What is Cardano? A Beginner’s Guide to Cardano and Tips for Investing in ADA

Last Updated February 1st 2022
12 Min Read

Cardano and its native cryptocurrency ADA have recently acquired expanded attention as one of the increasing numbers of proof-of-stake blockchains under construction in the crypto environment. The Cardano project defines its protocol as a “blockchain of the third generation” intended to enable smart contracts with future applications of quality control and governance of the supply chain.

There are thousands of various blockchain ventures on the market, and the selection of worthy alternatives can be challenging for an uncanny participant. Cardano has become one of the cryptocurrency industry’s strongest blockchain assets, drawing the attention of investors, developers, and innovators alike. Let’s take a look at everything you need to know about Cardano.

What Is Cardano?

Cardano is a blockchain open-source framework built in layers to run financial applications used worldwide by companies, customers, and governments. It can be used for digital money sending and receiving, ensuring quick, direct transactions that have been cryptographically secured.

The project features layered growth that helps the committed team of coders and developers with soft forks to manage and update the blockchain quickly. ADA signifies the token.

The Cardano blockchain enables individuals with negligible payments to build smart contracts, create decentralized apps and protocols, and submit and receive funds instantly. Like several other tokens, the Cardano utility token ADA is used as a value switch. But, with its functionality, it differs from other cryptocurrencies.

In addition, for participation in safety service, participating users are also awarded with ADA coins. ADA holders, for example, use their coins to vote on improvements or amendments to the protocol, thus engaging in its development. 

Where Did It All Start?

The Cardano project was launched in 2015, with the goal of developing a blockchain-focused on sound science analysis and best practice in the industry. Charles Hoskinson, one the Ethereum co-founders and a keen believer in the transformative forces of the financial system's cryptocurrencies, was the guiding force. The project raised more than $60 million in an ICO in 2017.

Cardano is often referred to as the “Japanese Ethereum '', since a large amount of its investors are originated from Japan, and there is also the organization that funds the introduction of Cardano, EMURGO. Five phases (or “era” as they are called) are planned for the complete deployment of the Cardano blockchain: Byron, Shelley, Goguen, Basho, and Voltaire. A new collection of functionalities is applied to the blockchain at each point. The recently introduced Shelley phase, for example, would incorporate a reward system for staking and an ability to delegate the cryptocurrency ADA of Cardano. 

Three separate organizations are guiding Cardano’s growth. It is the responsibility of the Swiss-based Cardano Foundation to oversee the creation and construction of the Cardano culture. The blockchain and the tools for its implementation are developed by Input Output Hong Kong (IOHK). EMURGO is a for-profit organization that promotes Cardano industrial software.

Read Also: 11 Reasons Why You Should Invest in Cardano ADA Today

Sceptics On Cardano

The limitations of Cardano include the fact that the blockchain is still under progress. It needs to boost its scalability concerns as it can only handle 257 transactions per second (TPS). It also has issues with the official sync of the wallet and access to the network. The double-spending or 51 percent attack is another concern when there is also the possibility that input endorsers can approve the same collection of transactions from two distinct slot representatives.

Why Invest In Cardano?

There are many new benefits that run along with Cardano. Many variables depend on the price of every digital currency. It is best to know the variables driving its valuation or objectively address whether ADA token is worth investing.

5 reasons as to why you should invest in Cardano:

1. Decentralized network

Cardano’s blockchain, like top cryptocurrencies, is also decentralized, ensuring that no single authority has an excessive amount of control over the transaction protection and confirmation method. This removes the need for any third parties such as banks or governments. 

2. Easily adaptable

Relative to other blockchain technology, it is much more adaptable. For example, to appeal to multiple customers, a single, smart contract may be changed to ensure consistency for all stakeholders.

3. Partnerships with regulators, ensuring security

It is not an attempt to be a disruptor, but rather an innovator. It aims to operate within the framework of the regional legislation, maintaining maximum compliance and supplying the end-user with ease.

4. Layered blockchain

For its token generation and smart contracts, it has two different blockchains, which ensures it can upgrade the network with soft forks without the other component causing any disturbances.

5. Enhanced economic liberty

The goal is to merge customer convenience and regulatory enforcement into a streamlined approach that will allow millions of people who do not have access to conventional providers to have access to financial independence. 

Among all these reasons, there is also a high level of safety with investing in Cardano. A team of developers who are professionals in their fields are designing it. In addition to that, there are different layers of ADA tokens and smart contracts, as mentioned above. This offers an extra security buffer. Cryptographic authentication means that it is not possible to hack the blockchain and ward off any cyber threats that may breach its credibility and expose user details.

