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How to Buy Cardano (ADA): Quick Guide
How to Buy Cardano (ADA): Quick Guide
DISCLAIMER: None of the following is intended to be investment advice. This is only meant to be a description of what has worked well for me so far, and my own opinions. Also, full disclosure, my links to Coinbase and Binance include referrals. It actually benefits you to use them because we will both get an extra $10 worth of BTC for free if you deposit at least $100 to Coinbase. Thanks in advance if you follow the links when you make your accounts - and even if you don’t, I hope you find this article useful! Remember: Always do your own research. This is not financial advice, so do not make any purchases or sales based on the opinions written on this website.
This guide will teach you how to buy Cardano from square one (i.e., all you have is fiat money, no cryptos). It will also work for most other cryptocurrencies, but as I’m focusing on Cardano right now, I am going to write a quick foreword about it and then we’ll get right into the details of the guide.
A Little About Cardano - Why Buy?
There is a massive subset of people who are new to the crypto-space entirely but have only heard of Bitcoin. Then they go online and they search around and figure out there are actually many, many cryptocurrencies out there with many different use cases. For Cardano (ticker symbol ADA), there has been a lot of recent interest - at the time of this writing, it already scores 7th place out of all cryptocurrencies ranked by market capitalization. It’s no surprise that Cardano was named in a recent Bloomberg article titled “Bitcoin’s Smaller Cousins Are Leading the Crypto Rally”— and personally I believe it’s likely that simple speculation is going to raise the price, at least in the short term, in the wake of this news.
However, I never write these guides based only on raw speculation. For me to be interested in a coin, it has to have great fundamentals or a new and interesting technology which solves tough problems in elegant ways. Cardano definitely qualifies when measured by this metric.
First of all, the Cardano Foundation is based in Switzerland, which automatically gives me a soft spot for them - the Swiss know banking, and if anyone is going to be at the forefront of a revolution in currency, I’d assume it’s them. The Cardano project began in 2015 - it’s relatively new, but it has some big ideas. Cardano offers an interesting mix of cryptocurrency techniques.
Like Ethereum, Cardano incorporates smart contracts. These smart contracts are made with the specific goal of being flexible enough to interact well with old-world systems. Actually, it’s possible to add functionality to Cardano’s smart contracts without changing Cardano’s protocol - e.g., there is no need for a hard fork if one wants to make its smart contracts more powerful. I could see Cardano’s take on smart contracts being used to expedite a great deal of currently-tedious financial processes. Basically what I’m saying is that when old-world financial institutions begin to wake up to cryptocurrency - and you better believe they’re already starting to wake up - I’d bet Cardano is going to be high on their list of coins to take advantage of.
Cardano is technically a proof of stake coin, as it uses the Ouroboros algorithm which they describe as “the most important part of the (Cardano) protocol.” I’m very interested in proof of stake coins these days, as it eliminates the massive power requirements of mining. In Cardano, “slot leaders” take the place of miners and help to secure and run the protocol by publishing blocks. If you want details on this process, there is a pretty extensive rundown on Cardano’s site, but the long story short is that it’s essentially a lottery system where any stakeholder can become a slot leader.
Coins are generated by this process, which makes Cardano technically inflationary, but only in the same way that Bitcoin is inflationary - where Bitcoin has a maximum of 21 million coins, Cardano has a maximum of 45 billion, and at the time of this writing there are around 30 billion coins in circulation, so there is a good ways to go. Even so, Cardano’s inflation occurs at a slow enough speed that its effect seems to be negligible so far.
If you want to invest in Cardano, you should do it with the understanding that there are two separate phases for this coin which the developers are calling “eras.” These phrases are called the bootstrap era and the reward era. These two phases can sort of be compared to the Bitcoin “fee economy” which will, in theory, replace the current system of Bitcoin mining once the rewards dry up. However, they’re actually quite different.
In the bootstrap era (AKA: where we are now), the network is not exactly decentralized. Instead, a pool of “trusted nodes” are maintaining the network and not collecting any block rewards. The most interesting thing about being involved in cryptocurrencies now is the fact that they’re all in their infancy - and that’s exactly how I would describe Cardano’s “bootstrap era.” Considering Cardano’s already-impressive market capitalization, I find it very interesting to realize that it’s still possible to get in on the ground floor of coins like this.
