Introduction
Cardano (ADA) is a highly innovative blockchain network that was introduced to the crypto scene in 2015 but officially launched in 2017 following two years of code development. Its core developer, IOHK (Input Output Hong Kong), is led by one of Ethereum’s co-creators Charles Hoskinson. It’s no surprise then that Cardano offers similar functionality to Ethereum, currently the leading smart contract platform. Like Ethereum, it seeks to become the de facto host to decentralized applications (dApps). In its quest to realize that goal, Cardano launched the Alonso network upgrade in September 2021 that introduced smart contract functionality. There are several benefits to investing in Cardano and in this guide, we will highlight some of them and show you not only why to invest in the network’s cryptocurrency (ADA), but also which platforms to utilize. We feature some of the main crypto trading platforms that support buying, selling, and trading ADA. And, finally, we will guide you, step by step on how to invest in Cardano.
What is Cardano (ADA)?
Cardano is a multi-functional blockchain network integrating the functionalities of Bitcoin and Ethereum using a dual-layered model. The base layer, also called the Cardano Settlement Layer (CSL), is ideal for processing value transfers or payments through the native ADA token. On the other hand, the second layer – Cardano Computation Layer (or CCL), has been designed to host self-executing logic programs or smart contracts. In simple terms, Cardano aims to replace both Bitcoin and Ethereum. Recommended video: Cardano simply explained Additionally, Cardano aims to make blockchain interoperability a reality by creating a protocol that enables seamless communication amongst decentralized networks. So far, most blockchains are created using unique rules and protocols, and tokens to propel economies within these specific networks. For instance, it is virtually impossible to exchange one asset, say Bitcoin, for another, say Ethereum, without using a third party. Cardano aims to change this scenario to enable direct trades between assets hosted on various networks. Cardano is one of the first networks that adopted the proof of stake (PoS) consensus mechanism when it launched. Staking makes blockchain networks easily scalable, and more cost-effective than mining. This is the reason why Ethereum core developers are currently in the process of upgrading Ethereum from a mining to a staking network. Staking is also more energy-efficient making it safer for the environment. Note: ADA token holders are at liberty to stake their tokens for a chance to participate in the network’s governance and validate transactions. Anyone interested in investing in Cardano’s network must acquire ADA, which is used to facilitate value transfers similar to how Ether is used to pay transaction and gas fees on the Ethereum network.
Why invest in Cardano?
There are three main reasons to invest in Cardano: The reasons provided above are not the only ones as some investors may have subjective reasons to participate within the Cardano network. However, these are the most common and they encompass a majority of the investors’ objectives.
Pros and cons of Cardano
When considering whether to invest in Cardano, it is important to consider its benefits and drawbacks to ensure that the decision to buy ADA is well informed. Cardano, like most cryptocurrencies, has aspects in which it shines and some, where it lags behind other projects. Here are its pros and cons.
Pros
Active project development – like Ethereum, Cardano’s core developers are committed to improving its functionality through constant code development and community engagement to decide on which features to add and deduct. The developers have only recently rolled out the smart contract functionality, albeit in testnet mode but this shows that the network is still under improvement. In 2021, Cardano was the most-developed crypto project on Github.Well-known leadership – some cryptocurrency projects are launched with pseudonymous individuals, such as Bitcoin. However, with Cardano, the community knows who is behind the project and they constantly update the public on roadmap progress. Charles Hoskinson, the leader of IOHK, which is the core Cardano developer, is also the co-creator of Ethereum. His history brings some legitimacy to his current post.Innovative technology – Cardano is considered a member of the third generation of blockchains which come with improvements over the first two. Bitcoin, the only blockchain in the first generation category, is laden with scalability issues and a lack of features. The second-gen cohort including Ethereum may have fixed the features drawback of Bitcoin but they lack effective implementation of scalability solutions. Cardano claims to have solved both these issues even though the solutions are getting rolled out slowly.Environmental friendly – the Proof of Stake (PoS) consensus mechanism that Cardano utilizes has several advantages over mining. One of the main benefits is the consumption of less energy making it more conducive to the environment. Besides, the blockchain’s community seems to have a soft spot for conserving the environment as evidenced through some of the initiatives carried out by the Cardano Foundation, a Cardano blockchain-affiliated not-for-profit organization. Recently, the foundation announced the achievement of its restoration project milestone which used ADA and the Cardano network to facilitate the planting of 1 million trees. This project was done in collaboration with cryptocurrency startup Veritree.Passive income – Cardano uses delegated staking as a consensus mechanism where the stakeholders elect a section of other stakeholders to validate transactions on the network and vote on governance issues. In exchange, the delegates share their network rewards with their voters who do not have to do anything but vote and partake in the reward sharing.
