Step-by-Step Guide to Cardano

Cardano Guide


Cardano is built by a decentralized community of scientists, engineers, and thought leaders united in a common purpose: to create a technology platform that will ignite the positive change the world needs. We believe the future should not be defined by the past, and that more is possible – and, through technology, can be made possible for all. We measure the worth of a task not by its challenge, but by its results.

Every ada holder also holds a stake in the Cardano network. Ada stored in a wallet can be delegated to a stake pool to earn rewards – to participate in the successful running of the network – or pledged to a stake pool to increase the pool’s likelihood of receiving rewards. In time, ada will also be usable for a variety of applications and services on the Cardano platform.

Who created cardano?

In the early days of Ethereum, one of its co-founders, Charles Hoskinson, saw the need for a more standardized, and scalable blockchain. With his mathematics background, Hoskinson began thinking about more scientific ways to build a blockchain. During this time, Hoskinson connected with Jeremy Wood, a former co-worker at Ethereum who was looking to create a better blockchain and smart contracts platform. The two began to pursue cardano as it exists today.

What is Cardano (ADA)?

Cardano is a Proof of Stake (PoS) general purpose blockchain project. Known as a “third-generation” blockchain, Cardano has set about solving the common scalability issues plaguing most “second-gen” blockchains (such as Ethereum and it’s ever-increasing gas fees).

Cardano’s development is defined by a rigorous scientific philosophy along with copious amounts of academic research and peer-review.

The Cardano project has put together an in-depth development roadmap consisting of five primary stages:

  • Phase 1 – Byron: The network goes live with basic functionality (transferring ADA).
  • Phase 2 – Shelley: Steps are taken towards decentralization with community-run nodes.
  • Phase 3 – Goguen: Smart Contracts are enabled on the network.
  • Phase 4 – Basho: Sidechains are introduced, enhancing scalability and interoperability.
  • Phase 5 – Voltaire: Governance and self-funding makes ADA fully decentralized.

Each phase in the Cardano roadmap enables an integral piece of the final network, and when complete, the network will be fully decentralized – governed by ADA holders and funded by a portion of its own small transaction fees.

A Short History of Cardano

Cardano rolled out its platform in five distinct phases. The ultimate goal is to have a multi-asset ledger with verifiable smart contracts for decentralized apps. The smart-contract functionality arrived in the third phase, with the Cardano Alonzo upgrade.

Smart-contract functionality gives businesses and developers the opportunity to use the blockchain to support non-fungible tokens, crowdfunding and DeFi Dapps as well. It could also introduce capabilities such as IoT monitoring and cost-efficient supply chain management.

Investors seem to like the way Cardano is progressing through its phases. The next phases, in order, are Basho — Scaling, which is in progress, and finally, Voltaire — Governance.

You might have noticed that the phases are cleverly named after famous personalities in history. ADA is likewise named after 19th century mathematician Ada Lovelace, while the blockchain is named after Gerolamo Cardano.

How Does Cardano Work?

Cardano is what’s considered a “third-generation” blockchain. Designed, in essence, to solve the scaling issues typically associated with both generation one (Bitcoin) and generation two (Ethereum), Cardano (ADA) is proving to be a constant source of innovation.

Where previous generation blockchains are prone to high transaction fees and low TPS (transactions per second) as a result of certain limitations in their design, Cardano is being built from the ground up to provide a truly decentralized, low-fee, high-TPS Proof of Stake (PoS) network solution.

Cardano aims to improve the speed and overall capability of its network in multiple ways. Standing at the forefront is ADA’s own Proof of Stake (PoS) consensus protocol, dubbed Ouroboros. Designed with efficiency in mind, Ouroboros greatly reduces the energy cost of the network – especially when compared to a Proof of Work (PoW) mechanism – without sacrificing security.

The upcoming layer 2 solution for the Cardano project is known as Hydra. Designed to enable theoretically infinite scalability, Hydra allows for an increase in throughput as each new node joins the network.

Cardano also boasts another unique feature – the Hard Fork Combinator. Essentially, this innovation allows the network to hard-fork without any real interruption to the blockchain. This was put to the test with the recent Shelley phase update, and it worked flawlessly.

What is the difference between Cardano vs Ethereum

While Cardano and Ethereum aim to achieve similar goals, they do so in very different ways. Arguably its biggest downfall, Ethereum uses a proof of work consensus model to verify transactions. This is extremely energy intensive and can only handle around 15 transactions per second. Conversely, Cardano can theoretically handle thousands of transactions per second, allowing for far better scalability.

This being said, Ethereum has a far more developed ecosystem than Cardano. Cardano’s smart contracts don’t work yet, so there are no NFTs, decentralized exchanges, or decentralized lending platforms on its blockchain. Even once these programs are released, they will take time to gain the liquidity and adoption seen by Ethereum’s blockchain.

What’s more, Ethereum plans to transition to a proof of stake network within the next year. Once this happens, much of Ethereum’s scalability problems will be fixed. At the end of the day, a bet on Cardano is a bet that its ecosystem will develop before Ethereum transitions to proof of stake.

Pros for Cardano

Cardano is already proof of stake and has a strong development team behind its future upgrades. The project focuses on getting it right the 1st time, whereas Ethereum focuses on trial and error to develop its ecosystem.

