Reasoning from First Principles

“We’re Cardano. And, if you’ll permit us, we’d like to change the world.” –Charles Hoskinson Youtube Video 8:22

This quotable line captured the hopes and dreams of Cardano believers around the world when it ushered in Cardano’s “Shelley Era” in July 2020. A google search of the quote turns up Reddit threads, industry articles, and many Cardano Stake Pool landing pages.

But wow - there’s a lot baked into these first sentences!

What is Cardano?
In what way does it intend to change the world?
What is the Shelley Era, or a Stake Pool?

Why should I care about any of this?

Chapter two of John Greene’s “Cardano for the Masses” seeks to lay the groundwork for these and other foundational questions about the Cardano blockchain. The chapter kicks off with another Hoskinson quote, hooking us with this explanation of what Cardano is and why you might care:

“Cardano is an open platform that seeks to provide economic identity to billions of people who lack it, by providing decentralized applications to manage identity, value, and governance.”

What this means is a new, unified “operating system” for the whole world.

One way to view the current world order is that it operates on two rails: one for the developed world, and another for the developing world. While current developed-world tools for finance, governance, and identity may be flawed, they do at least exist, and are relatively stable and safe compared to the developing world. Cardano seeks to build a new system where “suddenly, the richest people in the world…will use the same system as the poorest people in the world, and both will have a better system than [the one] that came before it” -C.H.

Greene expands on this concept later in the chapter, as he explains how Cardano is designed to be able to work within the inevitable strictures of official regulation, while simultaneously pushing aside the barriers that have made important tools inaccessible to many. He lists many historical and contemporary examples which prove again and again that central authorities and governments can, and do, misuse their power to line their own pockets and control the official narrative. Therefore, individuals should have control over their own assets and identities, official records should be tamper-proof, and there should be no restrictions on the movement of wealth. In systems where these values are not honored, those who have the least power are hurt the most.

So, there are some lofty goals baked into this cake! But what are the ingredients?

What is Cardano

The “Foundational Concepts” section explains the elemental concepts of decentralization, what a “block” is in a blockchain, and what cryptocurrency is. The next sections explain what is different about the Cardano blockchain when compared to its thousands of competitors, and why someone might choose to land on Cardano as their blockchain of choice. It explains how a newcomer can buy Ada through a centralized exchange, transfer their Ada to a Cardano wallet, and stake it to earn passive income.

Cardano’s deeply-rooted themes of decentralization, “third generation” innovation, scalability, interoperability, and governance have been covered before in the Lido Nation articles linked here, and each gets a brief introduction in this chapter, along with the promise that deeper explorations are coming in future chapters.

The “Cardano Roadmap” section explains the planned “Eras” of Cardano’s rollout, and I was reminded of what a ride it has been through the last 2+ years of my own involvement with Cardano. The Shelley Era ushered in decentralization by allowing anyone to establish a network node, or “Stake Pool”. That was the origin of Lido Nation! Since then, I’ve witnessed the Goguen and Basho Eras, and now the community is hard at work building toward the Voltaire Era. It’s not simply that Cardano keeps growing and stumbling forward; rather, distinct milestones have been defined and set, around which the global community has rallied and built its way toward common goals. Learning the meaning of each Era on the roadmap (there’s only five!) is important context for any aspiring Cardanian.

First Principles Thinking

Among the many key differentiators of the Cardano network described in this chapter, one stood out to me - perhaps because it has not yet been deeply covered at Lido Nation. Many blockchains start their life as a whitepaper. The Bitcoin Whitepaper, written by the pseudonymous Satoshi Yakamoto in 2008, is particularly well known. It was the first of many blockchain whitepapers to come. This and other whitepapers are technical documents. They define a problem and a technology solution. A good whitepaper may be used to launch a product, found a company, or lead to further research and innovation. Like Bitcoin, many of the blockchains in existence started with a whitepaper.

Cardano did not start with a whitepaper. Instead, the founders adopted a “first principles” approach. According to the book:

“First Principles thinking is one of the best ways to reverse-engineer complicated problems and unleash creative possibilities. Sometimes called ‘reasoning from first principles,’ the idea is to break down complicated problems into basic elements and then reassemble them from the ground up”

You can review Cardano’s first principles, outlined in 15 bullet points, in Charles Hoskinson’s short 2017 essay, at why.cardano.org.

With these “First Principles” in hand, the next element in founding and evolving the Cardano protocol is ongoing, peer-reviewed research. Cardano participates energetically in presenting academic papers at cryptography conferences around the world, where the world’s brightest minds will see the research and indeed will compete with one another to be the first to point out its flaws. In the spirit of iron sharpening iron, it is hoped that this allows Cardano to be the best it can be. It also reflects one of the first principles, which is that unlike many other networks that can’t easily be updated, Cardano must be built to evolve and upgrade without massive upheaval.
The application of first principles thinking, coupled with Cardano’s unique dedication to academic peer-review, seems to be what lies at the heart of the many primary and secondary differentiators of Cardano described in this chapter.

Naming

After establishing these foundation elements, the chapter wanders into the technical weeds of computation layers, settlement layers, side chains, NiPoPoWs, and more for a few pages. No matter where you are on your Cardano learning journey, you are sure to find somewhere to deepen your knowledge.

Then, to close out the chapter, things lighten up considerably. The reader is invited to enjoy the parade of flamboyant historical and mythological characters that inspired the naming of all the elements of the Cardano ecosystem. Starting with Gerolamo Cardano himself, we then wander through a colorful cast of poets, mathematicians, dragons, and a minotaur, to name a few. Knowing these stories is not strictly necessary to use Cardano or to admire its first principles design, but it absolutely adds some color and interest to the story!