar cryptocurrency was about a self sustaining economy, not a price prediction, before it was quoted dishonestly.

Shelley ships as a spectrum just like Byron because flipping a switch on new protocols would be irresponsible, and the anger about delays is really about price, which nothing moves in this market, just like Bitcoin sitting at $250.

Asks to be judged on process instead: a Haskell code base, formal specifications, peer reviewed research validated by third parties with no monetary incentive, and number one in GitHub commits.

Delegation was far harder than estimated and Ouroboros moved from Classic to a semi synchronous protocol with adaptive corruption protection and Genesis bootstrapping, and unlike others IOHK has no code base to fork, no marketing machine and no Silicon Valley company to buy history from.

A mobile Daedalus starts with light clients, and today a light client trusts a third party explorer as its oracle for UTXO and state.

The proof of stake sidechains work removes that middleman: Merkle roots in headers as checkpoints plus the ATMS primitive let you verify history recursively back to the genesis block with full security.

A few megabytes are enough for Daedalus to install as a light node and upgrade to a full node in the background, after which a mobile app is trivial, though whether IOHK ships one is strategic since Yoroi already has Android with iOS coming.

Yoroi should add hardware and paper wallet support plus delegation within six months, and every release IOHK takes on needs a help desk, QA and an exit strategy or you support it forever like Microsoft with Windows XP.

No monoculture on mobile either, the Ledger Nano X should be a good phone experience, ShapeShift is putting ADA into KeepKey and Trezor sent a device, while Ledger support lands around March after Vacuum Labs finished the integration for Emurgo and Yoroi.

The Ledger X mainly has more resources than the S so the same software should work, but using ADA through the Ledger mobile app is still an open question.

If somebody outbids IOHK after 2020 and does a better job they beat IOHK, since he is a service provider and not a king, and larger companies like IBM or Microsoft could take over in a multi client world like Ethereum with Parity Technologies.

Treasury money could blanket Africa with an ATM network for tens to hundreds of millions of dollars, or build a DEX with real liquidity and easy on ramps into a stable token.

A treasury lets third parties propose and the community vote, which prevents forks and division, and funding is decided before code is written, so a five million dollar lightning proposal is argued up front while meetups gain real power and dApps get funded without an ICO.

Treasury research with Roman Oliynykov and the Lancaster team produced a paper accepted to NDSS, and delegation is generation one of voting before liquid democracy layers on the same mechanics.

Governance consumes 2020 while scalability is nearly solved with shorter, more elegant papers, and by the end of the year the community should be self determining with IOHK just one voice needing a democratic mandate.

Developer education runs three ways, third parties who already built a Plutus course backed by a Cardano Foundation grant with localized materials, and IOHK's own education department under Lars Brunjes training 23 developers from Ethiopia and Uganda in Addis Ababa in Haskell and Plutus.

Third is a hackathon strategy, ETHDenver drew over two thousand people bottom up with no big foundation funding, and running many worldwide should produce five hundred to a thousand good projects.

Traxia seem like nice guys and he would love to ease their migration from Ethereum, since the extended UTXO redeemer validator model is Bitcoin script on steroids with a real language, distinctly different from the accounts model, with a KEVM or EVM sidechain as a fallback.

You do not need a token to be interoperable, which puzzles him about Wanchain, Aion and Icon, since interoperability is moving value and information one way or via atomic cross chain swaps, with firewalling and minimal state to check double spends.

Sidechains rank with Plutus and Ouroboros as IOHK's biggest accomplishments, NIPoPoWs on the proof of work side and ATMS on the proof of stake side move value without centralized coordination or permission.

Interoperability is a game of pragmatism, superior protocols lose and people use Wi-Fi and Bluetooth for a reason, so the plan is Interledger, lightning and maybe a DEX, but never a standard that forces a third party token and its centralized gatekeeper.

Oracles are the other half of smart contracts, someone has to tell the chain whether the Denver Broncos beat the Steelers or the Patriots, whether that is a company like Bloomberg or federated math giving a probabilistic notion of truthiness.

