Do you want to invest in Cardano cryptocurrency (ADA)? Discover in this article everything you need to know about this cryptocurrency and the technology that makes it work. Whether you are a beginner or an experienced trader, you will find useful information and advice to fully understand the functioning of the Cardano network.
Definition of Cardano
In a few words, we can define Cardano as the outcome of a technological project aimed at creating a cryptocurrency that performs better than its competitors and offers more possibilities to users. Before continuing with Cardano’s presentation, a reminder of a few concepts.
What is a cryptocurrency?
A cryptocurrency is a virtual currency. Understand by this that it has no physical reality like a fiat currency, such as the euro or the dollar. Cryptocurrency is not presented in banknotes or coins: everything happens on computer.
For the record, the first cryptocurrency, Bitcoin, was introduced in 2009 by a developer hidden behind the pseudonym “Satoshi Nakamoto”. He presented her as a decentralized peer-to-peer electronic payment system. That is to say, this payment system takes place without the intermediary of a central authority. It is this decentralized nature that sets in motion the Bitcoin revolution compared to previous attempts to create virtual currency.
To fully understand this concept, one must know how a traditional bank account works. The information relating to conventional accounts as well as that of the various transactions is stored in a database. So, when you want to make a payment for an online purchase for example, the bank where your account is domiciled is the only one able to verify that the balance of your account is sufficient to do this operation. If so, the bank confirm the transaction. Then it changes your balance and then records the transaction details in the ledger for a traceability. Here, we say that the bank has the skills of a central authority. For cryptocurrency, the technology used for transaction validation is a decentralized network and accessible by all users. This technology is called the ” blockchain ».
What is blockchain?
The blockchain, or “chain of blocks” in French, is the record of all transactions and information of a cryptocurrency, and this, since its creation. It is a technology which aims to facilitate the exchange and storage of information in a way decentralized, transparent, and secure by encryption methods. It is based on several principles:
- Decentralization : the network does not depend on an institution, but on the community which contributes to the project;
- Transparency : All transaction information is marked on the blockchain;
- Anonymity : Users are represented by public addresses which are ephemeral and encrypted;
- The immutable blockchain : No turning back is possible. Once a transaction is committed and written to the blockchain, there is no way to delete it.
What is Cardano (ADA)?
In a few words, Cardano is the first blockchain network developed in combining the technology of the two largest cryptocurrencies, namely Bitcoin and Ethereum, to allow faster exchanges at reduced prices. Drawing inspiration from them, Cardano created its own blockchain technology multi-layered and a transaction validation system that compensates for the shortcomings of the two previous generations. Thus, this project makes it possible to represent the third generation of cryptocurrencies.
History and operation of Cardano
Cardano is the result of a scientific approach. Its blockchain is designed to take into account smart contracts while being faster and less costly in energy than previous generations.
The creation of Cardano
The Cardano project has been initiated in 2015 by Charles hoskinson. The latter is the co-founder of the Ethereum project, that he left following a disagreement with Vitalik Buterin. While the latter wanted to keep the status of the project in open source and non-profit, Charles Hoskinson wanted to make Ethereum a business. Following this divergence, he therefore decided to devote himself to his own blockchain project: Cardano.
To carry out this project, Charles Hoskinson joins forces to other companies. We can talk for example from Emurgo, a Japanese blockchain consulting and solutions company, which will become the commercial branch of the Cardano project, or of society Input Output Hong Kong (IOHK) which was also associated for the development of a Cardano-specific blockchain.
The creation of Cardano responds to its vocation which is nothing other than to become the first blockchain developed using an academic and scientific approach. It’s after two years of research and $ 62 million fundraiser that Cardano is launched, in end of September 2017. Its issued cryptocurrency has the same name and its stock symbol is ADA. It is quickly offered on the market from october 2017.
In summary, Cardano is therefore the fruit of the collaboration between Charles hoskinson, the co-founder of Ethereum, as well as Emurgo and IOHK, which are specialized in blockchain. Added to this are engineers and researchers from four corners of the globe to help with the project.
Did you know ? The name “Cardano” of the project comes from Girolamo Cardano, an Italian mathematician, astrologer and inventor. As for the resulting symbol, ADA, it comes fromAda Lovelace, pioneer of computer science.
What are the principles of Cardano?
Cardano operates on its own blockchain, which has been fully developed for its network. The Cardano blockchain also uses its own programming languages. We are talking about Haskell code, which allows more reliable transactions and language Plutus, which allows the writing smart contracts.
In addition, the Cardano project is presented as a cryptocurrency of third generation after the Bitcoin with its blockchain technology, and Ethereum which uses two-layer blockchain technology. On the first layer is the code relating to accounts, tokens and transactions. On the second, the smart contracts. The Cardano project has developed its own blockchain also comprising two layers like Ethereum, with however a Proof of Stake (PoS) validation system, or proof of stake in French, instead of the system Proof of Work (PoW), or proof of work, used by its predecessors. This alternative aims to overcome the shortcomings of the first.
