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What is Cardano (ADA)?

A beginner’s guide to the Cardano smart contract platform and its native cryptocurrency, ADA.

A smart contract platform designed to offer scalability and security, Cardano has the ambitious goal of delivering more advanced features than any protocol previously developed. Though the platform is still being built, Cardano’s Ada token (ADA) has grown into one of the world’s top 10 largest digital currencies by market capitalization at the time of this writing.

Disclaimer: This information is not financial advice or an endorsement of cryptocurrency or any specific provider, service or offering. Cryptocurrencies are highly volatile and high risk. Do your own research and seek financial advice before buying. Please check with providers if their services are available in your state.

What is Cardano?

Cardano is a decentralized public and cryptocurrency project. A platform for the development of decentralized applications (dapps) and deployment of smart contracts, Cardano is built on a unique, layered architecture. It’s designed to provide enhanced security and scalability compared to other smart contract platforms.

One of the key factors that set Cardano apart is that it’s the first blockchain project guided by academic research and a scientific philosophy. On its website, you’ll find copies of a number of peer-reviewed academic papers to peruse, and the platform is being developed by a global collective of expert engineers and researchers.

Cardano’s developers hope to create a platform that combines the need for consumer privacy and protections with the simultaneous need for regulatory oversight.

Where to buy Cardano (ADA)

Cardano ADA tokens are listed on many popular exchanges. Find out which exchange is best for you by comparing deposit methods, fiat currency support and more.

Name Product Deposit methods Fiat Currencies Cryptocurrencies
eToro USA LLC Cryptocurrency Trading
Wire transfer, Online banking
USD

25
cryptocurrencies

Disclaimer: eToro USA LLC; Investments are subject to market risk, including the possible loss of principal.

Copy the trades of leading cryptocurrency investors on this unique social investment platform. Non-US residents can read our review of eToro's global site here.
Gate.io Cryptocurrency Exchange
Cryptocurrency
USD, EUR, GBP, HKD, SGD, AUD, CHF, MXN

267
cryptocurrencies

Finder exclusive: New users get $90 worth of Gate.IO points and an airdrop of $5 in random tokens if trade volume exceeds $100 in their first week. T&Cs apply.
A feature-rich exchange with over 700 tokens including derivatives, yield farming and lending products.
KuCoin Cryptocurrency Exchange
Cryptocurrency, PayPal, Wire transfer, Credit or Debit Card, SEPA
USD, EUR, GBP, RUB, CNY, AUD, KRW, JPY, TRY, VND & 40+ more

247
cryptocurrencies

Finder Exclusive: Get up to 10 USDT in trading fee rebates for signing up and making a deposit, and up to 30 USDT in trading fee rebates after buying with fiat. T&Cs apply.
Browse a variety of coin offerings in one of the largest multi-cryptocurrency exchanges and pay in cryptocurrency.
Coinmama Cryptocurrency Marketplace
Bank transfer, Credit card, Debit card, SWIFT, SEPA
USD, EUR, AUD, CAD, GBP, JPY

10
cryptocurrencies

Founded in 2013, CoinMama lets you buy and sell popular cryptos with a range of payment options and quick delivery.
Coinbase Digital Currency Exchange
Bank transfer (ACH), Credit card, Debit card, PayPal, Bank transfer (SEPA)
USD, EUR, GBP, CAD, MXN, HRK, CZK, DKK, CLP, BGN & 10+ more

63
cryptocurrencies

Buy and sell major cryptocurrencies on one of the world's most renowned cryptocurrency exchanges.
Crypto.com App
Credit card, Cryptocurrency, PayPal, TransferWise, SEPA
USD, AUD, CAD, CHF, EUR, GBP, NZD, SGD, JPY, ZAR & 9+ more

125
cryptocurrencies

Get 0% fees on credit/debit card purchases for 30 days after signup.
Buy 80+ cryptocurrencies, earn up to 8% on holdings, pay with your crypto for cashback at stores, get loans and more with this complete crypto-finance platform.
SoFi Cryptocurrency Exchange
SoFi Cryptocurrency Exchange
Bank transfer
USD

21
cryptocurrencies

Instantly purchase a handful of leading cryptocurrencies with the SoFi app, which also insures your coins against potential hacks or theft.
CEX.IO Cryptocurrency Exchange
Bank transfer, Credit card, Cryptocurrency, SWIFT, SEPA, Faster Payments (FPS)
USD, EUR, GBP, RUB

