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Cardano is a proof-of-stake blockchain designed for smart contracts and dApps, led by Ethereum co-founder Charles Hoskinson.
Designed to be an Ethereum competitor, Cardano began development in 2015, and launched as a testnet on 29 September 2017. The mainnet, called Goguen is slated for launch on 12 September 2021 which will bring long-awaited smart contract functionality to the platform. Despite its relatively slow development process, Cardano’s native ADA token is one of the most popular coins on the market.
Compare exchanges that sell ADA in the table below on things like payment methods and supported currencies.
If you’ve decided that you wish to invest in Cardano, the first step you must take is setting up an account on an exchange. This process itself can take a little time, as there are hundreds of different exchanges to choose from. That said, they can generally be broken up into three distinct categories:
Cryptocurrency brokers are the most common, and perhaps the easiest, way for investors to purchase cryptocurrencies such as ADA. They are typically geared towards newcomers to the world of crypto, and have user-friendly functions while still maintaining certain advanced trading strategies. These exchanges generally let users purchase crypto using fiat currency, supporting common payment methods such as bank transfer, internet payment and debit cards. Their fees are often a little higher than other exchanges however.
Cryptocurrency trading platforms
Trading platforms allow users to purchase cryptocurrency based on sell orders on the market. These exchanges will occasionally let you use fiat currency to execute trades, however some only accept other cryptocurrencies. While they offer a number of advantages, including greater exposure to different cryptocurrencies, lower fees and trading incentives, they are far more complex than brokers and require a bit more investment experience. Examples include Binance and Coinbase.
Peer-to-peer exchanges are exactly what they sound like — platforms where users can trade cryptocurrencies (like ADA) with one another, without the direct involvement of a third-party. You can contact a seller who is listing Cardano at a desirable price and arrange a transaction. These exchanges are the most risky of the three, and users should keep an eye out for scammers as they would on any other open marketplace.
Now that you’ve decided which exchange you’d like to use, it’s time to purchase some ADA! First, you will have to make an account on the exchange. Different platforms will have different identification requirements, varying from just providing an email, to multiple government documents (such as a driver’s license or health care card).
Once you’ve navigated through the verification process, you will be ready to buy Cardano.
When using a brokerage platform
Purchasing Cardano this way is the easiest of the three methods. All you will have to do is, once verified, enter the amount of ADA you wish to buy and then pay using any of the supported payment methods. Once the transaction is confirmed, the cryptocurrency will be released into your exchange account, ready to be sent to a wallet or anywhere else you want.
When using a trading platform
Using a trading platform can be a little complex, but the process typically isn’t too overwhelming. You will generally need to add funds to your account before you can make a trade. Once the deposit has been made, you should navigate to the corresponding market. If you’re purchasing with PLN for example, this market will appear as PLN/ADA. Once you’ve found this, simply place a buy order at a specific price, or at market price for the amount of ADA you desire.
When using a peer-to-peer trading platform
If you decide to purchase ADA using a P2P platform, it may take a little more time to find a suitable offer than other alternatives. Ensure to browse the exchange comprehensively, and make sure to research past transactions for any sellers that are listing an offer you’re interested in. Once you’ve found a trade you like, simply contact the seller and arrange a deal. Most of these platforms utilise escrow services, so you won’t have to pay the seller directly.
Once you purchase ADA, you may want to move it to a wallet to keep it safe.
Cardano offers a purpose-built wallet called Daedalus. It’s a secure multi-function desktop wallet that can be exported to a paper wallet for extra security. Currently it only supports ADA, but will eventually offer multi-cryptocurrency support. Daedalus is currently supported on all major platforms, including Windows, Linux and macOS systems.
Using Daedalus to store your Cardano presents a number of advantages. Users can stake (lock up) their ADA coins on the application, allowing them to earn additional tokens as a reward over a period of time. Though staking doesn’t come without its risks, it can be a viable strategy for crypto holders that want to earn some passive income.
The greatest incentive for holding your Cardano tokens in a wallet is the added security this provides. By moving your funds to a wallet, you give yourself complete control over your assets and their safety. Wallets like Daedalus are locked using a multi-tiered security system, which utilises multiple passwords and a rigorous hack-prevention system.
