A Beginner's Guide To Investing In Cardano (Ada) Crypto

Cardano (ADA) is a popular choice among crypto investors looking for projects with strong long-term potential. It is an open-source blockchain that allows the settlement of payments and aims to build a more scalable decentralised finance ecosystem. It is also one of the biggest blockchains to use the less energy-intensive proof-of-stake mechanism, along with Ethereum and Solana.

Cardano was founded by Charles Hoskinson, who was also one of the co-founders of Ethereum. He is the CEO of IOHK, the company that built Cardano's blockchain.

If you're interested in investing in Cardano, you'll need to sign up for an account on a crypto exchange platform that supports ADA, such as Coinbase, Binance, Kraken, eToro, or Crypto.com. After that, you'll need to fund your account, then navigate to ADA in the exchange's trading section and place an order to buy the desired amount of ADA.

Choosing a crypto exchange

When choosing a crypto exchange to buy ADA, there are a few things to consider. Firstly, you should look for an exchange with strong security measures and reasonable fees. Some popular crypto exchanges that offer ADA include:

• Binance
• Coinbase
• Crypto.com
• Uphold

For beginners, Coinbase is a great choice due to its user-friendly interface and abundance of educational content. On the other hand, if you are looking for the lowest fees, Binance is a good option. It's important to note that you will need to open an account and verify your identification before using any of these platforms.

Another factor to consider is the payment methods accepted by the exchange. Most top exchanges allow you to deposit cash from a bank account for free, although this method can take a few business days to process. If you want to make a faster purchase, you can use a debit or credit card, but the fees tend to be higher.

Once you've chosen an exchange, you'll need to sign up for an account, verify your identity, and fund your account before you can start buying ADA.

Creating an account

To buy Cardano's native cryptocurrency ADA, you'll need to create an account with a crypto exchange. Here's a step-by-step guide on how to create an account and purchase ADA:

Choose a Crypto Exchange:

Select a reputable crypto exchange that offers ADA, such as Coinbase, Binance, Kraken, or eToro. Consider factors like security, fees, ease of use, and payment methods when choosing an exchange.

Sign Up for an Account:

Visit the website or download the app of your chosen exchange. Look for a "Get started," "Register," or "Sign up" button to begin the account creation process. Provide the required information, which typically includes your name, email address, and password.

Verify Your Identity:

Crypto exchanges are required to verify the identities of their clients to prevent illegal activities. Have your government-issued ID, such as a driver's license or passport, ready for this step. You may also need to provide your Social Security number or equivalent.

Set Up Two-Factor Authentication (Optional but Recommended):

Even if it's not mandatory, consider setting up two-factor authentication for added security. This will require you to enter a code sent to your email or phone number in addition to your password when logging in.

Add Funds to Your Account:

Before you can purchase ADA, you need to deposit funds into your exchange account. Common payment methods include bank transfers, credit/debit cards, and stablecoins. Each exchange will have its own supported payment options and associated fees, so review them before proceeding.

Navigate to the ADA Trading Section:

Once your account is funded, locate the ADA trading section on the exchange. Here, you'll be able to see the current ADA price and place your order.

Place Your ADA Order:

Decide how much ADA you want to purchase and review the transaction details, including fees, before confirming your order. The purchased ADA will typically be deposited into your exchange wallet shortly after.

(Optional) Transfer ADA to a Personal Wallet:

For added security, you may consider transferring your ADA from the exchange wallet to a personal crypto wallet, such as a hardware wallet, software wallet, or a compatible third-party wallet like Yoroi or Daedalus.

Remember to do your research, understand the risks involved, and only invest what you can afford to lose when dealing with cryptocurrencies.

Verifying your identity

Firstly, you will need to provide personal information such as your full name, date of birth, residential address, and email address. It is important to ensure that the information you provide matches your identification documents to avoid any delays or issues in the verification process.

Speaking of documents, you will typically need to provide a scan or a clear photo of a valid government-issued ID, such as a driver's license, passport, or national ID card. Some exchanges may also require additional documentation, such as a recent utility bill or bank statement, to verify your address. It is essential to ensure that the documents you provide are up-to-date and legible.