The reward era is currently estimated to begin around March or April in 2018. This is the phase in which Cardano will become more like what I would call a traditional cryptocurrency - i.e., fully decentralized. At this point, information about the reward era is a bit sparse as far as I can tell - but I am almost positive that this transition will have a massive impact on Cardano’s popularity. The official site talks about “staking pools” emerging to allow ADA holders - even holders of small amounts of ADA - to participate in receiving block rewards. This actually reminds me a lot of Ark, another proof of stake coin which I’ve previously reviewed. I have to wonder if something resembling Ark’s delegate system is going to evolve here. Will the average person be able to gain a form of interest/dividends from holding ADA? It seems so - and I think this is an extremely powerful market force considering the fact that traditional interest has basically disappeared on savings accounts in the old-world financial system over the last several decades. Regular people deserve to get time-value on their money, after all, even if banks no longer seem to think so.
When I write these reviews, there comes a point when I do some math on the coin values for all the speculators out there. Ethereum is currently ranked #2 on coinmarketcap with a market capitalization of $84,130,225,250. If ADA had Ethereum’s current market cap, it would be worth roughly $3.2 per ADA. That’s about six and a half times the current price (less than $0.50). I can totally see why people would want to speculate on coins like ADA. Don’t scoff at the concept of Cardano destroying Ethereum’s place in the market, either. In my opinion, Cardano’s smart contracts blow Ethereum’s out of the water. I’m not the first person to use the words “Ethereum killer” in reference to Cardano - and while I’m not saying it will happen, I am saying it’s within the realm of possibility. With that said, let’s get into what you came here for - how to buy Cardano cryptocurrency.
Buying ADA: Basic Strategy
To date I’ve had no problems with the following basic strategy:
- Create and sign into a Coinbase account. I recommend Coinbase because they are the most straightforward exchange.
- Purchase some ETH. At the time of this writing, this currency transfers the fastest and cheapest out of anything Coinbase offers. Litecoin competes here, but will cause hiccups later in the process - more on that later.
- Create and sign in to a Binance account. If you are American, Binance is currently not accepting new American clients - use KuCoin instead. I recommend Binance because they have been reliable and convenient for me and they offer many different lesser-known cryptocurrencies with trading pairs on both ETH and BTC. An added bonus is that you can withdraw up to 2 BTC/day worth of funds with no verification at all.
- Move your ETH to Binance. Once it has confirmed, you can now easily use the ETH/ADA trading pair to buy as much or as little Cardano as you want. More on trading pairs later.
- Send your coins from Binance to a safe ADA wallet for long term storage if you intend to hold for awhile. This is not strictly necessary but it is considered a safer option than keeping ANY coin on ANY exchange long term. I personally believe Coinomi to be the safest and most convenient wallet for many cryptocurrencies. Unfortunately, they don’t support Cardano at this time - so instead, we’ll be using the very cleverly named official Cardano wallet, Daedalus. Unfortunately, as far as I can tell there is no support for Cardano yet with ultra-secure hardware wallets like the Ledger Nano S or Trezor.
Now, if you’re a power user or someone with some existing familiarity with cryptocurrency, you can probably stop here. The rest of this guide is just going to be a more in-depth description of the preceding steps. If you’re completely new to cryptocurrencies, you might be a little lost - that’s fine! You won’t be by the time you finish this guide. I’ll go step by step:
Starting Out On Coinbase
This is arguably the most trusted exchange currently on the market. You can think of them as the PayPal of the cryptocurrency world, with all the good and bad connotations that come along with that. There are some countries where this is not the case! For example, in Canada, one would probably want to use QuadrigaCX instead. Unfortunately, that’s outside the scope of this guide, but I may do a country-by-country guide for acquiring coins later.
All you have to do here is go to Coinbase’s website and create an account. Security is incredibly important here - remember, in cryptocurrencies you are your own bank and so it is absolutely crucial that you follow good security practices. This means your password should be strong - and it should be a password you aren’t using anywhere else (including other exchanges). Google has a pretty good guide with some tips on choosing strong passwords. Keeping security in mind, it would also behoove you to turn on two-factor authentication once your account is created.