Cardano’s separation of the settlement and computation layers results in much lower transaction fees for payments.

Cardano now uses smart contracts, allowing it to be even more competitive with Ethereum.

Cons for Cardano

Cardano is fighting an uphill battle with an army a tenth the size of Ethereum’s. Competitor Solana also has a much larger development team and is growing even quicker.

Low fees are nice, but low fees also indicate a low level of demand for space on the network. This might change when more smart contracts start flowing through the network, which demand more space than payments.

Pros for Ethereum

Etheruem’s network is already established and boasts over 1,500 active developers (over 10 times more than Cardano). Ethereum is the foundation of the DeFi movement, and it boasts a rich ecosystem already built on top of it. If Cardano wants to defeat Ethereum, they will need to pick up the weight of this entire ecosystem as well (This is why Cardano has already promised to support smart contracts written in Ethereum’s programming language, Solidity).

Ethereum is also far more decentralized than Cardano, making it much more secure (even before Ethereum 2.0, which should heighten security). Also, the ETH2 testnet, essentially the beta version, is already more decentralized than Cardano.

Cons for Ethereum

Ethereum’s lengthy transition to proof of stake is giving their competitors time to catch up and gain market share. Ethereum’s high network fees also make it unusable for many of its potential users. Since Ethereum only has 1 layer for settlements and smart contracts, the blockchain relies on scaling solutions like Polygon, Optimism and Arbitrum to scale its network. That is, until ETH2 releases.

How To Choose a Cardano Wallet?

Since Cardano (ADA) is a well-known cryptocurrency, it is supported by many wallets – both software and hardware varieties. There are more than enough options for users to pick and choose from, and each user will have to decide based on their specific needs.

Kriptomat offers a secure storage solution, allowing you to both store and trade your ADA tokens without hassle. Storing your ADA with Kriptomat provides you with enterprise-grade security and user-friendly functionality.

Buying and selling ADA tokens, or exchanging them for any other cryptocurrency, is done in mere moments when you store on our platform.

How is Cardano Used?

Cardano’s native ADA token can be used as a transfer of value, similar to how cash is currently used. Though many cryptocurrencies can boast this feature, ADA has other uses built into its design as well.

A central feature of the Cardano project is its Proof of Stake (PoS) consensus protocol where ADA is staked on the Cardano blockchain in order to verify transactions. Those who stake their ADA to the blockchain enjoy rewards for their participation – in the form of more ADA. This staking protocol ensures active participation and uptime while also helping to maintain security throughout the blockchain.

Another use ADA has on the Cardano network is in voting and governance. Cardano, unlike other blockchain projects, does not have miners to determine its future development – that duty falls to the ADA stakers as well. When a new change or enhancement to the network’s functionality is proposed, ADA holders use their tokens to vote on these proposals. This will eventually build to make Cardano a fully decentralized project, governed by those who invest in it.

With the launch of Phase 3 – Goguen, the ADA token will also be used to power the various smart contracts that will be enabled on the Cardano blockchain. Developers will utilize ADA to create and power these smart contracts and decentralize applications (dApps).


Is Cardano a Good Investment?

Cardano is without a doubt one of the more promising applications in the blockchain space today, with strong fundamentals and a lot of momentum behind the project.

While touted by many as the Ethereum-killer, this is extremely unlikely. In my opinion, Cardano will carve out its own niche within the global blockchain ecosystem, but fail to flip Ethereum. If you are bullish on crypto and blockchain in general, then it makes a lot of sense to have a position in Cardano. If you own Ethereum, then Cardano is a great hedge that will more than likely result in a net increase in gains. It’s truly a win-win.

Remember, this is just my opinion and not financial advice. Crypto investments are inherently risky and you should not invest any money you are not willing to lose. Crypto is extremely volatile, but I’m guessing that’s the reason you’re here to begin with.

How to Buy Cardano (ADA)

Buying Cardano (ADA) is as easy as visiting our guide on how to buy Cardano.

How to Sell Cardano (ADA)

If you already own ADA and hold it on a Kriptomat exchange wallet, you can easily sell it by navigating the interface and choosing your desired payment option.

What Will Cardano Be Worth in 2022?

Like many cryptocurrencies, cardano experienced a significant dip in 2022, dropping from its high of $3.10 in September 2021 down to just under $0.38 cents in October 2022, according to CoinMarketCap. Seventy-six percent of its maximum supply of coins is in circulation.

Wallet Investor predicts cardano will drop further, to just over $0.03, by the end of the year, but increase to about $0.05 by the end of 2023. DigitalCoinPrice, on the other hand, gives an average forecast of $0.40 for this year. Gov Capital says cardano could fall to $0.31 at the end of 2022.

Will cardano reach $10 this year? Current predictions are a far cry from the coin’s high and even further from the $10 value many investors are hoping for. If cardano does hit $10, it most likely won’t be this year, next year or any time soon.

Is Cardano Safe?

Generally speaking, Cardano is a fundamentally safe investment. However, just like other cryptocurrency, ADA is volatile and considered high risk by traditional standards. The team is considered reputable in the blockchain space, with founder Charles Hoskinson being a co-founder of Ethereum. Also, considering the project is a Layer 1, ADA is a coin on its own blockchain independent of other projects. It offers many options when it comes to staking, allowing traders to earn passive rewards while holding their ADA in staking pools.