Cardano is a large market cap coin and a strong competitor in the cryptocurrency space to make faster, cheaper, and more energy-efficient blockchain transactions.
Whether you're contemplating investing in Cardano or are already ready to take the plunge, we'll help you understand this crypto's important purpose in the cryptocurrency world and show you how easy it is to buy Cardano on Knaken.
Cardano had a relatively early beginning in the rapidly developing crypto world, founded in 2015 by Charles Hoskinson.
Well-established founders are crucial for building an investor's confidence in a coin's potential success, and Hoskinson fits the bill—he was the co-founder of Ethereum.
In fact, Hoskinson used his experience in building Ethereum—which continues to have the second-largest market cap in the crypto market after Bitcoin—with the goal of creating a faster, more efficient blockchain competitor.
Unlike Bitcoin, which operates on a Proof of Work consensus mechanism, Cardano performs its functions on Proof of Stake. We'll talk more about the advantages of Proof of Stake shortly. But for now, know that Proof of Stake allows Cardano to operate in a more environmentally-friendly way.
Given the backlash that cryptocurrency has received for its negative impact on the environment, this feature makes the ADA coin (Cardano's native cryptocurrency coin) a leading technology in the crypto market.
There are several essential items that Cardano is trying to fix in the blockchain world. They include:
- Increasing network speed
- Decreasing network fees
- Allowing cross-chain transfers
- Avoidance of complex hard forks
- Improving incentives for miners and stakeholders
Fairness and community input are at the core of Cardano's mission. Therefore, the Cardano Foundation is an independent organization based in Switzerland.
The Cardano Foundation monitors Cardano's progress and its ecosystem. It also spreads awareness about Cardano's use cases and supports Cardano users. Needless to say, they have a strong backing both within and outside their company.
What Is Cardano?
Cardano is a decentralized cryptocurrency platform that focuses on sustainable and scalable solutions to combat many current blockchain pain points. In addition to having Hoskinson as its founder, many other prominent engineers and academics have supported and tested its development.
Haskell is the programming language that Cardano uses. It helps elevate Cardano's code accuracy to new levels, given that it's a well-recognized programming language in the tech world that offers outstanding security.
Cardano's road map contains five stages (called "eras," in Cardano terminology), including:
Most recently, Cardano experienced its long-awaited Alonzo hard fork in September 2021, which was part of the Shelley era and marked the transition to the Goguen era.
It was a stage that many crypto developers were waiting for, given that it allows them to build decentralized applications (DApps) and mint nonfungible tokens (NFTs).
As a result, Cardano transitioned from a project with a mission to a true smart contract platform that offers real-world usability. Its goal is to become a DApp platform with more features than any other platform on the blockchain.
It's a big goal to live up to, but Cardano's team works hard to achieve it. They're developing a governance system that works on democracy, enabling their project to fund itself and evolve to the needs of its users.
In addition to Cardano's five eras, its open-source blockchain code contains two primary layers—the Cardano Settlement Layer (CSL) and the Cardano Computational Layer (CCL).
CSL serves as a kind of virtual bank, as it's where ADA holders can buy and sell their coins with low transaction fees. While CSL will feel most important to the everyday Cardano user, CCL is where the behind-the-scenes magic happens.
CCL ensures that smart contracts run in a compliant and secure way. It also offers identity recognition and supports Cardano's goal of advanced functionality with its blocklisting feature.
How Does the Cardano Network Work?
Cardano operates on a consensus mechanism of Proof of Stake (PoS). PoS incentivizes miners to hold more ADA Cardano coins because the more coins they have, the more they can mine and validate block transactions.
In layman's terms, that means that the more Cardano coins a miner holds, the more money they can make.
Mining is crucial to ADA's blockchain technology because it allows the confirmation of transactions and adds new blocks to the chain.
Cardano chose to use the PoS consensus mechanism because it uses significantly less mining power. Cardano only uses six gigawatt-hours per year compared to the more than 126 terawatt-hours that Bitcoin uses.
If you're a visual learner, that means Bitcoin consumes an equivalent amount of energy that Pakistan uses per year. In contrast, Cardano couldn't even power Niue, a small island in the South Pacific, for a year.
The consensus mechanism of Proof of Stake offers many benefits, including:
- Reduced possibility of centralization happening
- Lower carbon footprint
- Stakers don't need to invest in expensive, fancy equipment
- Excellent security
Although Cardano isn't the only cryptocurrency that operates on PoS, it's an active project that has made significant steps in its development. For this reason, many people see it as an excellent coin to hold for potential long-term gains.
How To Store Cardano?
Once you buy Cardano, the next step is to figure out how to store it. If you're new to crypto, the golden rule is to never leave money on an exchange that you're not staking or will be trading within the near future.
Therefore, one of the safest ways to store your Cardano is in an offline wallet, often called a cold wallet.
There's no shortage of crypto wallets on the market. Some of the most popular ones include:
The good news is that since Cardano is in the top ten for market cap, you can expect practically any cold wallet to offer ADA storage. Nevertheless, it's a good idea to double-check the label before you buy the wallet.
Once you bring your Cardano wallet home, set it up according to the instructions. Most crypto wallets work similarly, involving a PIN you create and a long recovery phrase they'll give you.
The recovery phase is crucial because it'll allow you to re-access your crypto if your wallet gets damaged or lost.
If you prefer the flexibility of having quick access to your ADA coins from anywhere, an online wallet could be a better fit for you. Daedalus and Yoroi offer desktop and mobile wallets, respectively.
Daedalus is a Cardano-run wallet, making it unique from cryptocurrencies like Bitcoin and Ethereum. By downloading the Daedalus wallet onto your desktop, you'll be able to run an entire Cardano blockchain node.
As a result, you'll have complete control over your coins and monitor how transparent the Cardano blockchain is. You can also stake ADA through Daedalus in exchange for your help in supporting their blockchain network.
How To Stake Cardano?
Staking is a way to store Cardano, and it's an excellent option if you're seeking passive income. You'll contribute to the network by staking Cardano because your ADA cryptocurrency will help validate transactions and provide stability.
Despite how crucial staking is to Cardano's performance, you don't need special equipment or skills to do so. Instead, you simply need to hold ADA in an online Cardano wallet on Daedalus or an exchange that offers the ability to stake.
Every crypto exchange has its own rules for staking ADA, and much of it comes down to the amount you stake. Generally speaking, the more ADA stake and the longer timeframe you allow it to stake for, the higher earnings you'll receive.
So, how much can the earnings be? The range is large, typically from 1.9% to 7%. All payments for staking your Cardano will arrive in your wallet through ADA currency.
If you lock up your ADA stakings for a set period, you'll be able to receive a higher percentage than if you set up your staking so that you can pull out your coins at any time.
Therefore, if Cardano is on your long-term hold radar, locking up your ADA for long-term staking is an excellent way to make a better passive income than leaving the equivalent of that money to earn interest in a bank.
Buy Cardano with iDEAL
Buying Cardano with iDEAL on Knaken is easy. First, select the crypto you want, which in this case is the Cardano ADA coin. Next, select "iDEAL" in the dropdown box under "Payment method."
You'll find the list of other payment methods we offer, including credit card and bank transfers. Click "Buy" and wait for your transaction to process.
Once your ADA crypto arrives, you can view it from your Knaken dashboard. From there, you have complete control of your Cardano coins—keep them on Knaken, stake them, or move them to a cold wallet.
If your goal is to build up a long-term hold of Cardano, we recommend setting a calendar reminder to return to Knaken on a weekly or monthly basis. That way, you can dollar cost average your way into your ADA investment.