Cons
Still, under development – Cardano has been in development since 2015 but it only launched the smart contract functionality feature in testnet in 2021. Some of Its competitors such as Ethereum, EOS, and Solana launched the same functionality right off the gate and are continually iterating to improve it. Cardano will now have to play catch-up.Unproven technology – Cardano has built a reputation for collaborating with academics to come up with innovative technology. While this is a good thing, it leads to theoretical innovations that are unproven in the real world. For instance, PoS staking is a less established consensus mechanism than mining and despite its benefits, its security aspects are still unproven.Stiff competition – Cardano is among a group of ambitious projects aiming to dethrone Ethereum as the go-to decentralized app platform. The others include Solana (SOL), EOS, and Avalanche (AVAX). These these projects have a leg up in terms of implementation of their roadmap over Cardano. Additionally, there are some blockchain networks that are already miles ahead in terms of financial payments. These include Ripple (XRP) and Stellar (XLM), both of which have transaction settlement speeds that are much quicker than ADA.
How to Buy Cardano (TOP 5 crypto brokers)
Generally. it’s very simple to buy Cardano. The whole process involves only five straightforward steps which are to:
Step 1 – Find a Cardano cryptocurrency exchange
Cardano’s native cryptocurrency ADA is a ubiquitous token available in a majority of the large crypto exchanges. Depending on where you are located and a few other factors, you may find that you have access to some platforms and not others. In the United States, you can buy ADA from several exchanges, but the most credible and recommended ones are:
1. Uphold
Uphold is a fully-regulated, multi-asset brokerage company with crypto as one of its supported assets. More than seventy different cryptocurrencies including Bitcoin and Cardano are available for buying, selling, and trading.
2. Coinbase
Coinbase is a highly regulated US-based crypto exchange with operations across the United States including the state of New York. The exchange supports multiple payment methods such as bank transfers, wire transfers, and PayPal, among others.
3. Kraken
Kraken is another well-established crypto trading platform based in San Fransisco, California. The exchange offers several products and services including spot, margin, futures trading, and staking, among other crypto-related services. Note: For investors outside the U.S., Binance and KuCoin are the two solid choices.
4. Binance
Binance is the leading crypto exchange by daily trading volume but it backs that up with the most comprehensive list of crypto-related products and services including trading, staking, mining, investing, savings, NFT, and two fully-fledged blockchain networks.
5. KuCoin
KuCoin crypto exchange is a close runner-up to Binance in terms of product offering and accessibility. The Singapore-based crypto exchange, which launched in September 2017, now offers spot, margin, futures trading, staking, P2P services, lending, and investing to more than 10 million users spread across over 200 countries. Whichever platform you opt to use to buy ADA tokens, you will find that the process is almost the same. However, it is worth paying attention to various other factors that may affect the decision on which exchange to have an account and which one to avoid. Note: Be sure to read our comprehensive guide on the best cryptocurrency trading platforms to learn more on how to choose a secure digital asset trading platform.
Step 2 – Create an exchange account
Once you have chosen a preferred crypto exchange that supports Cardano cryptocurrency, it is time to create an account. This is necessary if you are using a centralized platform but not so much if you opt for a decentralized exchange. The process is often similar to most regulated crypto trading companies. First, you visit the website or download their official mobile or desktop application. While on the homepage/screen, go ahead and click or tap on the signup button found typically to the top right of the page. You will be required to provide identifying information such as your name, email address, and phone number before being prompted to create a secure password. A confirmation code or link will be sent to the email address provided to ensure it’s genuine and functional. The next step is your account’s verification. Global financial regulators require crypto exchanges to request more information from their customers in what is called Know-Your-Customer (or KYC) regulations. Hence, you will be asked to provide additional information about yourself such as a passport photo, a scanned copy of your national ID, driving license, or international travel passport. In some cases, the exchange could request the user to do a selfie with a specific written note. Note: Know-Your-Customer (KYC) procedures are an integral part of credible crypto brokers and are usually mandatory if you want to use all platform’s futures and products. Some exchanges have a third verification level whereby you will be required to provide current residence information using documents such as utility bills or bank statements. This last level is usually optional but could be demanded if you exceed certain trading volumes. Once you complete account verification, you are now ready to start buying Cardano but before you do that, it’s worth planning out your buying strategy.
Step 3 – Plan your Cardano investment strategy
Deciding to buy Cardano is one thing and choosing how to do it is yet another matter entirely. Your investment strategy will depend largely on your goals. Typical investor goals include making a profit, supporting the Cardano blockchain, saving for a rainy day, or increasing income sources. Keeping these goals in mind, you may decide on any one of the following investment strategies:
Staking;Day trading and/or scalping;Swing trading; andPosition trading (intimately referred to as Hodling within the crypto circles);
For instance, if your investing goals involve supporting the development of the Cardano blockchain, you will probably have to choose staking as your investment strategy. On the other hand, if you want to speculate then day trading or swing trading is a better choice. Position trading is for those investors who just want to buy and hold ADA for a long time within their wallets. Note: For more information about the various digital asset investing strategies, refer to our Cryptocurrency Trading for Beginners guide.
