What is Cardano and how does it work?

What is Cardano? How does the Cardano blockchain work? What is ADA? How to buy ADA? Where to store ADA cryptocurrency? Is it worth investing in Cardano cryptocurrency?

Bitcoin and Ethereum are the two most famous cryptocurrencies in the world. For a long time, these were the only two cryptocurrencies that many people knew about. But not so long ago, the third largest cryptocurrency in the world appeared – Cardano.

Cardano is a blockchain developed by scientists. Before actually developing the blockchain, they did years of research. Cardano hopes to solve the problems faced by many other blockchains, such as Ethereum. In this article, we will explain how this blockchain works and whether it is worth investing in the Cardano cryptocurrency.

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What is Cardano (ADA)?

What is Cardano (ADA)?

Cardano is a blockchain and cryptocurrency launched in 2015 and calls itself "the first blockchain project developed using a scientific approach." This cryptocurrency was created by both engineers and scientists. The launch was made after two years of research and development. The project started with an ICO for $ 62 million.

Cardano consists of three parts:

  1. Cardano Foundation: Deals with the management of the Cardano project, as well as legal issues such as regulation.
  2. Input Output Hong Kong (IOHK): the company behind the Cardano project. Their mission is to explore new tools for cryptography and cryptocurrency architecture research.
  3. Emurgo is a partner that will contribute to the implementation of the Cardano blockchain in two ways: by investing in startups that create dApps on Cardano and developing partnerships with companies that want to use blockchain for a revolution in your business.

How was the Cardano blockchain developed?

Cardano is an open source decentralized blockchain and a platform for executing smart contracts. These functions allow you to create, deploy and maintain decentralized applications. But Cardano aims to provide more advanced functionality than any previously developed protocol.

Cardano justifies its existence for several reasons. It all started with the first generation of cryptocurrencies, such as Bitcoin. Two people can exchange valuables without the need for a trusted third party. The problem is that the exchange of values comes from a contract. For example: "I'll give you $1,000 in exchange for your computer." Bitcoin was not suitable for this, and to meet this need, a rather heavy overlay was built on top of bitcoin.

In 2014, Vitalik Buterin, Charles Hoskinson and others came together to offer Ethereum. This cryptocurrency allows you to add a programming language to the blockchain (Solidity), which allows you to automatically activate the exchange when conditions are met.

This is the second generation of cryptocurrencies, which also faces 3 types of problems:

  1. Scalability: how to maintain the load of transactions per second as the network grows. Blockchains are getting bigger and bigger, and millions of data have to be stored on machines. Cardano assumes that users do not have access to all the data to verify everything, but only to what is necessary, for example, to verify their own transactions.
  2. Interaction: how to get a common standard so that blockchains can interact with each other.
  3. Stability: how to develop a project.

The goal of the Cardano project is to solve these three problems in order to improve the previous generations of coins. Cardano is based on two principlesah to solve the three problems mentioned above:

  1. Separation of payment and functions from applications.
  2. Delegated Proof of Stake (DPoS).

Separation of payment and functions from applications

Unlike Ethereum, Cardano divides payments and dApps into two separate levels. The idea is that a smart contract, which, for example, distributes monthly salaries between employees of a company, will never be able to find out how much each of these employees receives.

Delegated Proof of Stake (DPoS)

Cardano uses Ouroboros, a Proof of Stake (POS)-based consensus algorithm that determines how different nodes in the network reach consensus. This technology is considered unique. The algorithm is based on Proof of Stake, although the Cardano team has made several changes to make the algorithm even more secure.

Currently, Proof of Work (POW) is being heavily criticized:

  • huge energy consumption;
  • centralization;
  • high transaction costs;
  • network overload.

Proof of Stake allows you to reduce energy consumption. But there are risks that Proof of Stake is less reliable than Proof of Work. DPoS solves this problem.

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What is an ADA token?

What is ADA token?

ADA is a Cardano token. It is used for various purposes. So users can use it as a bet. When they want to participate in the Proof of Stake network, they can use the ADA cryptocurrency as a kind of deposit. Then the validators are selected based on the bet they placed.

By betting ADA, you can earn more ADA. The network pays a reward to validators who ensure that new blocks are added to the ADA blockchain. Another way to get ADA is to buy it on a cryptocurrency exchange.

How to buy ADA?

You can buy ADA on various cryptocurrency exchanges. We recommend that you do this on Binance, given the high liquidity of this platform. In this case, you can buy or sell ADA at any time.

Of course, it is also possible to buy Cardano on decentralized exchanges (DEX) such as Uniswap, Sushiswap and Pancakeswap. However, keep in mind that it is much more difficult to buy ADA on these platforms, it is much easier to purchase it through Binance.

How to store ADA?

ADA coins can be stored in almost any wallet, since Cardano is one of the most famous crypto projects in the world. Think about a wallet that is linked to a crypto exchange, as well as external wallets such as MetaMask. You can also store your cryptocurrencies in other wallets, such as the Ledger wallet.

If you have a lot of ADA, it's wise to store it in a hardware wallet. A cold wallet is much safer than a wallet that is constantly connected to the Internet.

ADA price

In the past, the price of ADA has gone up and down significantly. Previously, it was possible to make a good profit with this project. However, this does not guarantee success in the future. The price may also fall further than the value at the moment.

Of course, you want to buy ADA tokens at the best price. That's why we recommend you to keep an eye on the price of ADA tokens. You can do this on several sites, including CoinMarketCap.


Cardano aims to be a cryptocurrency in which all stages, protocols and concepts are analyzed and criticized by researchers and developers to ensure the reliability of the project. This process is similar to what is being done in scientific research today.

Therefore, the project can be viewed as serious. Many crypto traders expect the ADA price to rise in the future. We recommend that you pay attention to this coin when compiling your crypto portfolio.

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