cardano for beginners

Beginner’s Guide to Cardano Cryptocurrency

Cardano. Ever heard of it before? You must have. Otherwise, you wouldn’t be here. And if you have heard about Cardano, you must’ve heard about ADA as well. In this post, we’re going to dive deep into the amazing world of Cardano and learn how it works.

What is Cardano?

If you think Cardano is a cryptocurrency like Bitcoin or Litecoin, you’re actually thinking about ADA. Cardano is a Blockchain platform designed to handle both transactions and smart contracts. And ADA is the token that holds value. Sounds familiar? We know what you’re thinking. No. It’s not like Ethereum.

While Cardano and Ethereum share a lot of characteristics, they are very different from each other. For example, Ethereum is a 2nd generation cryptocurrency network while Cardano is considered 3rd generation.

The 1st generation of crypto is Bitcoin. It only holds value and can be used for transactions on a peer-to-peer basis. Consider it as digital gold. You buy or mine it. Hold it until it increases in value. And then sell it.

The 2nd generation of the crypto network would be Ethereum. It introduced smart contracts for the first time where developers could deploy their decentralized applications (Dapps) on the Ethereum blockchain. And miners can help execute the contract and earn Ether in return, the cryptocurrency that fuels the smart contracts.

The previous two generations are quite limited in features and yet to become a global currency. Also, they don’t communicate with each other without the inference of a third-party medium. Moreover, both Bitcoin and Ethereum suffer from scalability issues because they use the ‘proof of work’ method through the consensus algorithm. It’s not very efficient in terms of carbon footprint and energy usage.

Cardano plans to solve the problems of the previous generation cryptos. It follows a ‘proof of stake‘ method which is significantly more efficient than proof of work. It can handle more transactions per second without emitting too much carbon into the environment.

Another major difference between Cardano and other Blockchain platforms is that Cardano is developed through a peer-reviewed method while the other ones utilize a simple white paper method.

The previous Blockchain technology was developed after one of more developers published a white paper and they worked on the platform. For Bitcoin, it was Satoshi Nakamoto and for Ethereum, it was Vitalik Buterin and his team.

But that’s not the case with Cardano. Before it was developed, the white paper was reviewed by many capable individuals from around the world in a peer-review method to increase the credibility of the platform.

It means that Cardano started more stable and packed more functionality over any other crypto network the moment it was launched.

And all of this happens with a goal to earn ADA. ADA is a cryptocurrency that actually holds monetary value. ADA lives in the Cardano Blockchain and works as the incentive for solving smart contracts.

Where to Buy Cardano / Invest In Cardano Cryptocurrency?

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History of Cardano

If you know Ethereum, you know Charles Hoskinson. He was the co-founder of the 2nd generation crypto network alongside Vitalik Buterin. The interesting fact is that Charles is also the founder of Cardano.

The peer-review started in 2015 and the platform was launched in 2017. The platform itself is named after the legendary Italian polymath Gerolamo Cardano. And the cryptocurrency was named after the first computer programmer ever, Ada Lovelace.

Just like all other crypto networks, Cardano came to life through an ICO (Initial Coin Offering). During the time of launch, the market capitalization for ADA was $600 million. The same year marked a whopping $10 billion market cap for the cryptocurrency! It only shows how strong Cardano started compared to Bitcoin or Ethereum.

The development of Cardano went through the hands of three organizations. IOHK, EMURGO, and Cardano Foundation. Except for EMURGO, the rest of the two are non-profit organizations.

How Does Cardano Work?

Now we’re at the most interesting section of our content. Cardano may be a Blockchain, but it’s very different from other Blockchains we’ve seen so far.

To start with, the Cardano Blockchain is divided into two layers, something the crypto industry hasn’t seen before. The first layer is known as the Cardano Settlement Layer or CSL. It’s the tip of the iceberg that processes all the transactions. It’s very similar to how the Bitcoin Blockchain works.

The second layer is where the magic happens. Known as Cardano Computational Layer or CCL, this is where the smart contracts are deployed, executed, and processed. This is where you get slot leaders taking care of ‘minting’ the block.

If you didn’t know already, there is no ’mining’ in Cardano. Well, there is. But not how we know it. You won’t find millions of miners getting into a competition to solve the block as fast as they can. Rather, a few selected slot leaders are assigned by the network to solve specific blocks.

This is the concept of ‘proof of stake’ comes into play. In the traditional ‘proof of work’ protocol, all of the nodes connected to the network could try and solve a block. But only the ones with spectacular computer power managed to succeed.