22
cryptocurrencies

Disclaimer: Highly volatile investment product. Your capital is at risk.
Use your USD, EUR or RUB to buy and sell cryptocurrency at competitive exchange rates and with high maximums for verified accounts.
Binance.US Cryptocurrency Exchange
Bank transfer (ACH), Bank transfer, Cryptocurrency, Debit card, Wire transfer
USD

58
cryptocurrencies

Get a US$15 bonus when you trade US$100 or more of any supported crypto. T&Cs apply.
Trade with USD on Binance.US, the American dollar onramp of the world’s largest cryptocurrency exchange. Non-US residents can read our review of Binance's main exchange here.
Revolut Cryptocurrency App
Revolut Cryptocurrency App
Bank transfer (ACH), Bank transfer (SEPA), SWIFT, Credit or Debit Card
USD, EUR, GBP, CAD, NZD, JPY, HKD, NOK, DKK & 9 more

20
cryptocurrencies

Buy and sell several popular cryptocurrencies through your Revolut account, set up recurring purchases and transfer it to other US users. You can’t transfer cryptocurrency to anyone who does not have an active Revolut account. Service not available in Tennessee.
Huobi Cryptocurrency Exchange
AdvCash, Cryptocurrency, SWIFT, Wire transfer
GBP, USD, AUD, EUR, INR, BRL, KHR, CAD,CNY, NZD & 15+ more

219
cryptocurrencies

Huobi is a digital currency exchange that allows its users to trade more than 190 cryptocurrency pairs.
Coinbase Pro
Bank transfer, Cryptocurrency, Debit card, PayPal, Wire transfer
USD, EUR, GBP

69
cryptocurrencies

Formerly known as GDAX, Coinbase Pro is a US-based exchange which offers fiat currency payment options, including wire transfer, ACH bank transfer and SEPA.
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Cardano use cases

When the Cardano project first started to take shape in 2015, the overarching aim was to change the way cryptocurrencies are designed and developed. According to its whitepaper, “The overall focus beyond a particular set of innovations is to provide a more balanced and sustainable ecosystem that better accounts for the needs of its users as well as other systems seeking integration.”

That all sounds great in theory, but what real-world uses does the platform have? Cardano can be used:

  • As a payment protocol, providing fast and affordable transfers between users
  • To create and deploy smart contracts, which themselves have a myriad of applications across numerous industries
  • To build and power dapps
  • To digitize physical assets

What is Ada and what does it do?

Ada is the cryptocurrency on the Cardano blockchain. It can be used to send value between friends, pay for goods and services, deposit funds on an exchange or enter an application.

You’ll need Ada to complete a transfer on Cardano’s settlement layer (see below for more details), while any applications built on Cardano will use Ada as their native token.

The supply of tokens is capped at a maximum of 45 billion ADA, and at the time of this writing (May 2018), almost 26 billion of those were in circulation.

What makes Cardano unique?

Any new smart contract platform is inevitably compared to Ethereum, and this is a good starting point for anyone looking to get a handle on what the project has to offer. Just like Ethereum, Cardano offers a platform where developers can create dapps and deploy smart contracts.

However, it’s also designed to offer a number of other versatile features. Thanks to its layered architecture, Cardano allows smart contracts to be executed on a different layer than where transactions take place. This makes it possible to quickly deploy a wide range of advanced smart contracts on the blockchain.

It’s also the first cryptocurrency to be based in Haskell code, which is widely considered to be one of the most secure programming languages and provides a range of security benefits.

Rather than a roadmap or whitepaper, the project was initially based on a collection of design principles, engineering best practices and other key considerations, including:

  • Separating accounting and computation into different layers
  • Small groups of academics and developers competing with peer-reviewed research
  • Building on the ability to upgrade systems once they’ve been deployed without destroying the network
  • Building a cryptocurrency that can work on mobile devices and provide a reasonable and secure user experience
  • Finding a “healthy middle ground for regulators to interact with commerce without compromising some core principles inherited from Bitcoin”

From these ideas and principles, Cardano was created.

The technology behind Cardano

Cardano is being built with two layers – the Cardano Settlement Layer and the Cardano Computation Layer – to provide the flexibility businesses need to tailor smart contracts to their requirements.