Once you are up and running there are a number of options when it comes to actually paying for coins via Coinbase. It is possible to link your bank account to Coinbase but actually transferring coins out of Coinbase will be impossible for a few days while the funds are clearing. This is obviously not ideal if you want to move quickly, as you would now have to wait several days to move your coins to an exchange where you can trade them for ADA (or any other coin).
Instead, I would recommend you link a credit or debit card to Coinbase. This will allow you to purchase some amount of coins immediately, and then immediately send them off wherever you want - your wallet, another exchange, etc. At the time of this writing Coinbase offers three coins: Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC).
What to Buy First?
In my opinion if you intend to buy lesser-known coins like ADA, ETH is the best choice to buy here. Why? Well, with regards to LTC, the reason is clear: other exchanges like Binance offer direct trading pairs for BTC and ETH, but not LTC or any other currency. What this means is that you could directly exchange your ETH for ADA, or your BTC for ADA, but you’d have to perform another step if you wanted to trade your LTC for ADA (and that means more fees!). Obviously we don’t want to waste even one cent if we can avoid it, so LTC is out.
With regards to BTC, at the time of this writing there have been a lot of rumblings about high transaction fees, slow transaction times, etc. Exchanges often overpay these fees as well, and that means that you are again risking missing out on more money than you need to.
ETH is therefore currently the best choice for our purposes by default - fastest transaction speed, lowest transaction cost. So, to review: create a Coinbase account, link your credit or debit card, and purchase ETH.
I Bought ETH: What Now?
Now is the time for you to make your Binance account. Follow the link and create an account using a strong password (this should be different than the one you used for Coinbase!). There are other places where you may be able to buy ADA (Changelly and Kucoin are two reputable examples). There are other reputable exchanges as well, but be careful about using lesser known exchanges - scams do exist! This guide focuses on Binance because my experience there has been 100% positive - I have transferred coins in and out of their system many times with no problems.
Once your account is made, you should set up two-factor authentication here via Google Authenticator. It’s safer, and you will need it to transfer coins out of Binance anyway. More on this later.
After your Binance account is made, click “Funds” at the top right, then “Deposits Withdrawals” beneath it. Find Ethereum in the list and click the “Deposit” button on the far right. You should end up with something that looks like this:
Unlike the picture, there will be an “ETH Deposit Address” listed in the box at the bottom left. This is a very long series of letters and numbers, and is the fundamental basis of most if not all cryptocurrencies. An “address” is simply the destination for funds - think of it like the account and routing numbers at the bottom of your checks. For many cryptocurrencies such as Bitcoin it is possible to have multiple “receiving addresses” which point towards the same wallet.
The address listed here is Binance’s “receiving address” for your Ethereum. To the right of it is a “copy address” button - use it to put the address into your copy/paste buffer. Then, in your Coinbase account, navigate to the Accounts tab and then to your ETH Wallet. Paste in your address. You should double check that the pasted address is the same one you saw on the deposits page in Binance - you can never be too sure when it comes to security! Once you’re sure you’re sending to the right place, input the amount of ETH you’d like to send (if you just want to buy some ADA, you should send all of it) and click “Send.”
Optional Trick: Using GDAX To Save Money On Fees
GDAX, or “The Global Digital Asset Exchange,” is the actual exchange which backs Coinbase. You can use it to save a lot of money on fees if you’re willing to spend a few extra minutes getting verified. Follow this link and click “DEPOSIT.” Click “Coinbase Account” at the top and deposit all your ETH from Coinbase into GDAX.
Once you’ve done this, you can click “WITHDRAW” in GDAX and send your funds from GDAX to Binance. Fees are significantly reduced with this method!
I Sent ETH to Binance - Now What?
Once you click Send, you will need to wait a little while. Without getting too technical about it, exchanges want to be as secure as possible. Thus, when you make a deposit, they wait for multiple “confirmations” from the network before allowing you access to your funds. You can view the progress in your Binance account by clicking Funds and then History. Do not be alarmed if nothing shows up at first! There are many reasons there might be a slight delay. In general you should see the transaction show up within a few minutes, with the current number of “confirmations” next to the number of required “confirmations” next to it. Be patient - your ADA is nearly in hand!
