Cardano (ADA) is a cryptocurrency that lets its owners help operate the network and vote on changes to it. Developers are able to make use of the Cardano blockchain to write smart contracts and decentralized applications (dApps). ADA crypto is required to run programs like dApps. Cardano boasts a large library of academic research that its founders point to as a factor that makes the blockchain unique. Cardano’s creators also hope that the platform will be used by “innovators and visionaries” to create positive change in the world. This article serves as a cryptocurrency guide for ADA.
What is ADA Cryptocurrency?
In 2017, Cardano was created by two technologists named Jeremy Wood and Charles Hoskinson. Hoskinson co-founded Ethereum (ETH), the second-largest cryptocurrency by market cap. It makes sense, then, that Cardano and Ethereum have a lot of similarities. Namely, both networks are primarily used for programming based on smart contract technology.
A smart contract is a program that initiates a digital transfer between parties when specific conditions have been met. It’s not unlike a regular, written paper contract. The big difference lies in the fact that smart contracts require no third-party intermediary and can be programmed to execute automatically when the right conditions are met.
Cardano claims to be different by focusing its design on research and academics, believing this could help accelerate its adoption. Cardano is written in a sophisticated programming language known as Haskell, which is also used by banks and governments.
The company that built Cardano, IOHK, has a strong reputation in the world of academia. IOHK has published over 60 academic research papers (as of 2020) describing its technology. Research can be found on the official website of Cardano , where the team also publishes blogs posts and videos to educate users.
ADA Crypto Proof-of-Stake Blockchain
Cardano (ADA) is a proof-of-stake blockchain. This differs from Bitcoin and most mineable cryptocurrencies which use the proof-of-work consensus method. On the Bitcoin network, miners solve complex mathematical problems to process transactions (“work”) in a race to solve the next block and receive the rewards that it yields. Mining difficulty is constantly increasing and there is a limited amount of bitcoin that can ever be created.
On Cardano, things work a little differently. All of the ADA coins that will ever exist have already been created. ADA was a “pre-mined” coin, meaning there’s no work to be done to mine additional coins.
Instead, ADA holders can participate in the Cardano network and “stake” their coins, effectively locking them up for a period of time, in hopes of receiving the next reward in a lottery-like format. The more “stake” one has in ADA, the greater their chances of receiving winning the next block.
Proof-of-stake blockchains have a few advantages over proof-of-work blockchains. Perhaps most notably, they use far less energy. Mining requires servers to be running at all times, consuming a huge amount of electricity. There is a constant “search” for more bitcoin. Proof-of-stake removes the search aspect, since the coins already exist.
What is Cardano ADA Used For?
Like many other cryptographic tokens and coins, ADA cryptocurrency can be used as a medium of exchange. People can send each other ADA through digital wallets for whatever purposes they like. ADA can also be used for speculative purposes. Traders can try to buy coins when the price is low and sell them after the price rises.
When asking the question “what is Cardano cryptocurrency,” however, it’s important to look at the specific use case for ADA on the Cardano blockchain. The ADA crypto is used as fuel to run programs, much like ETH is used as “gas” on Ethereum.
Ethereum and Cardano are both smart contract platforms. Because smart contracts represent decentralized agreements that execute themselves when certain conditions are met, there is no intermediary (like a bank or a notary) to facilitate the transaction. Instead of paying a fee to a third-party provider, users on these blockchains must use the appropriate crypto token as a tool to conduct business, run programs, play games, etc.
Some examples of projects that have been created on the platform include a workplace incentive platform and an enterprise traceability solution.
Is Cardano ADA a Good Investment?
Ultimately, the question of whether Cardano ADA is a good investment is one the individual investor must answer for themselves.
Investing in any cryptocurrency like ADA crypto is generally seen as a speculative investment that comes with high risk and lots of volatility.
Someone with a high risk tolerance who doesn’t mind the potential losses might see ADA as a good investment, if they’re looking for potentially quick profits without a dividend.
Like all cryptocurrencies, ADA doesn’t yield any interest or pay a dividend. Some investors assert that based on this metric alone, the entire crypto asset class doesn’t qualify as an investment. Altcoins like ADA also aren’t accepted by many online merchants, so the only way to profit is to buy low, sell high, and take profits in bitcoin or a stablecoin like USDT. (Here are 6 things to know before investing in crypto.)
On the other hand, when considering any of the other hundreds of altcoins, by some metrics Cardano (ADA) might be considered a better choice than many. The coin currently sits in the 6th spot for largest cryptocurrencies by market cap, meaning there are only 5 cryptos in the world larger than ADA. Cardano has remained in the top ten cryptocurrencies spot since its inception in 2017.
Investors who believe in technology that enables decentralized applications might find ADA to be a more appealing investment than other types of cryptocurrency. And crypto enthusiasts who believe in the future of proof-of-stake blockchains might also decide to hold ADA.
What is the Price of Cardano?
At the time of writing, one ADA coin is worth about $0.31. To reach a valuation of $1 would imply a rise of roughly 220%. Such moves are not unheard of in the cryptocurrency space. But they tend to take some time, unless there is a big news item that causes people to rush into a particular digital asset.
In the case of ADA crypto specifically, the one factor most likely to drive higher prices might be use of the platform itself. That’s because people need ADA tokens to run decentralized applications (dApps) on the Cardano network. So, the more people use the network, the more demand for tokens increases, and the price of ADA could, in theory, keep rising.
This is the dynamic thought to be behind the rise of Ether (ETH), the token of the Ethereum network, which is used for much the same purpose. ETH has soared from under $10 in 2016 to over $1,100 at the time of writing.
How to Buy ADA Cryptocurrency
Now that we’ve answered the question “what is Cardano cryptocurrency,” let’s quickly run down how to buy ADA.
Buying ADA is not unlike buying any other cryptocurrency. ADA is traded on many of the prominent crypto exchanges. Binance, Upbit, and Huobi all trade ADA, for example. There are often both ADA/BTC and ADA/USDT trading pairs available, meaning users can exchange either bitcoin or the Tether stablecoin for ADA.
To buy ADA, a user will need to take the following steps:
1. Create an account on an exchange that trades ADA.
2. Deposit some BTC or USDT to your wallet.
3. Exchange your BTC or USDT for ADA.
After the third step, you will hold ADA in your exchange-hosted wallet. From there, users can either hold coins, send them to another secure cryptocurrency wallet, or trade them for a different cryptocurrency.
Cardano ADA is a proof-of-stake cryptocurrency that currently ranks as the 6th largest cryptocurrency by market cap. Developed in 2017, the Cardano platform was intended to be used by “innovators and visionaries” to create positive change in the world, according to its founders.
Cardano is just one of many cryptocurrencies investors might explore as they look to investing in this relatively new digital asset class. Others include Ethereum, Bitcoin, Litecoin, and more.
Buying cryptocurrency with SoFi Invest® is simple—and the app safely stores your crypto investments for you.
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal. Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.