Cryptocurrency Guide

What is Cardano — A Beginner's Guide

Team Cryptoradar by Team Cryptoradar

Updated: Feb 4, 2022

There’s a lot of jargon associated with cryptocurrencies. If you’ve learned about DApps, nodes, blocks, smart contracts, blockchains, mining, decentralisation and PoW systems, you’re probably just starting to think of yourself as a cryptocurrency connoisseur. But in true crypto-fashion, just as you start feeling comfortable with the lingo, a new coin crashes on to the scene with more terms to learn.

So, on that note, let me introduce you to Cardano (ADA), a third-generation, multi-layered cryptocurrency that uses a proof of stake consensus process.

Fret not, behind these intimidating terms, the fundamentals of Cardano are much the same as other cryptocurrencies. However, Cardano has found ways to be more sustainable, adaptable and scalable, without compromising on speed.

The brains behind Cardano, Charles Hoskinson, is also the co-founder of Ethereum and BitShares. With its roots in experience and knowledge, Cardano’s innovation is not without reason.


A key problem that Cardano set out to solve is the scalability of cryptocurrency. If you’re not quite up to speed on your cryptocurrency lingo, scalability essentially refers to how many transactions can be performed simultaneously.

Downsides of Proof-of-Work Systems

Many cryptocurrencies make grand claims that their coins will soon replace the fiat currencies we’ve used for years. However, most cryptocurrencies do not have the infrastructure to even dream of facilitating this. To put the cryptocurrency scalability problem into perspective, Bitcoin can process 7 transactions a second, Ethereum can process 15. Meanwhile, Visa, the renowned fiat financial service, processes an average of 1,667 transactions every second. Cryptocurrency might be revolutionary in concept but it is not revolutionary in practice.

Bitcoin and many other cryptocurrencies use a ‘proof of work mining’ system. This involves powerful computers solving complex equations to validate blocks of transactions. The miner that completes the equation first receives a monetary reward. However, most crypto-blocks have set sizes so transactions can take some time to process. In theory, block sizes could be increased but this would also increase the power necessary to mine the block. To be able to validate a block, PoW miners need to have records of every transaction on the ledger. With the popularity of cryptocurrency growing, the number of transactions on the ledger is growing exponentially, and this slows the process down.

Cryptocurrency strives to juggle decentralisation, security and scalability, but it is nearly impossible to achieve all three when using a PoW system.


Cardano thus decided to opt for a PoS consensus method instead of the more favoured PoW system described above. PoS stands for ‘proof of stake’. Be sure to take note of the spelling of stake, it refers to the investment kind of stake…. not the meaty kind (unfortunately).

Proof of stake is still a decentralised consensus method, which is integral to the cryptocurrency philosophy. The PoS process means that rather than needing powerful computers to validate transactions, miners only need Cardano’s currency, ADA, to be validators. It is still a secure method because validators are investors and so the secure-running of Cardano is important to them.

As the saying goes, the proof is in the pudding. And the same is true for the success of proof of stake systems. Even the cryptocurrency big dog, Ethereum, is moving over to a PoS system for their latest fork, Ethereum 2.0.

What’s more, while Cardano still uses blocks, they understand that the data of a whole block is not relevant to every single transaction. With Cardano, validators validate transactions rather than entire blocks, earning what is effectively a transaction fee as a reward for their stake.

Proof of stake processes have been adopted by some other cryptocurrencies, but some currencies ensure the validators will be honest by giving the reward to the validators with the biggest investment, the biggest stake. However, this is not the most decentralised ethos and one that Cardano does not indulge in. Instead, Cardano employs a system they built called the Ouroborus protocol that ensures everyone has a fair opportunity to be validators without compromising on security and decentralisation.

Cardano’s system has enabled them to be much more scalable than some of the leaders of the cryptocurrency industry. In a test back in 2017, Cardano were able to accommodate 257 transactions a second. While that result totally overshadows Bitcoin and Ethereum, it still can’t compare to Visa. However, a crucial part of Cardano is development and while their scalability isn’t quite up to scratch yet, they hope it will be able to achieve thousands of transactions a second in the near future.


It doesn’t take a genius to recognise that cryptocurrency’s audience and interest has changed vastly over the last few years. However, many of the leading cryptocurrencies are using very similar sciences, languages and infrastructures as the ones they started with. This is an integral difference with Cardano who recognise that change and progress are essential to grow a successful business.

Multi-layer Approach

So because of this, Cardano operates a multi-layered approach to their cryptocurrency in order to separate the accounting element of Cardano from the computational element. While the accounting layer is very much operational, the computational layer is evolving.

Many cryptocurrencies were created as if they were buildings. The interior design could be changed or updated, an extension could be added, but the integral structure of the building could not be changed without knocking it down and starting again. Instead, Cardano’s development is more like bringing up a child: it is always growing, always changing, always adapting to its surroundings.

This malleable approach to cryptocurrency gives Cardano the scope to create some really promising features like DApps and Smart Contracts. Some of the DApps already developed by Cardano have enabled students to access their examination certificates and allowed restaurants to trace their ingredients back to the field for product certification. Perhaps one of the most exciting innovations is the news that one of Cardino’s backers is partnering with Wyoming University to develop a crypto-authentication microchip to verify the authenticity of their purchases.