Metadata matters as much as value transfer, Bob withdrawing $500 near a Chinese restaurant at Christmas reads very differently from the same withdrawal at a brothel at 2:30 in the morning, and whoever can switch that story makes the innocent look nefarious.

Metadata should be immutable and auditable yet private, and contingent settlement does that by embedding signed contract hashes in the transaction so an outsider sees nothing but a dispute can still be litigated.

The industry needs a standard for writing legal agreements and embedding them as transactional metadata across Cardano, Bitcoin and Litecoin, and OpenLaw is looking at exactly this.

Wyoming matters because the real problem of doing business in the United States is not regulation but uncertainty, where rules are unknown yet enforced retroactively, so banks derisk and fortune 500 companies stay away.

Japan has clarity but a draconian process with no new listing since November 2017 because of Coincheck, Switzerland has clarity and a workable environment, and states can innovate despite Washington, though the US has about five years before it loses the industry to Malta, Switzerland, South Korea or Liechtenstein.

In 2018 everything was an ICO, and in 2019 uncertainty and the SEC pushed everyone toward STOs in the hope of a safer bet.

Hopes the US embraces the crypto industry like the internet, where the National Science Foundation acceptable use policy once banned commerce and Amazon still emerged, though a University of Pennsylvania paper found over 70 percent of 2018's ICOs were fraudulent in some way.

Better that the industry improves itself through technology and self regulatory organizations, because the heavy hand of government just creates black markets, as Japanese buyers now purchase unlisted tokens from foreign exchanges.

Two shots at getting Cardano into smartphones, Sirin Labs and the Finney phone where Emurgo negotiated a deal, and the more meaningful route through the SIM card and trusted hardware that Rivetz is pursuing with Telefonica and its 40 million subscribers.

Samsung and Sony are moving toward hardware wallets too, so within one to three years phones become a path to mass adoption, with trusted hardware enabling offline off chain payments that reconcile later.

The other path is marrying permissioned and permissionless ledgers in agritech, starting with Ethiopia's roughly one and a half million unbanked coffee farmers, where Fairtrade, carbon and biodiversity rules and buyers like Starbucks force digital identity, wallets and certificates before ADA can power Kiva style microfinance, insurance or remittances.

Mass adoption comes either through consumer devices like Facebook Messenger and phones, which the big guys will do with or without IOHK, or by digitizing underserved markets so anyone is instantly banked.

Remittances eat 15 percent of a transfer today, in Ethiopia 70 percent of people are under 30 and unhappy with their money, and the idea that Africans have no money is a misnomer with a trillion dollars flowing in and five to fifteen percent growth.

Admits a bias toward Cardano, but if Vitalik wants to come play in Ethiopia, IOHK would happily connect people to Ethereum as well.

Crypto is in its infrastructure phase like the early internet, cables and routers and protocols first, then ISPs and web browsers, and only then the Facebooks, Googles and YouTubes built on top.

Saying grandma cannot use crypto is like saying she cannot use email in 1988, the next wave of entrepreneurs fixes experience, which is why IOHK does peer review and formal methods now instead of repeating the mistakes of JavaScript and TCP/IP.

The experience layer has mammoth financial incentives so it will get solved, and if not, Google, Apple or Microsoft will simply add a cryptocurrency wallet to Windows, just as Siri came from the DARPA CALO project in 2003.

The IOHK Summit is April 17 to 18 in Miami with a Plutus hackathon, 26 workshops from zero knowledge proofs onward, a Cardano 2020 keynote, Tangem wallets for attendees and a puzzle splitting an ADA wallet's 12 recovery words across four puzzles.

Summit guests include Christian Cachin and Jonathan Katz, plus scaling debates with the Prism team about their protocol and related work.

Miami Beach in April also means the Everglades, Disney World and a Caribbean island an hour away, and if only the IOHK crowd shows up you get to hang out with them anyway.