Proof of stake versus proof of work: How Cardano works
The method proof of work (PoW) was the first method of validating a transaction. This is the one applied by the Bitcoin and Ethereum projects, although the latter plans a transition to the proof of stake for its new version.
According to this method, the user makes his blockchain available computing power in order to solve a mathematical problem. Concretely, when there is a transmission of information, the computer network performs calculations, also called “Hash”, in order to find a solution to the mathematical problem. The user offering their computing power is called a ” minor “, And therefore has a copy of the blockchain to carry out the operation.
Once the problem is resolved, it create a new information block which is related to the ancients, hence the name blockchain. Finally, as a reward for this, the miner obtains tokens from the cryptocurrency from the network for which he contributed. If you want, you can learn more about Bitcoin mining and Ethereum mining.
The problem with this validation method is that it consumes a lot of energy. In fact, to perform the calculations, computers are heavily usedfor a long time. Thus, to mine, the mobilized electricity resource is considerable. According to a study used by Personal-Financial.com, the cumulation of all the energy used by the computers of the Bitcoin network is colossal, exceeding the energy consumption of certain countries.
Beyond this issue, there is that of centralization and risk of system attack by a pool, that is to say a group of minors. These minors group together to increase their computing power in order to increase their mining capacity tenfold. And if the computing power of a pool reaches 51% of the computing power of the network (which is complicated, but still possible), the system would centralize on this pool which could then defraud the system. To know more about what is called “The 51% attack”, click here.
Aware of the problems with proof of work, Cardano works differently. The latter uses a validation system called “Proof of stake”.
Here, the transactions are written by validators called “Slot leaders”. Among the Cardano blockchain players, those with a number of ADA tokens are elected to validate transactions.
We must therefore remember that according to this method, instead of making work the whole network to solve a mathematical problem, which consumes a lot of energy, only the members of the network actively contributing to its development are designated in order to perform this task. In addition, using its Ouroboros protocol, this method makes exchanges faster and more economical.
Objectives of the Cardano project
Cardano’s goal is simple: to offer the same things as Bitcoin (transactions) and Ethereum (a platform for Dapps and smart contracts), only better.
What characterizes the Cardano project is its vocation which aims to solve the problems posed by other platforms, in particular scalability, durability and interoperability.
The scalabilityis the network’s ability to adapt to high demand. The solution proposed by the Cardano project is based on the energy management. In other words, the goal here is to limit the use of energy. That’s why a number of nodes are designated to perform the calculations. In addition, the technology Ouroboros, who is the Cardano proof of stake validation system, allows transactions to be confirmed faster than the blockchains on which the project was based, which avoids saturation of the network.
To achieve its goal of durability, Cardano adopted the treasury system for the evolution of the project. Instead of going through the ICO (Initial Coin Offering) fundraising platforms used by most of the competing networks, Cardano has set up a treasury system which allows it to immediately have the necessary funds to get the project moving quickly. The ” Treasure “ is powered by the creation of blocks. With each block added, part of the reward is added to the treasury.
Interoperability is the ability of a system to exchange with other systems. The Cardano project was designed so that the ADA could be exchanged for Bitcoin or other cryptocurrencies. For this, the project must take into account the concept of sidechains, but also comply with certain rules such as the KYC or the AML.
Where and how to buy Cardano?
You decided to take the plunge to live your first experience in the trading world? Wondering where and how to buy Cardano? It exists several purchase and exchange platforms offering Cardano.
If you are a beginner, eToro is the perfect platform to start. It’s about a social trading platform offering several markets, including cryptocurrencies. In this area, the platform offers 16. In addition, novice traders have access to different helpers, as guides or even a first registration with a demo account to get to know the site interface and the trading world.
In terms of cryptocurrency exchange platforms, Binance is the most recommended. The costs are among the lowest on the market and its interface is suitable for all types of Internet users.
For the record, Binance previously focused only on the exchange of cryptocurrencies. We could not therefore buy virtual currency with a fiat currency (euro, dollar, etc.). However, since 2019, the platform has started to offer to buy cryptocurrencies with Fiat currency. Unfortunately, ADA is not yet on the list of cryptocurrencies having this means of payment. So you must first have tokens from another cryptocurrency that you will exchange for Cardano. Note, however, that this functionality is still new, so it is not impossible that Binance will add this cryptocurrency to its list in the future.