Cardano reached an all-time high price of $1.33 on January 4, 2018. Then, the value of Cardano slowly decreased, hitting $0.027 on December 15, 2018. After that, on April 6th, 2019, the price fluctuated from $0.03-$0.06 before it hit the peak point of $0.090.

On November 24, 2019, Cardano began at $0.038 for one ADA coin with a propensity to rise and hit $0.18, about a year later, on December 29, 2020.

In September 2021 Cardano reached its current all-time high of $3.10.

Coin Switch is positive about the development of the ADA as Cardano is winning more and more collaboration, which could have a positive effect on its price.

According to Coin Switch, Cardano will hit $5 mark by 2025. Although Cryptoground and Coinliker endorse these forecasts, they expect the price of ADA to reach $5 or $10 in 2025, accordingly.

Read Also: What Will Drive The Cardano Price In 2021?

How To Invest In Cardano?

You can easily invest in Cardano through one of the cryptocurrency exchanges since it is listed on most of them as it is a prominent cryptocurrency. Crypto exchanges may have had a shady reputation at the beginning of the crypto era since they were not regulated, but now they are completely safe. If you want to invest in Cardano, you can easily do it with eToro as it is one of the most popular platforms worldwide.

Ready to invest in ADA?

Tips Before Investing In Cardano

1. Get your hands on a crypto wallet

Cardano, unlike other big cryptocurrencies such as Bitcoin and Ethereum, has its own cryptocurrency wallet for ADA called Daedalus. Users don’t just get a wallet with the Daedalus, they run a complete blockchain node, allowing them absolute leverage of their funds and the opportunity to maintain accountability over the blockchain of Cardano.

In addition, Daedalus acts as the only wallet where ADA holders can engage in the staking scheme of Cardano. As Cardano runs a PoS blockchain protocol as mentioned above, token holders can earn incentives inside the Daedalus wallet for either delegating ADA or operating a staking pool. If you don’t want to use Daedalus, you can pick one among many other digital wallets or hardware ones.

2. Try to keep your initial investments small

You can feel like you know almost everything about crypto investing after several weeks of deep research. Well, there’s a lot you might know, but that doesn’t mean you can spend blindly. Like all investments, ambiguity is implicit, and for Cardano investing, it is the same.

The digital currency continues to change, and you need to tread cautiously. There are incredibly high risks involved, which means you could either win big or lose your whole investment. Before you raise your spending, first spend small sums to see how things work out.

3. Be patient

Unless you’re someone who is drawn into day trading and is attracted by the adrenaline of quick exchanges, it’s prudent to look at holding your Cardano coins. This option is more risk-averse, especially for beginners, you’ll want to get used to the market. It makes it easier for you to expect value increases to be high. With the ambitious forecasts being made for Cardano, any persistence for any higher premiums can be worth acquiring.

4. Stay informed

A typical error committed by amateur crypto-investors is to make investment decisions based solely on the price of the coins. In fact, a cryptocurrency’s valuation is only true if you have taken the existing circulating supply into account. Try not to rely too much on the current valuation of the coin if you’re considering buying Cardano and just remember the amount of overall market cap you are buying.

5. Tax laws may apply to your Cardano

The IRS released a notice in 2014 stating that cryptocurrencies are property, and not cash for tax reasons. If you discarded or purchased ADA by cashing it on an exchange or acquiring products and services, then the realized with (for instance, the purchase price of ADA) is greater than the price of which you purchased the cryptocurrency, you will owe taxes. For any short-term or long-term rates, you might have a capital benefit that is taxable. Keep close monitoring of your cryptocurrency operations to guarantee that you remain on the right side of the law.

In conclusion, Cardano has a strong chance of achieving an equal share of the crypto market. Thus, for traders and new entrants who have just reached the crypto market, it is constantly heading upwards, being an excellent option. At the same time, for traders seeking to diversify their investments,  ADA  continues to remain one of the best option.

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Key Points

  • Cardano is a blockchain open-source framework built in layers to run financial applications used worldwide by companies, customers, and governments.
  • The project features layered growth that helps the committed team of coders and developers with soft forks to quickly manage and update the blockchain.
  • ADA holders can use their coins to vote on improvements or amendments to the protocol, thus engaging in its development.
  • Five phases are planned for the complete deployment of the Cardano blockchain: Byron, Shelley, Goguen, Basho, and Voltaire.
  • Decentralized network, strong partnerships with regulators, and layered blockchain are some of many advantages to Cardano.
  • There are different layers of ADA tokens and smart contracts, offering an extra security buffer.
  • By 2025, it is speculated that Cardano could hit $10 at most.
  • Cardano has its own cryptocurrency wallet for ADA, Daedalus.

If you're thinking about investing in Cardano, remember, there is an incredibly high degree of risk involved.