Explaining Cardano through Analogies

2024/04/29 | Youry Brauner

Explaining Cardano Through Analogies | Waffle Capital

Some Analogies To Help Explain Cardano

In my role at Waffle Capital I constantly have to explain what Cardano is, but also how it stands out within the broader cryptocurrency industry. This is a big part of my job. People get somewhat intrigued when they learn we solely operate within this ecosystem. Why shouldn’t they be? After all, Cardano is not part of the “mainstream” within our industry. People nowadays have a very short attention span, and it can be challenging to explain difficult or novel concepts. Hence it becomes important to keep things somewhat simple when justifying our choice in Cardano, and what better way than the use of simple, day-to-day, relatable analogies?

In this blog post I will share some of my favourite and most used analogies when it comes to Cardano. Most of them are not from me, I have picked them up along the way through my own journey. Some of them even come from Charles Hoskinson himself. I don’t keep track to be honest. My goals are for the readers to learn a bit more about Cardano, but also how to explain certain aspects of it in a relatable way.

The Scientific Method

There is a lot of debate whether Cardano’s use of the scientific method is an advantage or not. I happen to sit on the side of those who say it’s an advantage, because it can be reduced to one thing and one thing only: process. Putting your wealth (or parts of it) onto the blockchain can be a very risky business, and there is no one to call if something goes wrong. In this environment how can you be sure that the cryptocurrency you are operating under is safe or reliable? If you are not a programmer, it’s certainly quite out of reach. What is the solution for you?

The two examples I often use are medication and airplanes. Most of us don’t know what is inside our medication, yet we take them all the time. Is this solely based on our trust in doctors? Not really. In each country there is an agency, often times governmental, which sets the standards for the approval of newly developed drugs. The US’ Food & Drugs Administration (FDA) is the most famous example. The standards can always be subject of criticism and debates, but this stays in the realm of industry experts. Most Americans don’t know what are in the FDA Standards, they just know there are experts who have set the standards for their safety. They know that there is a process in place.

Similarly, every time we sit on an airplane, we risk our lives and we accept it’s in the hands of the pilots and the plane they operate. Yet, we do it all the time, how come? It all comes down to processes. We may not know what the processes are exactly behind the scenes, but we know they exist. Unless we experience a catastrophic situation (and they do happen once in a while), we leave the rest to industry experts and trust them to update the standards and processes as time moves on. The pilots too have processes. They regularly go back to training and evaluation, and even their mental state gets assessed. Again here, we rely on industry experts applying processes and standards. Most of us are not able to evaluate the skills of a pilot. Ultimately the choice becomes: would you like to fly on the fastest airplane? The most comfortable airplane? Or the safest? Most would choose the safest, and the rest comes after.

Choosing to operate on a particular cryptocurrency is like choosing which plane you are going to be flying on. That is due to the risks involved; and safety becomes paramount. No one would be flying on airplanes without procedures of safety. The same goes for your medicine. This where Cardano makes sense. There is a process in place to reduce the risks of something catastrophic happening. Nothing is ever full proof, but having a process is the start of a serious conversation.

Consensus Mechanisms

A blockchain is a replicated and distributed ledger. We can simply imagine a room full of people sitting at their desks. Each person has a notebook on his desk. The question becomes, who writes down the next transaction? How do we choose between so many actors? This is what is called the Consensus Mechanism – the process to decide who will add the next block of transactions. Once the chosen actor has written down the transactions, everyone else in the room verifies and copies them on their own notebook, so as to replicate the records. Once completed, the process begins anew.

Bitcoin uses a consensus mechanism called Proof of Work (PoW). This can become quite confusing for people. The most simple way to explain PoW is using a Rubik’s cube analogy. Computers do the work through computations but essentially it’s about who solves the Rubik’s cube first. Whoever does get the right to write down the transactions within the next block. As a reward for this work, new bitcoins are issued and distributed to the party that solved the Rubik’s cube. Once this process is over, it starts again. It’s a constant race due to the costs and rewards of performing such a task. The computational power and the race factor is what makes this system so energy consuming, and it increases over time as the Rubik’s cube becomes more difficult over time as well.

Cardano uses a different consensus mechanism known as Proof of Stake (PoS). Again, the goal is picking an actor (amongst the many) to write down and validate transactions. Cardano’s PoS model is not a race amongst actors. Instead, it is like a game of roulette, where each actor represents a hole for the ball to fall into. Whoever gets chosen will record transactions in the upcoming block. And from there the game starts over again. These actors, known as validators, require coin holders to delegate their voting power to them in order to become a hole large enough to accommodate the ball. The more coin holders delegate to a particular validators, the bigger the hole gets, and thus the more likely the ball will fall in that particular hole. One danger is the concentration of delegation within one or a few validators. To mitigate this, there is a cap on how large a hole can become (ie how much coins can be delegated to it). The beauty of this system is that it not only rewards validators, but also rewards coin holders. The validators only take a small fee of the overall rewards, and the rest gets distributed amongst token holders. This creates an incentive for token holders to choose good standing validators.


Cryptocurrency ecosystems can sometimes be strange concepts to grasp. They are just people all around the world and from all walks of life forming communities around these blockchains. Throughout my journey here I have to explain why we decided to operate in the Cardano ecosystem. It’s not the most popular overall, it might not be the most used overall, so why be there?

Humans have always valued choices. There are over 190 countries around the world. They all come with different geographies, legal/political systems, economies and cultures. Some countries are more popular than others, but that doesn’t mean the “less” popular ones don’t have value to offer or don’t present opportunities.

The Ethereum Virtual Machine (EVM) world is currently the industry standard and where most cryptocurrency users and builders live. I often compare it to the United States of crypto-land. It’s dynamic and full of talents, but it’s also crowded and competitive. Cardano on the other hand is like Australia. Smaller in population, but it has a lot of resources to take advantage of, including an equally strong rule of law, and because it somewhat lags behind the “US”, there remains much more to build. This is the opportunity. We can observe how the EVM world does things, learn from their mistakes, and then replicate better versions of it on Cardano. The main idea I am trying to get across is that different ecosystems present different opportunities, just like countries do. It’s just a matter of choosing what fits you best and where the best future opportunities lie.

Cardano is hard to explain. It tackles complex problems in the world of computer science, cryptography, blockchains and game theory. As people’s attention span declines, it is important to explain things in a digestible and relatable way. Otherwise conversation becomes too technical, and people lose interests. I keep coming up with analogies over time, they truly help conveying concepts. I will make sure to share more of them in the future.

Disclaimer: This post is intended solely for informational purposes. It is not designed to provide investment guidance or to endorse or solicit the purchase or sale of any investment. Furthermore, it should not be utilized as a basis for evaluating the benefits of any investment decision. This document is not a source for accounting, legal, or tax counsel, nor does it offer investment recommendations. The views expressed in this document represent those of the authors at this time and are not issued on behalf of Waffle Capital or its associates. Moreover, these opinions do not necessarily align with those of Waffle Capital, its affiliates, or personnel associated with Waffle Capital. The opinions herein are liable to alteration and may not be updated.