here is a summary table of the two platforms with their advantages and their defects:
|Platform||Means of payment||Benefits||Disadvantages|
|eToro||Purchase with Fiat currency||– Suitable for beginners in cryptocurrencies|
– Several payment methods, including PayPal (to secure your bank details)
– Ability to copy the investment strategy of other users
– Ability to interact with Internet users
– Opening a demo account to get started
|– High fees|
– All transactions and deposits are in US dollars. The platform therefore involves conversion costs if you make a deposit in euros
– A first deposit of a minimum of $ 200, about 190 €
|Binance||Cryptocurrency exchange only||– Very recognized platform|
– Your cryptocurrency dust can be converted to Binance Coin at no cost
– Platform from a rich ecosystem
|– Cardano is not one of the cryptocurrencies that can be bought with Fiat currency on the platform|
– An interface that is a little difficult to understand when browsing the markets page
If you’re interested in finding other places to buy your ADA tokens, feel free to visit our page for the best cryptocurrency buying platforms, and use our filter to see which ones offer Cardano.
Keep your Cardano
Once your ADA tokens have been purchased, do not let them sleep in the purchase platform: opt for a wallet in order to store your corners. This is a fundamental aspect for the security of your investment. The portfolio that is dedicated to ADA is called Daedalus.
This is an application or software that you can download from smartphone or computer. This portfolio has been specially designed for the Cardano project, so it’s one of the most suitable for storing your ADA. It brings several advantages, like:
- Security. Daedalus does not retain the user’s keys, it uses cryptography to secure the funds;
- Of information on the progress of the project ;
- The possibility of customize portfolio according to your taste.
There are other wallets suitable for Cardano. Among others, we can cite:
- Infinito Wallet : It’s a mobile wallet. It allows you to send, receive and store your Cardano. The interface is very easy to use.
- Yoroi Wallet : Web portfolio developed by Emurgo. As an extension to integrate with your browser, this portfolio is completely free and open source. It allows you to store your cryptocurrency on your computer.
Be careful, however, because the portfolios we have presented to you are all “Hot wallets”, that is to say that they are connected to the Internet. We advise you not to store a large amount of cryptocurrencies there, as these offer less security that “Cold wallets”, which are offline portfolios. To know how keep your ADA tokens as good as possible in a wallet, do not hesitate to consult our guide.
Remember: If you have a significant amount of Cardano in your portfolio, there is a good chance that the system will choose you to perform the calculations. This will allow you to increase your funds.
Why invest in Cardano?
Although it is recent compared to other cryptocurrencies, the Cardano is in a good position in the ranking of the most highly rated cryptocurrencies. His price at the time of writing this article is € 0.052687 with an exchange volume of € 177.46 million in 24 hours.
In addition, the ADA fulfills its vocation of being less expensive, less energy intensive and more reactive to breakdowns.
The Benefits of Buying Cardano
Both technically and technologically, Cardano has many advantages:
- Cardano blockchain code is in open source, that is to say accessible to everyone, which makes it a transparent network. This is a basic principle of cryptocurrency. That said, the improvements to the code will allow any user to develop your own project and to make the network more efficient;
- The validation method by proof of stake according to the Ouroboros protocol of the project is an innovation that has a bright future ahead of it. As a reminder, it differs from the proof of work method because it minimizes computing resources necessary to validate a transaction. This reduction in processing power makes the system less energy-consuming;
- Thanks to its system two-layer blockchain, the Cardano platform is trying to increase flexibility in the execution of smart contracts ;
- The Cardano project is supported by a team qualified and experienced to make it evolve and last over time. We find in the team of scholars like Charles hoskinson, co-founder of Ethereum and professor-researcher Aggelos Kiayias, renowned in cryptography research at the University of Edinburgh;
- This project is based on a global mutual aid, because it was designed by engineers and researchers from all over the world.
The risks of buying Cardano
Since the Cardano project is relatively recent, it has a few years behind on its direct competitors in terms of network development. In addition, there are aspects of the system that have not yet been fully finalized. For example, the programming language (Plutus) specific to the project is not yet complete. It is this language that the platform uses to draft and confirm the execution of contracts. This can cause some disturbances on the network.
Remember that the Cardano project is a blockchain system aiming to be more advanced than competing systems. It is developed according to a scientific research logic. Its blockchain uses a cryptocurrency emission protocol based on its own computer language. For greater efficiency in drafting smart contracts, the Cardano platform also uses his own language called Plutus. In addition, the network validation system, Ouroboros, is a proof of stake validation validation algorithm to monitor.
Given its advantages and especially its scientific and evolutionary character, Cardano is a cryptocurrency in strong potential. It is accessible at all, even those with low initial capital. However, the fact that the project is not completely complete on certain aspects can hold back some people. However, it should not be forgotten that Cardano is a very young project that still has time to develop.
Cardano is one of the highest ranked cryptocurrencies on the market. At the time of writing, it is 8th in the Coinmarketcap. Maybe his future exploits will allow him to aim higher.