A sevenfold gain this year has made Cardano’s ADA token the fifth largest cryptocurrency by market value, sparking debate over the merits of a rally that has defeated blockchain bellwethers like Bitcoin and Ether. Skeptics questioning Cardano’s usefulness include Michael Novogratz of Galaxy Digital LP and founding partner Nic Carter of Castle Island Management LLC.
Proponents point to the relatively lower energy consumption of the network and projects in areas such as identity management and governance, and the ability to take advantage of the growth of decentralized finance, or DeFi. Alexandra Clark, sales trader at UK-based digital asset brokerage GlobalBlock, says it promises “an entirely new economy”.
Charles Hoskinson, who founded the Cardano platform and serves as chief executive officer of blockchain research and engineering firm IOHK, spoke to Bloomberg News about his company and the broader crypto ecosystem. IOHK is working with the Ethiopian Ministry of Education on one of the world’s largest blockchain projects: a universal student identification system. It also develops ranked choice voting systems and explores some of the most complex issues in cryptocurrencies.
The comments below from Hoskinson, who was also part of Ethereum’s founding team with Vitalik Buterin, have been edited for clarity and length:
How is the Ethiopia project going?
We have about a million people on board. It’s K to 12, and we’re going to do the first launch, I think, sometime in September or October. The goal is to get five million students. It’s going to be used first as a universal legitimation system — basically their grades, their academic achievement, if they’re getting accolades, whatever.
Among other things, our intention is to fight for the entire national identity card system, which consists of approximately 110 million people.
How do you deal with human rights?
We are a strong supporter of high-quality human rights. Regimes such as China or Saudi Arabia have a heavy track record of very significant institutional violations. There it makes no sense to build identity solutions or blockchain solutions. Because there is a high probability that those solutions will be abused and armed against the population.
You have to balance every deal. You first look at the country level and then you work your way to the facts and circumstances. Things change – and in some cases you have to leave even after working in a country for years.
We recently turned down a deal with a Central American country that we really wanted to do, but after we peeled back the layers and noticed the rule of law was deteriorating, it just didn’t feel right with our values.
But the company’s vision is to improve the world’s systems for everyone everywhere, and the places that need better systems aren’t necessarily Berlin or New York City. So you have to go to places that are a little more difficult, and you have to be very careful when you do it.
What do you think of Ethereum now?
Vitalik is a young guy. He will use his youth and his wealth for the things he believes are good for his ecosystem. And he’s got a lot of people working with him, like ConsenSys and so on, that’s definitely big companies and they’ve got a lot of people and money too.
When you have that kind of momentum, something is going to happen. If I had to guess, I’d say the main heavy lifting in their upgrade strategy will be in 2022, and they’ll probably finish it by the end of the year 2022 or early 2023 at their current rate.
What about Tether?
The original premise of Tether was that for every Tether in circulation there was one US dollar in a bank account. That fiction is gone and now they say there is a dollar equivalent, and that could be Chinese commercial paper, gold, who knows.
Normally, if you have $60 billion or more under management and there is a very strong promise you made to get that money – backed up to you – you would be regulated by the US. You should report to someone, you should have a custodian. And there are restrictions on people’s behavior and proper compliance and so on.
I think regulators are hesitant to discontinue Tether until there is a replacement for it, such as USDC, and Tether’s notoriety wanes. It could do existential damage to the crypto markets, a bit like when Lehman Brothers failed in 2008. So you have to scale that down, remove that risk and solve that problem.
What is your take on crypto rivalry?
Maximalism is actually a religion — there is a doctrine of Satoshi. If you say, “let’s change something because it’s 15 percent faster,” they’ll say, “you can’t change that, because it’s not in the Bible, it’s not in the Bitcoin white paper.”
It actually prevents neutral people from entering. I’ve heard more than one Fortune 500 company say, “I don’t want to do anything in crypto because once we pick a single blockchain to work on, everyone else will attack us.”
What else is IOHK working on?
Zero knowledge cryptography, which is about the closest thing to magic in our industry. If someone sends you a Bitcoin, you need to be able to have the entire blockchain to know that it is real and not double spent. But if you have zero proof of knowledge, checking the proof will give you the same level of assurance.
The proof can be kilobytes in size and the blockchain exabytes. That’s really the only way we’re going to scale on the smart contracts and transaction side.
But it’s also really cool because you can do things like protect human rights or make sure a whistleblower is protected, or allow freedom of association. For example, what happens if you are gay in Iran? If you get caught, you can be stoned. So, how do you meet other people? You need a system for that.
(Except for the headline, this story has not been edited by NewsMadura staff and has been published from a syndicated feed.)