What is Cardano (ADA)? | The all-inclusive guide

Cardano is a smart contract platform, similar to Ethereum, with a focus on security through a layered architecture. The self-described “third generation blockchain” is the first of its kind to emerge from scientific philosophy and build on peer-reviewed academic research.

The team behind Cardano develops it for both the end user and the regulators. They are trying to strike a balance that balances the need for regulation with the principles of privacy and decentralization at the core of blockchain technology.

The platform also uses unique Haskell, a programming language with high fault tolerance. Given the relatively unknown future and complexity of blockchain-based systems, it is important to build flexibility into projects. It is almost impossible to know what a system may have in months or even years, so it is important to have a robust language like Haskell that allows for a certain margin of error.

Unlike some other crypto projects, the Cardano team’s goal is not to overhaul the entire financial system. Their goal is to use blockchain technology to bring banking systems to places where their implementation was previously too expensive – especially in developing countries.

In this Cardano guide we cover:

How does Cardano work?

Cardano is developed in two layers that make up the Ledger of the account values of the Reason why values ​​move from one account to another. This separation enables a more flexible design of the smart contracts on the platform. It also offers btakes advantage of the ability to customize the design, privacy, and execution of each contract to better suit their specific use cases.

Cardano Settlement Layer (CSL)

The Cardano Settlement Layer (CSL) acts as a balance ledger and is the first layer of the platform. This layer was developed as an improvement on Bitcoin and acts as a cryptocurrency based on the whitepaper Ouroboros: A Demonstrably Secure Proof of Stake Blockchain Protocol by Aggelos Kiayias.

The CSL uses a Proof-of-stake consensus algorithm to generate new blocks and confirm transactions. And it contains:

  1. Two sets of scripting languages
    1. One sentence to shift the value
    2. A phrase used to improve overlay protection support
  2. Sidechains for linking with other ledgers
  3. Multiple signature types, including quantum-resistant signatures
  4. Multiple assets issued by users
  5. Scalability, where the capabilities of the system increase as more users join

Cardano computing layer (CCL)

The Cardano Computation Layer (CCL) is the second layer of the Cardano platform and contains the information why transactions are taking place. Cardano’s smart contracts run within this layer.

Since the calculation layer is detached from the CSL, different users of the CCL can create different rules when evaluating transactions.

For example, you could create an approved ledger that skips all transactions that do not contain AML / KYC data – something that will become more important as blockchain regulation increases.

The Cardano team is developing a new programming language for developing smart contracts on the CCL – Plutus. The CCL also supports Solidity, the language behind Ethereum Smart Contracts, for low-security applications on the platform.

To help developers, Cardano also includes a reference library of Plutus code that can be used in Dapps. The team also creates a number of tools to review code and improve code security.

KMZ side chains

Cardano supports sidechains based on a new protocol from Kiayias, Miller and Zindros (KMZ) with proof of work. TThe KMZ sidechain protocol enables the secure transfer of funds from the CSL to any CCL or blockchain that also uses the protocol.

This protocol allows ledgers to interact with the CSL with certain regulatory requirements without having to share the data, which must remain private.

Daedalus purse

Daedalus is an open source wallet created by the Cardano team. It is a Multi-currency wallet in which you can freely switch between the supported currencies. The wallet starts expanding support with Bitcoin and Ethereum Classic.

Daedalus wallet interface

The wallet also contains an app store with applications developed by the Daedalus community. You can currently download the wallet on Windows and macOS operating systems.

ADA and Ouroboros Proof-of-Stake

The Cardano team has stipulated that it be a maximum 45 billion ADA coins ever created. New coins enter the ecosystem and nodes validate transactions through a unique consensus algorithm, Ouroboros Proof-of-Stake (PoS).

In this protocol, slot leaders generate new blocks in the blockchain and verify the transactions. Anyone who owns a Cardano ADA coin can become a slot leader. When the “Follow the Satoshi” algorithm picks a coin to hold, you become the slot leader and publish new blocks on the network.

Your node does this automatically, so you don’t have to worry about manually reviewing every transaction.

Cardano fees

The fees for transferring ADA vary and are determined by the following equation:

Transfer fee = a + b * size.

a = a constant currently 0.155381 ADA

B. = a constant current equal to 0.000043946 ADA / byte

size = Size of the transaction in bytes

This effectively means that the minimum transaction fee you will have to pay is 0.155381 ADA and will increase by 0.000043946 ADA for each byte increase in your transaction size.

The transaction fees of each epoch are collected in a pool and distributed to the corresponding slot leaders. An epoch is simply a period of time during which slot leaders validate transactions. When one epoch ends, the next begins immediately.