Step 4 – Fund your exchange account
Different exchanges will have varying payment options through which to fund your trading account. The most common is the use of credit and debit cards but this choice is usually the most expensive. Other channels include bank or wire transfers through SWIFT, SEPA, etc. Another more globally accepted payment method that is rare to find supported by most exchanges is PayPal. So far, only Coinbase supports this ubiquitous payment method but it is worth noting that not all Coinbase users can use this channel. If you opt to use Binance, you get access to a much broader selection of payment methods because the exchange has invested in partnerships with various third-party financial services providers such as Banxa, and Simplex. On the Binance P2P marketplace, traders have access to at least 100 national currencies to trade from and tens of channels that support multiple fiat currencies. Whichever exchange you choose from the first step, you will find that it supports a payment method that you are comfortable using. Otherwise, you can still use another platform to buy crypto, transfer it to your preferred Cardano exchange, and trade it to ADA tokens.
Step 5 – Buy ADA tokens
This final step is, perhaps, the simplest of all these steps. Now that you have picked a suitable crypto exchange that supports ADA trading and created an account, it is time to buy Cardano.
How to buy Cardano on Uphold & Coinbase (Step-by-Step)
On Uphold, the ADA purchase process is as simple as visiting the homepage and choosing [Crypto] in the menu, and then pressing [Buy Cardano]. Then, within the ‘Buy Cardano’ page press [Buy] and Uphold will then guide you on the straightforward ADA purchase wizard. Now, let’s consider a typical first-time purchase of ADA using the Coinbase exchange. We are going to assume that you have created a Coinbase account, verified your identity, and added a payment method. In our example, we will buy Cardano using a debit card. Log in to Coinbase using your username and password. On the home screen, click on the [Trade] tab on the left navigation panel. Coinbase will load the assets page with Cardano among the most popular assets appearing at the near top. Click on the three vertical dots corresponding to the Cardano asset to reveal more options then choose [+ Buy ADA] from the list. A pop-up window will appear through which you can specify how much ADA you want to buy. Alternatively, you can click on the Cardano tab to open up the Cardano information page where you can access extra details about the asset such as its price history, news, and some background information. On the Cardano page, you can also access the Buy Cardano card to the right side or click the [Buy/Sell] button on the top right side of every page to load the purchase wizard. On the Buy Cardano dialog box, you will enter the amount of ADA to buy or an equivalent value in fiat currency. The exchange will include the default payment method on the [Pay with] form field. You can change this option to another payment method if you have more than one activated for your account or you can add another payment method. Coinbase has another neat feature that allows its users to schedule regular crypto purchases. The supported time periods are daily, weekly, biweekly and monthly. You can access this feature by clicking the [One time purchase] link then selecting the appropriate time intervals to execute the trade. When activated, Coinbase will automatically deduct funds through the payment method chosen at the specified time and day as you specify. This option is appropriate for investors using the HODLing or position trading strategy. It allows the trader to dollar-cost average into a position. Once you have set up your trade, click on the [Preview] tab to confirm the transaction details. If everything is correct, click the [Buy now] tab to make the purchase. Your ADA tokens will be credited to your account and you can then proceed to withdraw them to an external wallet or hold them within your Coinbase account.
Where to store Cardano
It is highly advised against keeping your digital assets on an online account such as your exchange because the assets held in such places are highly vulnerable to theft. Instead, you should consider a self-custody wallet. Several cryptocurrency wallet options exist and they include web wallets (JAX or Coinbase), mobile wallets (Trust Wallet or Coinbase wallet), and hardware wallets (Ledger or Trezor). You’ll still need to maintain high-security hygiene standards to ensure that your ADA tokens are safe once you transfer them from your online trading platform. Note: For more information regarding choosing the best wallet to store Cardano, check out our full guide to the cryptocurrency wallets, which compares the most popular cryptocurrency wallets and their features.
Final thoughts
That is our complete guide to buying Cardano. In this article, we discussed what Cardano is, how to invest in it, and some of its pros and cons. Hopefully, you now understand why the smart contract platform is popular and why most investors are including it in their digital asset portfolio. In the latter section, we demonstrated a straightforward step-by-step process for purchasing ADA tokens, the native cryptocurrency used to facilitate value transfer within the network and necessary to perform any transaction on the Cardano blockchain. All in all, whether or not you decide to invest in Cardano, you have hopefully learned something about the innovative smart contract platform and you can apply that knowledge to advise your future investments. Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