To make using Daedalus more secure, you may want to use it with a hardware wallet that keeps your private keys secure on a hardware device.
Keeping your Cardano tokens on an exchange is a viable alternative for asset holders. While this does leave your funds in the hands of a third-party, most major exchanges are insured so the risk of losing your crypto is still relatively low.
Keeping your ADA on an exchange like Binance or Coinbase can be a simpler solution than having to download and set up a wallet, and there are ways to regain access to your holdings if you should forget your password. While financial independence is a major appeal of cryptocurrency in general, this does leave users vulnerable to losing their wallet password/seed phrase and ultimately, their entire pool of assets.
Wallets typically can’t be used to exchange coins to and from different currencies (be it crypto or fiat), so ADA holders that wish to actively trade their coins may benefit from leaving their investment on an exchange. This will save them both time, and money (due to less transaction fees.)
There are a number of different ways your Cardano can be sold, depending on what you wish to exchange it for and what platform is holding your assets.
If you wish to sell your Cardano tokens back into your local currency, this can be best accomplished by using a trusted cryptocurrency exchange. These exchanges will give you a custom address that can safely store your funds.
If you’re holding your ADA in a wallet, simply forward the value you wish to sell to a platform like Binance, ensuring to copy and paste the correct wallet address.
Finally, navigate to the ‘sell cryptocurrency’ section of the exchange and input the amount of ADA you wish to sell, as well as the fiat currency you would like to receive in exchange. Once confirmed, you are done!
If you would like to swap your ADA for another cryptocurrency like Bitcoin or Ethereum, the process is very similar to selling a crypto back into a fiat currency.
The easiest way to do this is via an exchange. Many platforms, such as Coinbase and Binance, allow you to trade crypto-to-crypto with relatively low fees.
However, for even lower fees and a broader range of cryptocurrencies to swap between, you may want to consider using a decentralised exchange (DEX) to trade your ADA. This process is a little more complex and can be riskier, but may be preferred for experienced investors.
Users will have to connect a supported wallet like MetaMask and set it up to be compatible with ADA before they can use a DEX to trade their coins.
The developers claim that Cardano is purpose-built to be the only cryptocurrency the world needs, offering an exceptional range of features and usefulness. In particular, it’s designed to work well with regulations and to be accessible to almost anyone, with the ability to tweak functionality to suit local laws and regulations.
Despite Cardano’s lofty goals, it faces stiff competition. Since Cardano began in 2015, many new blockchains have come online with similar goals and are already capable of onboarding users while Cardano’s development lags behind by comparison.
The implementation of the Goguen mainnet in 2021 is likely to be a pivotal moment for Cardano, with the addition of smart contracts and dApps giving it a real chance to compete in the now saturated smart contract (base-layer) market.
Note: Cardano is still under development. Not all of the features described below are active at the time of writing.
In order to achieve its goal of being the most practical cryptocurrency ever made, Cardano is created from the ground up instead of borrowing features from existing blockchains.
One of the main features of the Cardano system is the multi-layer design:
Bitcoin and most other cryptocurrencies have all of these functions in one layer. This multi-layer system brings some features that developers may find useful.
These layers are supported by the Cardano treasury, which receives a portion of newly minted ADA and transaction fees.
Cardano uses an entirely new mining algorithm called Ouroboros. According to its developers, it’s the first proof-of-stake mining algorithm that’s been mathematically proven to be secure.
How proof of stake works
Some older cryptocurrencies like Bitcoin use “proof-of-work” mining, in which miners compete to solve problems, produce the next block and win a reward for doing so. By contrast “proof-of-stake” mining works by picking a semi-random stakeholder to solve the next block, with larger stakeholders (contributors with more ADA) more likely to be chosen.
This can potentially offer quicker and cheaper transactions, plus the benefits of being more energy-efficient.
The problem is finding a truly reliable and random way to pick the stakeholder to make a block. According to its developers, Ouroboros solves this problem.
Cardano is entirely open source and patent-free. All its source code is publicly available for scrutiny. People interested in Cardano may find that this not only assists development, but also means any problems can be highlighted quickly. It’s also fronted and developed by some publicly accessible and widely known names.
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