About a week ago, Cardano’s Director of African Operations tweeted a phenomenal tidbit that largely went unnoticed by crypto media. We here at LIDO Nation think the news was as epic as man landing on the moon for the first time. They are taking up a challenge that is not being addressed by any other crypto project that we know of - and we know about a lot of other crypto projects. After reading this article, if you know of another project trying to solve the same problem, please let us know in the comments; solving the “cash” problem in crypto is a critical hurdle for widespread adoption.
I just saw an offline transaction demo for #Cardano including #Ada and other native assets that kinda blew me away. Support for any android phone of the last 5 years. A few things to work out but the use-cases are crazy. Go @InputOutputHK
Cryptocurrency is all digital. The very premise of blockchain is the idea of digitizing (tokenizing) physical things to protect the right of ownership from any one company or government. The most trending street name for crypto is “internet money.” As a result, it might sound counter-intuitive to call something digital, “cash.”
What is Cardano Cash? As a feature of how Cardano is designed, Cardano transactions need very little information. If you were going to send your neighbor Ammon 800 bucks for his car in ADA, here is how that transaction would play out:
Your computer (or phone) will tell the Cardano network: First, here are three chunks of ADA that I currently own. Here’s my proof that I own them. Combined, they are worth 900 bucks. Next, I want you to put these three things into a pot, then create two new things. One worth 800, and the other worth 100 (like a cash register at a store). Finally, change the owner of the 800 bucks to be Ammon, and make me the owner of the remaining 100 bucks.
Typically when you do this on your phone or computer, your device would be talking to all the computers around the world that make up the Cardano network. Cardano cash is the idea that instead of being forced to talk to the entire Cardano network to send Ammon his 800 bucks, what if your phone only needs to talk to Ammon’s phone?
This is a challenging problem, because how does Ammon’s phone know that you really own the three things you put into the transaction pot? Generally, verifying that you own the 900 bucks is what the computers on the Cardano network do. To solve this, we need a way to transfer all or some of what you own from the network to your phone or other device, and delete (or freeze) it on the network. As part of this transfer, the network gives you some kind of certificate that Ammon’s phone can verify. With the certificate, Ammons’s phone can say, yes, this ADA is authentic and yes, you own it. Ammon’s phone will need to verify that once you send him the 800 bucks, you destroy your copy so Ammon is the only owner. Later, When you or Ammon are ready, you can transfer the “Cash” from your phones back to the Cardano network.
Does that sound like how cash currently works? You can go to your bank, take out cash. Pay someone. They can look at it and “verify” that is real, that you didn’t make it in your basement. They might give you change if you give them three 20s for something that costs 50. And you can both go back to your bank and deposit the cash when you please.
This is the crypto cash challenge, and Cardano is saying that they’ve run a successful test. This is huge! This means that people could get the same privacy they get from cash, while gaining a lot of new features. Crypto, since it is “digital” is much easier to travel with. Regions around the world that do not live on the internet 24/7 can have crypto! This means small businesses can accept secure payments for zero transaction fees. Let me say that again. This means that small businesses can accept secure payments with zero fees.
Another challenge of crypto cash is the hacking problem. How do we prevent the software on your phone from being hacked? How do we securely update the software? The tweet mentioned phones from the last 5 years because these newer devices have something called Trusted Hardware Environments. When you deploy code to these devices, they practically guarantee that the code cannot be changed once installed.
What happens when you lose your phone? The same thing that happens when you lose your wallet!
We’re excited to see the development of Cardano Cash and will keep our ears glued to the multiverse for developments and the next milestones on this journey.