A sevenfold gain this year has turned Cardano’s ADA token into the fifth-biggest cryptocurrency by market value, stoking a debate over the merits of a rally that has trounced blockchain bellwethers like Bitcoin and Ether. Among skeptics questioning Cardano’s utility are Galaxy Digital LP’s Michael Novogratz and Castle Island Management LLC founding partner Nic Carter.
Supporters point to the network’s relatively lower energy usage and its projects in areas like identity management and governance, and its ability to capitalize on the growth of decentralized finance or DeFi. Alexandra Clark, sales trader at U.K.-based digital asset broker GlobalBlock, says it promises “a whole new economy.”
Charles Hoskinson, who founded the Cardano platform and serves as chief executive officer of the blockchain research and engineering company IOHK, spoke with Bloomberg News about his company and the broader crypto ecosystem. IOHK is working with Ethiopia’s Ministry of Education on one of the world’s biggest blockchain projects — a universal student credentialing system. It’s also developing systems for ranked-choice voting and researching 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’s the Ethiopia project going?
We’ve got about a million people onboarded. It’s K through 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 credentialing system — so basically their grades, their academic accomplishments, if they get honors, whatever.
It’s our intention to compete amongst others for the whole national ID system, which is about 110 million people.
How do you address human rights?
We’re a big believer in quality human rights. Regimes like China or Saudi Arabia have an onerous record of very significant institutional violations. There, it makes no sense to build identity solutions or blockchain solutions. Because there’s a high probability that those solutions are going to be abused and weaponized against the population.
You have to balance every deal. You look at first 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 you spent years working in a country.
We recently turned down a deal with a Central American country that we really wanted to do, but after peeling back layers and noticing rule of law was deteriorating, it just didn’t feel comfortable with our values.
But the vision of the company is to improve the systems of the world 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 as you do it.
What do you think about Ethereum now?
Vitalik is a young guy. He’s going to apply his youth and his wealth toward the things he thinks are right for his ecosystem. And he’s got a lot of people working with him, like ConsenSys and so forth, that are certainly big companies and they have 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 most significant heavy lifting in their upgrade strategy will occur in 2022, and they’ll probably wrap it up by the end of the year 2022 or early in 2023 at their current velocity.
What about Tether?
The original premise of Tether was that for every Tether in circulation there was a U.S. dollar in a bank account. That fiction is over and now there’s a dollar equivalent, according to them, and that could be Chinese commercial paper, gold, who the hell knows.
Normally when you have $60 billion or more under management and there’s a very strong promise you’ve made to get that money — that you’re backed — you’d be U.S.-regulated. You’d have to file reports to somebody, you’d have a custodian involved. And there’s restrictions on behavior and proper compliance people and so forth.
I’d think regulators would be hesitant to strike Tether until there’s some replacement for it, like USDC, and Tether’s prominence is waning. It could have existential damage to the crypto markets, kind of like when Lehman Brothers failed in 2008. So you have to deleverage that, derisk that and remove that problem.
What’s your take on crypto rivalries?
Maximalism is basically a religion — there’s a doctrine of Satoshi. When you say, “let’s change something because it’s 15 per cent 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 had more than one Fortune 500 company say, “I don’t want to do anything in crypto, because the minute we pick a single blockchain to work on, all the others will attack us.”
What else is IOHK working on?
Zero-knowledge cryptography, which is about the closest thing to magic in our industry. If somebody sends you a Bitcoin, you need to be able to have the whole blockchain to know that it’s real and hasn’t been double-spent. But if you have zero-knowledge proofs, checking the proof gives you the same level of certainty.
The proof could be kilobytes in size, and the blockchain exabytes. That’s really only way we’re going to scale on the smart-contract side and transaction side.
But it’s also really cool because you can do things like preserve human rights or ensure a whistleblower is protected, or allow freedom of association. What happens if you’re gay in Iran, for example? If you get caught, you could be stoned to death. So, how do you meet other people? You need to have some system to do that.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)