In addition to the above, some exchanges may also require you to set up two-factor authentication for added security. This adds an extra layer of protection to your account by requiring you to enter a code sent to your email or phone number each time you log in. Even if it is not mandatory, it is highly recommended to enable two-factor authentication to protect your account and investments.

The verification process is typically completed online through the exchange's website or mobile app. Once you have submitted all the required information and documents, the exchange will review and verify your identity. This process may take some time, and you will usually be notified via email once your account is verified and ready for use.

It is important to note that different exchanges may have specific requirements and procedures for identity verification. Therefore, it is always a good idea to carefully review the instructions and requirements provided by your chosen exchange to ensure a smooth and efficient verification process.

Planning your investment strategy

Before investing in ADA, it is important to understand the risks and volatility of the cryptocurrency market. As with any investment, it is crucial to do your research and carefully consider your financial situation, risk tolerance, and investment goals.

• Long-term investment approach: Cryptocurrency is highly volatile, and short-term price movements can be unpredictable. Therefore, it is generally recommended to take a long-term investment approach with ADA. This means holding onto your investment for several years or even longer, allowing you to ride out the short-term price fluctuations and potentially benefit from long-term growth.
• Dollar-cost averaging: Consider making regular, fixed-amount purchases of ADA over a period of time, rather than investing a large sum all at once. This strategy, known as dollar-cost averaging, can help reduce the impact of price volatility and lower your overall risk. For example, you could decide to invest a certain amount of money in ADA every month, regardless of the current market price.
• Diversification: Diversifying your investment portfolio can help manage risk. Instead of putting all your money into ADA, consider investing in a variety of cryptocurrencies and other asset classes, such as stocks, bonds, or real estate. This way, you can reduce the impact of any single investment on your overall portfolio performance.
• Risk management: Set clear risk management guidelines for your ADA investment. Determine how much you are comfortable investing and how much loss you can tolerate. You can also set stop-loss orders to automatically sell your ADA if the price drops below a certain level, limiting your potential losses.
• Market analysis: Stay informed about market trends, news, and developments related to ADA and the broader cryptocurrency market. Monitor the price movements of ADA, follow industry news, and analyse technical indicators to make more informed investment decisions.
• Investment horizon: Decide on an investment horizon for your ADA holdings. This could be a specific time frame, such as holding for at least five years, or it could be based on a price target. For example, you might plan to hold ADA until it reaches a certain price, at which point you will sell a portion of your holdings to lock in profits.
• Exit strategy: Have a clear exit strategy in place before investing in ADA. Determine the conditions under which you will sell your holdings, such as reaching a certain profit target or if the price drops below a certain level. This can help you avoid making impulsive decisions and ensure you stay disciplined with your investment plan.

Making your ADA purchase

To buy Cardano's native cryptocurrency ADA, you will need to follow a few simple steps. Firstly, choose a reputable cryptocurrency exchange that supports ADA, such as Coinbase, Binance, Crypto.com, Kraken, eToro, or Uphold. These platforms offer security and reasonable fees, which are important factors when selecting an exchange.

Next, create an account on your chosen exchange and complete the verification process. This typically involves providing personal information and setting up two-factor authentication for added security.

Once your account is set up, you will need to add funds to it. You can generally use a bank transfer, credit card, or other supported payment methods for this step. Keep in mind that using a credit card may incur higher transaction fees and interest rates, so it is generally not recommended to start your crypto investing journey with debt.

After funding your account, navigate to the trading section of the exchange and select ADA as the cryptocurrency you wish to purchase. Enter the amount you want to invest, and review the transaction details, including any associated fees.

Finally, confirm the purchase, and the ADA you bought should be available in your exchange account within seconds.

For added security, you may consider transferring your ADA to a personal crypto wallet. There are several types of wallets to choose from, including hardware wallets (physical devices similar to flash drives), paper wallets (a physical piece of paper with your private keys), software wallets (downloadable apps or programs), or storing it on the crypto exchange itself. However, it is generally not recommended to keep your crypto on an exchange for long periods, especially if you are not actively trading.

Frequently asked questions