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What is Cardano?

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What is Cardano?

The Cardano blockchain platform was launched in 2017 by Charles Hoskinson. It’s a third-generation blockchain designed to provide a secure and scalable infrastructure for the deployment of decentralised applications (dApps) and smart contracts. 

Cardano has several distinguishing features that set it apart from other blockchains:

Two-layer architecture

Cardano utilises the Cardano Settlement Layer (CSL) and the Cardano Computation Layer (CCL). The CSL handles ADA, Cardano’s native cryptocurrency, transactions, while CCL manages smart contracts, governance and dApps. This separation enhances security and scalability. The CCL layer is highly flexible, supporting the development of a wide range of dApps. 

Ouroboros consensus protocol

Cardano employs a unique variation of a Proof of Stake (PoS) consensus mechanism, known as the Ouroboros consensus protocol. This protocol relies on randomly chosen leaders to approve blocks, aiming for energy efficiency and security. As with most blockchains, the node that adds the next block receives a reward for its effort. 

Shared oversight

Cardano’s oversight is shared among three entities:

1. Cardano Foundation, a non-profit organisation.

2. IOHK (Input Output Hong Kong), a science and technology firm responsible for building the network’s technologies.

3. EMURGO, a Japanese incubator with a focus on commercial ventures.

What is ADA?

ADA is the native cryptocurrency of the Cardano network, serving as a medium of exchange, a means of staking for network security, and as a governance token for voting on proposals and upgrades.

Why ADA can be appealing for a crypto portfolio?

Cryptocurrencies can make up a small or even a significant portion of a well-diversified portfolio, depending on an investor’s knowledge and risk tolerance*. ADA is a popular top-ten token, according to CoinGecko, with a current crypto capitalisation at the time of writing of around USD 10 billion. Cardano was designed to address the shortcomings of Ethereum, such as high transaction costs and low transaction speeds, but now competes with other Layer-2 blockchain solutions, like Polygon. Nevertheless, Cardano offers several benefits that people might want to take advantage of, including: 

  • Scientific approach: Cardano’s development is guided by a strong emphasis on research-driven development, particularly peer-reviewed research. This provides a strong scientific foundation for the blockchain.
  • Strong development team: The team is managed by IOHK and has a reputation for a research-driven approach to blockchain development.
  • Interoperability: Cardano is designed with interoperability in mind, making it possible to connect with other blockchains and legacy financial systems, potentially enhancing its utility.
  • Smart contracts and dApps: Cardano’s smart contract capability allows developers to build and deploy decentralised applications and execute smart contracts on the network.
  • Market presence: ADA has a strong presence in the cryptocurrency markets.

Can I buy ADA through Xapo Bank?

Yes, Xapo Bank provides its members with access to buy, hold and sell ADA. While many banks around the world are worried about the popularity of cryptocurrencies and the chance they could usurp some of the bank’s functions and revenue streams, Xapo Bank embraces the opportunity to increase its crypto offerings. It is the first regulated bank in the world to offer such a service. To execute a purchase, select the ‘Wealth’ tab and navigate to the cryptocurrencies section. You will be able to see the available cryptocurrencies. 

Can I buy ADA directly from the Xapo Bank app?

Yes, you can.

How difficult is it to buy ADA via Xapo Bank?

It’s very simple. With Xapo Bank, you can buy, hold and sell ADA at the click of a button. This is in contrast to many other banks, where purchasing cryptocurrencies directly can be cumbersome, often involving extensive documentation and explanation about the transaction’s purpose. 

Can I receive and send ADA from my Xapo Bank account?

Xapo Bank is working to enable this feature. It will be available soon.

What will happen when I want to cash out of my ADA?

You can sell your ADA quickly and easily into US Dollars from the Xapo Bank app.

I’ve been told I should use a digital wallet like Metamask to store my ADA, but can I rather store it with Xapo Bank?

You’ve probably heard the well-used crypto slogan, ‘Not your keys, not your coins’. Crypto holders are encouraged to self-custody their assets in either a cold wallet (not connected to the internet), or an internet-enabled hot wallet like Metamask. However, self-custody wallets, where you own your own private keys, come with a host of issues. Over $100 billion worth of cryptocurrency stored in self-custody wallets has been lost forever due to forgotten seed phrases or faulty devices. Is the digital equivalent of keeping your money under the mattress really the most secure way to keep your cryptocurrency safe? It’s simpler and more secure to store your crypto assets with Xapo Bank, a licensed Virtual Asset Service Provider (VASP) by the Gibraltar Financial Services Commission. We follow strict security rules for the assets we protect using ultra-secure MPC wallets

What are the fees for buying ADA, and are there any limits to how much I can buy and sell in a day?

The fee for buying and selling ADA is a flat 1% for all order types. For example, if you buy USD 100, your fee will be USD 1 upon purchase. If you sell the cryptocurrency for USD 100, your fee will again be USD 1.

In addition, you can buy or sell unlimited times per day. The minimum USD amount for purchase is USD 10 and the minimum USD amount for selling is USD 1.

When can I buy ADA?

The market is open 24/7. Xapo Bank members can access, monitor and rebalance their crypto portfolio anytime.

*Capital at risk. This information is not investment advice. Crypto asset values can go up as well as down and you could lose all the money you invest. This is a high‑risk investment and you are not protected if it loses all or some of its value. Past performance is not indicative of future results.

Xapo Bank is a crypto-enabled bank licensed by the Gibraltar Financial Services Commission. We give our members access to a US Dollar and Bitcoin account, successfully bridging the gap between traditional banking and crypto. USDC deposits into Xapo are immediately converted to USD on a 1:1 basis, giving instant dollar cash value with zero exchange fees.

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