The Hitchhiker’s Guide to Cardano ADA
Cardano (ADA)

The Hitchhiker’s Guide to Cardano ADA

By raxp122 | Raxp's Blog | 2 Dec 2020


1. What is Cardano?

2. How does Cardano work and what does it solve?

3. How to buy ADA?

4. How to stake ADA?

5. How to keep your ADA safe?

6. Conclusions

 

1. What is Cardano?

Cardano is a third generation decentralized platform, designed by Charles Hoskinson, on which ADA is developed, a cryptocurrency that, like any other digital currency or not, can be sent to anyone with a compatible wallet, but what's special about it? Well it's not just a coin, but much more.

In fact, Cardano is a smart contract platform, a bit like Ethereum, but it differs from all other cryptocurrencies or other tokens in one fundamental aspect, research.

In fact, research on Cardano is organized in many small groups made up of researchers, programmers, security experts and many other figures who are "competing with each other" to develop and publish "peer-reviewed" research to guarantee an incredible level of security.

 

2. How does Cardano work and what does it solve?

Cardano is developed on several layers:

The CSL Cardano Settlement Layer is precisely the one in which we can find transaction information in a similar way to other cryptocurrencies such as bitcoin.

The CCL Cardano Control Layer manages everything related to Smart Contracts, profiles or digital identities.

This separation makes it possible to increase security and facilitate the implementation of new features.

To validate transactions and receive rewards, it is necessary to staking with your ADAs, and to do so you can create a Pool if you have the necessary skills, or delegate your stake to a Pool. The algorithm used is Proof of Stake called Ouroboros which determines who will have to generate the new blocks based on various factors including the amount of ADA staking on a pool.

The main problems common to all blockchains are basically three: Scalability, Interoperability and Sustainability.

How does Cardano approach these problems?

To solve the Scalability Cardano uses various tricks, first of which is the separation between the Accounting level that manages the transactions and the Calculation level that instead manages Smart Contracts and all the various applications that will be released in the future, the so-called dApps.

Furthermore, the development of Hydra is underway which will allow transactions to be scaled at an incredible speed, for example higher than that of Visa or Mastercard and higher than any other cryptocurrency, at the same time lowering the costs of commissions and opening the way to microtransactions.

To resolve interoperability, Cardano will implement sidechains, chains parallel to the main chain that will have the task of interacting with all other existing cryptocurrencies, creating a sort of network.

To ensure sustainability, it plans to help the ecosystem through ICO sponsorships and agreements with various bodies and institutions to bring the benefits of decentralization to areas where it can bring significant progress.

The various stages of updating the platform are:

  • Byron that allows to exchange ADA between users and launch the Cardano mainnet (Completed)
  • Shelley who takes care of bringing the system to complete decentralization(Completed)
  • Goguen who will bring integration with Smart Contracts (In Progress)
  • Basho in charge of improving performance (In Progress)
  • Voltaire who deals with the treasury system and governance. (In Progress)

 

3. How to Buy ADA?

ADA is available on numerous exchanges such as Binance, ZBG, HitBTC, Huobi Global and many others,

to make an example of a purchase I will use Binance.

To start we will need FIAT money or another cryptocurrency in our possession accepted by the exchange, if you already have cryptocurrencies you should already know the method, while if it is your first purchase, continue reading.

So the first step is to register on Binance (Binance) if you also want to support me you can register via my referral link below (https://www.binance.com/en/register?ref=12016217) otherwise click on the first link.

Once registered, go to the Spot wallet and look for a stable coin, since it is not possible to buy ADA directly, for convenience I will use BUSD and buy with the amount you want to invest by connecting your card.

As soon as you receive your BUSDs you are ready to go, go to the Trades section and the FIAT section ADA / BUSD selection which is precisely the section where the exchange will take place, click on 100% if you want to invest, exchange everything immediately otherwise enter the desired quantity (the minimum are 10BUSD), now click on Buy ADA and wait for the transaction to be processed. At the end in your spot wallet you will find YOUR ADAs waiting for you, even if ... they are not yet YOURS since you do not have the private keys. To do this, it will be necessary to transfer the ADAs to a wallet.

Personally, among all the wallets I recommend the official ones or Daedalus and Yoroi.

Daedalus must be installed on a computer, it will have to download the entire blockchain and once the synchronization is complete it will allow you to create a wallet.

Yoroi, on the other hand, is a lighter version and does not need to download the entire blockchain so it is more suitable if you perform the operations from Mobile.

During the creation of the wallet you will be asked to write a series of words and a spending password, this is extremely important information and you will need to keep it carefully, which I will explore further on.

Once the creation is complete, go to the receive section and click on generate address, (good practice to generate a new one for each transaction, this will also be detailed later) copy it and return to Binance.

On the spot wallet, click on ADA and select Withdraw, on address enter the address you just copied, re-read it a couple of times to make sure it is the correct one, enter the amount you want to withdraw, or select Max and click on withdraw.

Now all that remains is to wait for the confirmations to start, check your Yoroi or Daedalus wallet and wait for the ADAs to arrive.

You are now the sole owner of your cryptos!

 

4. How to stake ADA?

To stake it is necessary to have ADA in the wallet, if you have followed the guide you are ready to proceed.

Click in the Delegate section of the app, choose a pool in the list and press the Delegate button, enter the spending password and done! You have successfully delegated to the pool. Now check every 5 days for the rewards that are awarded at the end of each epoch.

At this point you can collect the rewards or leave them where they are, in fact if you just want to staking the rewards are added automatically, and withdrawing them is only useful if you want to spend your ADA. Remember that it takes 2 epochs to receive the first rewards and that your ADAs are never blocked. Furthermore, if you add or receive other ADAs on your wallet they will be automatically added to the stake without the need for further operations!

For the selection of the Pool it is important to check that it is not saturated, easily identifiable as it is red or orange if saturated, and also choose Small Pools to help the ecosystem and its decentralization.

For example, you could delegate to RIOT

 

5. How to keep ADA safe?

As mentioned above, the first thing to secure is the list of mnemonics received during the creation of the wallet and the spending password.

Personally, being paranoid I have engraved the words on a metal plate which I then put in the safe, but obviously it can be fine to write the words carefully on a couple of sheets or booklets and hide them in safe places like a safe.

Another more expensive method is the purchase of a hardware wallet, a device that holds your private keys inside and requires physical action on the device before you can send ADAs to other wallets or addresses. This solution is undoubtedly one of the safest as it adds an extra layer of security.

You will find various online purchase and use guides.

Having said that to go back to a simple concept, would you ever give your car or house keys to a stranger with the promise that your car will be more powerful or performing or your house bigger or more luxurious? I guess not, which is why you should never share your private keys, mnemonic phrases or spending passwords with ANYONE.

Use official software and use it on computers or browsers on which you do not install strange add-ons or software of dubious origin.

This is by and large the biggest line of defense to protect your ADAs.

 

6. Conclusions

I hope you enjoyed this guide or was useful, please comment on your perplexed opinions or express opinions or correct me if I have made mistakes, thank you.

If you want to support me you can contribute some ADA at this address

DdzFFzCqrht6Lsriv6KVG8eaGzKrddGsiU5T3pbRXjAaTMssxPHTVfW2s8nm4wnbBaRotJSxdkDbGwv2vVRpWotEG8q77jmXWzTyjPsq


raxp122
raxp122

I have a lot of interests, and always searching for new ones.


Raxp's Blog
Raxp's Blog

I like Cryptocurrencies like Cardano, tech gadgets and practice programming languages like Python or Haskell. I like crypto projects that aim to make everyone's life better.

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