The treasury

Aside from slot leaders, a portion of every block reward also goes to a treasury. If you want to get funding to contribute to the Cardano ecosystem, you need to apply for a grant from the Treasury Department. The stakeholders will then vote on whether or not your grant will be approved and give you the funding. The Ministry of Finance’s goal is to create a self-sustaining ecosystem that will continue to grow long after the project is completed by IOHK.

Cardano story

Cardano shares many of its roots with Ethereum. The project’s two founders, Charles Hoskinson and Jeremy Wood, were instrumental in the beginnings of Ethereum in 2013. After leaving Ethereum, they teamed up in 2015 to create Input Output Hong Kong (IOHK), one of the companies behind Cardano.

If I am ever asked why there are cryptocurrencies, I answer because this exists and we need a pushback https://t.co/yxGiMLRDrW

– Charles Hoskinson (@IOHK_Charles) September 18, 2018

In fact, three organizations are working together to develop Cardano:

  1. The basis
  2. Input output Hong Kong (IOHK)
  3. Emurgo

The Cardano Foundation is a non-profit organization that acts as the custodian of the project. Its aim is to support and expand the Cardano ecosystem. IOHK is a blockchain engineering company focused on building the actual project. And Emurgo is a blockchain project incubator that provides much of the funding.

The team raised around $ 63 million during its nearly two-year ICO.


The project has an evolving roadmap but follows a five-phase plan. The phases are as follows:

  1. Byron – This is the phase Cardano is currently in. It includes the initial development of the main network and additional functions such as the Daedalus wallet. Everything that is planned for this phase has been created and the team is in the process of making improvements.
  2. Shelley – In this phase the network is completely decentralized. The functions here include delegation and stake pool test networks.
  3. Goguen – The team is in the process of planning this phase. At this point on the roadmap, Cardano will have a virtual machine called IELE, similar to the Ethereum Virtual Machine (EVM). The platform will also have a universal language framework for future blockchain technology.
  4. Basho – The team plans to improve scalability, security, and performance during this phase. They will also implement Ouroboros Praos, an improvement on the original Ouroboros protocol.
  5. Voltaire – In the final phase, Cardano will implement the treasury model and provide a self-sustaining ecosystem for the network.


As a smart contract platform, Cardano competes with several similar crypto projects – above all Ethereum. The project also competes with several recent projects that focus on smart contract development, such as EOS, Lisk, NEO and NEM. Of these additional competitors, Cardano is the second largest behind EOS.

As mentioned earlier, the team is trying to split up by focusing on it Scalability through peer-reviewed research and very safe Coding Practices. Although this strategy results in slower product development, it significantly reduces the risk of critical bugs and noticeable errors.


Cardano had a long ICO from September 2015 to January 2017, and the ADA token started trading on the open market in October 2017.

The price of ADA remained relatively stable through November 2017, when it jumped from ~ $ 0.03 (0.00000345 BTC) to ~ $ 0.14 (0.0000142 BTC) in 3 days. That is an increase of over 360%.

ADA hit an all-time high of $ 1.15 (~ 0.0000077 BTC) in early January 2018, but has since followed the rest of the cryptocurrency market to the bottom. It apparently had a spike in April 2018 caused by the increasing number of exchanges listing ADA and the publication of the roadmap.

Unfortunately, these types of announcements are most likely not going to have any impact on the price of the coin. The biggest positive factors influencing price from now on will likely be partnership announcements, roadmap successes, and increased use of the network.

Where can I buy ADA?

You can buy ADA on several major exchange platforms. Binance has the highest ADA trading volume on the exchanges and offers the coin as a trading pair with Bitcoin and Ethereum.

To buy ADA on most platforms, you must first buy and transfer Bitcoin or Ethereum on another platform. GDAX and Gemini are good choices to start this process.

ADA will also soon be available through a network of ATMs in Japan. However, there are no ATMs available yet and no schedule has been given.

Where can I save ADA?

To receive the reward from staking, you will most likely need to keep your ADA in a wallet on an exchange.


Cardano is an ambitious project that addresses a wide variety of problems in the crypto industry. After seeing the potential Ethereum vulnerabilities from the DAO hack and the recent Parity wallet fiasco, it’s nice to see Cardano focus on code review and peer-reviewed security measures.

However, this comes at a cost. With such an emphasis on security, don’t expect quick product updates. Instead, see this as a long-term project with a lot of potential.

Editor’s note: This article was updated by Steven Buchko on 10/22/2018 to reflect the latest changes to the project.

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