Once you have the required number of confirmations, it’s time to trade your ETH to ADA. This is blessedly simple. In the front page of Binance, click “ETH Markets.” Search for “ADA/ETH” in this list, and click it. Now you are on the trading page. In the bottom left under “Buy ADA,” click “100%” below the “Amount” field.
This indicates to Binance that you’d like to trade all of your ETH for a commensurate amount of ADA for no more than the price listed above. The price field is automatically listed based on the current market. If you like, you can change it to a different price, but like any market it’s not guaranteed that someone will buy at the price you’d like. Your order will remain open until it’s been fully filled or you cancel it. There are several options here such as Stop-Limit orders, etc., but this is outside the scope of this guide. In this case, you are simply placing a “Limit” order for some ADA.
I Placed My Order! Am I Done?
If you want to be done now, you can be - but there are more steps if you want to be security-conscious. You may want to check under the “Orders” and “Order History” tabs that the order went through - if you placed a Limit order at the default price, it probably did. Once you have your ADA in your Binance account, you can see them under “Funds” → “Deposits Withdrawals.” You can click “Hide 0 Balances” at the top to clean up the screen of coins you don’t own, and you can see an estimate of the overall converted BTC and USD value of your account at the top right.
For maximum security, I wouldn’t leave your coins in the exchange. I like and trust Binance, but ANY site can be hacked or experience downtime - even massively established trusted sites like PayPal. You want to have full control of your coins.
How Do I Move My Coins to a Private Wallet?
In Binance, go into the “Deposits & Withdrawals” tab, then click “Withdrawal” to the far right of the “ADA” row. By now it should be clear what you’re looking at - fields that let you input the address to send the coins to, and how many coins to send. For your convenience, there is a “Max” button to the right of the Amount field. Note that once you click “Submit” you will need to use your two-factor authentication via Google Authenticator. I recommend picking up a low-cost Android phone for use with Google Authenticator - as a bonus, you can use such a phone for the Coinomi wallet when dealing with other cryptocurrencies.
Moving Coins to the Daedalus Wallet
The name Daedalus comes from Greek Mythology; he was known for many things, but I imagine the wallet is named after him because he created a labyrinth to safely house the terrible Minotaur. Likewise, the Daedalus wallet is meant to safely house your ADA.
However, there’s a hiccup. Windows and macOS are the only supported operating systems for Daedalus - no Linux! In their defense, they claim on this page that “Linux installer is going to be released soon,” but no mention of any sort of solid timeline. There is also a link that purports to be instructions on how to build Cardano SL and Daedalus from the source code on Linux, but at the time of this writing that link is dead. Furthermore, you can’t really reasonably expect people to build from source.
I have a rule with wallets: if the development cycle isn’t far enough along to support all three major operating systems, or at least Linux, then I am extremely dubious by default. I’m not going so far as to say that Daedalus is badly programmed or insecure, but I am saying that I personally do not trust that it could possibly be polished enough for normal use. To make things worse, there seems to be an unofficial (probable scam!) wallet in the Google Play store under the named Daedalus. Don’t download this - as far as I know, there is not currently any mobile wallet for Cardano.
I have to say I am very disappointed by the current wallet situation for this coin, but it bears mentioning that many coins are in a situation like this where wallet support is minimal. Still, I am a bit surprised to see a top-ten market-cap coin suffering from this issue. The bottom line is that, for me, I personally would rather risk leaving coins on an exchange such as Binance than use an unpolished wallet. Just remember, in cryptocurrency you are your own bank, so any choice you make is at your own risk - be careful out there! For me, the risk is worth it - proof of stake coins are especially interesting to me, and I think Cardano may have a very promising future if they can work some of the kinks out.
If you’ve followed my guide this far, then you’re the proud owner of some Cardano. Be advised that the information here only scratches the surface on ADA and cryptocurrencies in general. I recommend you read as much as possible. Cryptocurrencies are the future, and if you’re reading this guide you are already lightyears ahead of the curve.
Come back soon because more content like this is always coming! If my work helped you or gave you something to think about, share it with others:
Sharing helps more people find my articles, and I’d love to be able to assist as many people as possible with cryptocurrencies. Also, if you have any ideas for future articles or specific questions, I’d love to hear them. One last thing: if you’d like to chat with me in real time, check out my Discord!
Posted: Dec 21, 2017
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