Research Focus

More and more people are trusting Cardano because of its commitment to progress and improvement. As well as having Charles Hoskinson’s renowned and trusted name behind them, Cardano also publish academic research to support their development and technology. To date, one of the companies that built Cardano has published over 60 peer-reviewed academic papers that outline, evidence and support their technology. Cardano is maintained by three institutions: the Cardano Foundation, IOHK and Emurgo. The result is a multidisciplinary team comprised of scientists, business professionals, mathematicians and programmers.

Unlike other cryptocurrencies that are shrouded in secrecy and fronted with empty promises, Cardano is transparent and reactive to demand with the facts to match.


A perfect example of Cardano’s reactivity to its environment lies in their adoption of a PoS consensus process. In the age of David Attenborough and Greta Thunberg, sustainability is important. So, with cryptocurrency being a new innovation, it is disappointing that so many popular cryptocurrencies use an extortionate amount of electricity to mine transactions. It is believed that Bitcoin mining processes use more energy than the whole of Ireland. In comparison, Cardano’s proof of stake process requires a lot less energy so is much more sustainable.

This exemplifies Cardano’s commitment to this cryptocurrency. By being mindful of environmental sustainability, Cardano are setting themselves up for economic sustainability too. Cardano isn’t just interested in kicking up a storm in this decade. Instead, they clearly plan on being around for many decades to come.

How to Buy Cardano

There are still very few cryptocurrency marketplaces that allow you to buy Cardano for US dollars, euros or pounds. Luckily, we've got you covered. Just follow these four simple steps:

  1. Find a cryptocurrency exchange
  2. Sign up for a cryptocurrency exchange
  3. Buy Cardano using US dollars, euros or pounds
  4. Store Cardano securely

1. Find a Cardano exchange

Before choosing a cryptocurrency exchange, it's good to figure out what you are looking for in an exchange. Should it be easy-to-use, have the best prices or great payment options? The below list outlines key factors which should influence your decision for a marketplace that suits your needs:

  • User experience: if you're new to cryptocurrencies, it's a good idea to choose an exchange with a great user interface which helps you make better informed investment decisions and reduces the risk of unnecessary mistakes.
  • Fee structure and rates: great user experience, however, often comes at an expense - trading fees as well as payment fees are usually higher at marketplaces that are easy to use. Fees can generally range from as little as 0.1% per transaction to 10% per transaction and more. Hence, always look for a good trade-off between pricing and user-experience.
  • Payment methods: make sure that your preferred cryptocurrency exchange offers payment methods that suit your wants and needs.
  • Security & trust: a cryptocurrency trading platform should follow security best practices. Read reviews by real users to learn more about the trustworthiness and support provided by the different marketplaces.

How to use Cryptoradar to find a cryptocurrency exchange

Cryptoradar helps you find a suitable cryptocurrency marketplace, providing you a comprehensive yet compact overview Cardano marketplaces.

Make sure to use the filters on the left side of the website to narrow down your list based on your wants and needs.

2. Sign up for an exchange

Signing up to an exchange is actually one of the easiest parts of the process. Simply enter your personal details to get started.

After registration, however, you need to verify your identity. To do so, you will either be asked to upload identification documents to the marketplace (e.g. a copy of your passport and a recent utility bill as proof of residence), or you will be asked to jump on a short video chat with a support agent who will verify your details remotely.

3. Buy Cardano using fiat currencies

Finally, you're on the brink of making your first Cardano purchase! Yet, before you can actually buy cryptocurrency, you need to deposit money on the marketplace. This can either be done through bank transfer or instant payment methods like credit cards or Skrill.

Once your payment is received by the cryptocurrency exchange, you can go ahead and buy Cardano. This is actually the easiest part of the whole process. On most marketplaces it’s as easy as selecting the purchase amount (in US dollars, euros or pounds) and clicking the buy button.

4. Store Cardano securely

Optionally, you can withdraw Cardano after your purchase to a secure wallet that you manage. Keep in mind that you should not leave large amounts of cryptocurrencies on marketplaces as they are popular targets of hackers.

To Conclude

Cardano’s development has been more slow, measured and organic than other cryptocurrencies, so the potential of Cardano is only just starting to be realised and is, still, largely unknown. However, Cardano’s reliance on science and fact is comforting and incredibly promising.

Many cryptocurrencies are too risky to invest in when they are at this fledgeling stage. However, Cardano’s renowned roots and esteemed backing means that they have a high chance of success. While investing in some cryptocurrencies feels like walking through a jungle with a blindfold on, Cardano allows that jungle to be navigated with a little more clarity.

Frequently asked questions

As with every investment, Cardano’s Ada offers potential rewards but there are obvious risks involved whenever you trade crypto. All investors should keep an eye on the market and, if unsure of their actions, take advice from financial experts before putting their money at risk.

Using a digital wallet is the best way to store Ada. There are a number of different recommended wallets, such as the full-node wallet, Daedalus, or browser-based Yoroi. The wallet you choose depends on whether you want to make quick trades or save Ada on a long-term basis. It is recommended that any digital currency is stored in a wallet for security rather than kept on an exchange for an indefinite period of time.

Join the Cryptoradar community