  • Cardano Settlement Layer. This is the first layer and acts as the platform’s balance ledger. It uses a proof-of-stake (PoS) algorithm to generate new blocks and confirm transactions.
  • Cardano Computation Layer. This is the layer on which smart contracts can be run, and the Cardano team is developing a new programming language (Plutus) that will be used to build smart contracts.

As mentioned, instead of using a proof-of-work (PoW) consensus algorithm like bitcoin, Cardano uses a new proof-of-stake (PoS) algorithm called Ouroboros. Under this system, blocks are generated and transactions verified by slot leaders. Anyone who holds an ADA token can become a slot leader, with slot leaders randomly chosen using a coin-flipping protocol.

Cardano’s team and history

The Cardano platform is the brainchild of Charles Hoskinson, a tech entrepreneur and mathematician who also happens to be a co-founder of Ethereum. Founded in 2015, Cardano is being developed by not one but three organizations:

  • The Cardano Foundation. Registered in Switzerland, the foundation’s mission is to standardize, protect and promote the Cardano Protocol technology.
  • Input Output Hong Kong (IOHK). A tech company founded in 2015 by Hoskinson and Jeremy Wood, IOHK is responsible for most of the technology behind Cardano.
  • Emurgo. Founded in 2017 and registered in Japan, Emurgo focuses on integrating businesses into Cardano’s blockchain.

Cardano held an extended ICO from September 2015 until January 2017, raising just over $62 million, and it launched the first phase of its mainnet in September 2017.

Next for Cardano: the roadmap

Cardano maintains a detailed roadmap that’s well worth a look for anyone interested in the project. It’s split into several phases named after poets, a computer scientist and a philosopher, as follows:

  • Byron featured the launch of the Cardano Settlement Layer mainnet.
  • Shelley will see the addition of key elements to ensure that the Cardano platform grows into a decentralized and autonomous system. Scheduled for Q2 and Q3 of 2018, key milestones in this period include:
    • Making it possible for stakeholders to delegate their stake
    • Development of consensus incentives and fees to encourage users to run a full node
    • Light client support
    • Support for Cardano to be added to the Ledger Nano S wallet
    • Launch of a Cardano debit card
  • Goguen will focus on the integration of smart contracts. Key milestones in this phase include:
    • The addition of sidechains to enhance the ability to move Ada, improve scalability and allow the addition of new features without forking
    • Finalizing the Plutus Core language and integrating it into the Settlement and Computation Layers
    • The creation of IELE, a virtual machine featuring a universal language framework for translating and executing smart contracts
    • Smart contracts deployment and interaction
    • IELE testnet launch
  • Basho will focus on performance improvements.
  • Voltaire will feature the addition of a treasury system and governance.

What to watch out for

As the roadmap above reveals, there’s still a long way to go until Cardano is fully developed. While its initial release occurred in September 2017, there are still many crucial features yet to be added. For example, smart contracts and sidechains are still some time off.

Until the Goguen phase of the roadmap has been successfully completed, there’s always going to be a level of uncertainty surrounding the project. In other words, it all sounds great on paper, but only when there’s a fully functioning product will we know just how good Cardano can be.

At the same time, don’t forget that Cardano is far from the only dapp/smart contract platform out there. Ethereum, NEO, NEM, EOS and a host of other projects will all provide stiff competition and could affect levels of adoption.

Read more about where Cardano might be headed in our prediction for 2021.

The bottom line

Cardano has huge potential but, like so many other popular cryptocurrency projects, still has a long way to go before that potential might be realized. In the meantime, there are several other smart contract platforms at various stages of development, while Ethereum, the biggest and best-known of them all, continues to grow. Whether or not Cardano can deliver on its promise remains to be seen.

There’s a lot to like about its science-based approach, its development team and the architecture underpinning its system. And, if Cardano can effectively find a balance between the needs of users and regulators, there are many who say it could have a very bright future indeed.

However, as always, make sure you do your own research before buying it.

Frequently asked questions

Which wallets support Ada?

Cardano’s official wallet, the Daedalus Wallet, is a popular choice for storing Cardano. However, it isn’t your only option. Find out more about wallets that can store Cardano.

Can I mine Ada?

No, Ada is a proof-of-stake cryptocurrency and therefore cannot be mined.

How can I buy and sell Cardano tokens on an exchange?

Check out our how to buy Cardano guide for step-by-step instructions.

Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

Images: Shutterstock

Disclosure: At the time of this writing the author holds IOTA and XLM.

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