Before I proceed, it is important to understand that as of today, the initial setup towards earning passive income with Cardano is not yet straightforward. This initial setup may take minutes to complete but it may also take days or even weeks depending on your situation. Nevertheless, this is also the reason why you should do it now because once the process becomes easier, more people will buy Cardano, possibly making it too expensive for some investors.
Now, put on your thinking hat, tell yourself that you will complete this process no matter what, then proceed.
There are three main steps to earning passive income with Cardano. They are:
- 1. Purchase – Buy Cardano ADA Coins
- 2. Keep – Store coins in your own wallet
- 3. Stake – Delegate your coin voting power
The details of these main steps are described below:
1. Purchase – Buy Cardano ADA Coins
ADA is the name used for Cardano coins. You have two options when buying ADA: (a) Direct purchase or (b) Two-Step Purchase. Not all options may be available in your country. Read on for details.
(a) Direct Purchase
This is the easiest way to buy Cardano and can be done only at some Exchanges like Coinbase. You just need to open an account in Coinbase, complete their verification steps by submitting required documents, deposit the money for buying ADA, then complete the purchase. For details, please refer to your Exchange’s instruction manuals.
A word of warning. If your money is not in USD or if your location does not allow you to fund your purchase through direct bank transfer or wire, this method may be more expensive for you. In some countries, Coinbase may not even be operating. In these cases, use the 2-Step Purchase option described below.
(b) Two-Step Purchase
Up until recently, this was the only way to buy Cardano. It consists of 2 steps:
- (1) Convert your fiat (traditional cash) into an intermediate crypto (e.g. Bitcoin, Ethereum or Litecoin) at an exchange that accepts fiat deposits. Not all exchanges accept fiat and the few that do offer conversion only to major coins like Bitcoin and Ethereum. Examples of fiat exchanges include Gemini and Liquid. Thus, you need to proceed with the next step.
- (2) Convert your intermediate coin (e.g. Bitcoin, Ethereum or Litecoin) into Cardano at a large crypto exchange like Binance or Bitfinex.
Take note that each time you sign up with an exchange, you need to go through a verification process. Just follow the steps of the exchange that you choose and you will be fine.
When choosing an intermediate currency, I now recommend Litecoin for its low transaction fees. The transaction fees of Bitcoin and Ethereum has recently increased significantly making them impractical to use for small transactions. Just make sure that whatever intermediate currency you select is available at both of the exchanges that you are using.
2. Keep – Store coins in your own wallet
Irregardless of which method you use to buy Cardano, they will eventually be stored in an electronic wallet inside the exchange. This is like your bank account in a traditional bank. For more security, and to be able to manage your coins (e.g. stake them, vote on projects, etc), you should transfer your coins out to a wallet that you control.
The next section introduces the most common wallets I recommend.
- If you have a few GB of disk space, fast internet speed and don’t mind delays when accessing your wallet (caused by syncing/downloading the blockchain), I recommend you use Daedalus by IOHK as it has more features like multiple wallets, and voting for projects that Cardano should prioritise.
- If you are a beginner or if you don’t want these extra features and just want a simple, fast, convenient and reliable wallet, I recommend using Yoroi by Emurgo instead.
- If you still can’t decide, checkout this link which compares the two: Daedalus vs Yoroi comparison
Once you’ve decided, follow the links below to complete your installation, transfer funds and delegate:
(a) Daedalus – uses a copy of the full Cardano blockchain
(b) Yoroi – a light wallet that runs on a Chrome browser
3. Stake – Delegate your voting power
You can delegate your coins to earn rewards using either Daedalus or Yoroi. Remember that you are only delegating your coins’ voting power. You are still free to spend your coins anytime when you delegate them.
For step by step instructions on how to delegate your coins, please follow the links below:
(a) Delegate to [WISH] Pool using Daedalus
(b) Delegate to [WISH] Pool using Yoroi
Congratulations! You managed to purchase ADA, store it in your own wallet, and delegate it to [WISH] Pool. You are well on your way to earning rewards. Do note that the Cardano network will transfer your first reward directly into your wallet 15 to 20 days after you first delegate and every 5 days thereafter.
If you find this article useful, please support us by delegating your ADA to WISH Pool. You will be earning interest rewards while indirectly helping the lives of disadvantaged children. This is because at WISH Pool, we pledge to give at least 10% of our own profit to educational charities so that successful students can help get their families out of poverty.
If you have any questions, corrections or suggestions, please feel free to drop us a note. We would be happy to hear from you.