This is why you see dedicated mining farms all over the world with hundreds of computer graphics cards lined up. It results in a lot of wasted power because the majority of the miners don’t get anything out of the process. In recent years, the world has seen a significant increase in electricity usage due to this problem.

But that’s now how ‘proof of stake’ works. The protocol that Cardano has put in place is known as ‘Ouroboros’. According to this protocol, not everyone is allowed to mint a block of the mathematical problem. Rather, the users must put their existing ADA at ‘stake’ to win a chance of mining the block.

The more ADA you have, the more likely it is that you may get to mine. If not, you’re out of luck. This way, no energy is being wasted at all. Only the ones who get permission from the network get to use their hardware. And all of this is controlled with a smart contract in the Cardano Blockchain.

The implementation of Ouroboros divides the blocks into Epochs and Epochs into slots. Then, the Blockchain assigns a ‘slot leader’ to take care of the slot. You can think of the slot as a shift at your local manufacturing plant.

Slot leader is a fancy term for a miner in this case. If the slot leader doesn’t show up or complete the task, it will be removed from the position. They will have to wait for their turn again.

The selection of slot leaders depends on a few factors. First, how much ADA is at stake. The more you stake, the higher your probabilities go. Second, how long the ADA has been staked for. It would be unfair if someone suddenly dumped a lot of ADA into the system and got a priority, wouldn’t it? So, you need to find the balance between the two.

Why is Cardano Viable?

The Cardano developer team is working hard to address three main pain points of the existing crypto industry. Scalability, inoperability, and sustainability.

First up, scalability. Due to the high power consumption for solving a block, the previous blockchains were not very scalable. If they were to become global means of transactions, the energy industry would take a huge hit. Cardano plans to solve it by eliminating the proof of work concept altogether. And it has seen success.

The next one is inoperability. It means that the different blockchains in circulation cannot communicate with each other independently. For example, to convert your Bitcoin into Ethereum, you need a third-party brokerage or cryptocurrency exchange service. Cardano envisions solving this by becoming the ‘internet of Blockchains’. At least that’s how the majority of the crypto enthusiasts are putting it.

Interoperability also includes the disapproval of banks and governments. While the concept of decentralization was introduced to eliminate these entities from the equation, it would be amazing if you could buy Bitcoin, ADA, or Ether from banks.

The bottom line is, Cardano comes with immense potential to revolutionize the crypto industry. It might be in the distant future but from how it looks, we can expect Cardano to control a hefty share of the internet.

Where Can You Get ADA?

So, now that you know the basics of Cardano, you might be thinking how do you participate in the process and make some money, right? Well, whether you want to be a slot leader or trade ADA for money, you are going to need a crypto wallet and an exchange platform.

There are various kinds of crypto wallets. Some are online-based, some are software wallets, and some are hardware wallets. Online and software wallets are generally free and you pay for the ‘hardware’  in hardware wallets.

In terms of security, hardware wallets are the best option. They keep your private keys away from the internet and come with strong encryption to keep everything safe. Software wallets are quite safe as well but the constant connectivity with the internet may induce risks if you’re not careful. And lastly, it’s wise to stay away from online wallets because they often have points of failure.

A good rule of thumb is to stick to software wallets if you plan to deal with a small number of cryptocurrencies. And when you decide to scale up your operation, you can invest in a proper hardware wallet like Trezor or Ledger.

Coming to exchange platforms, there are many. You can search on the internet and discover hundreds of crypto exchange platforms within seconds. However, not all of them are good choices. We like Coinbase and Bittrex the most. Let’s see what they offer for you.


One of the most reliable and trusted platforms to exchange cryptocurrency on the internet. What started as a brokerage platform for Bitcoin later turned into one of the largest repositories for crypto exchange.

You can buy, sell, exchange, and store your ADA in Coinbase effortlessly. However, we always recommend storing your crypto in your own wallet. This way, you remain in control of your possessions.


Bittrex is another very popular platform for exchanging crypto including ADA. The cost for exchange or trades is very minimal. This platform also boasts amazing security features for both beginners and veteran crypto dealers.

If you decide to go through the severe banking verification process on Bittrex, you can connect your bank account or credit card to purchase crypto with fiat currencies. In this case, it’s US dollars.

Wrapping Up

Everyone invests in crypto to make money. That’s the ultimate goal of any venture. And to maximize the possibility of earning, you need a proper understanding of the platform. Cardano is quite different from other cryptos so you needed to know what you’re getting into beforehand. And now you do. So, go ahead and start planning your adventures with Cardano and ADA.


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