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Cardano has been breaking records lately, establishing itself among the top cryptocurrencies in terms of market cap and hitting an all-time-high of €2.61 on the 2nd of September. Partially, Cardano’s success can be attributed to the impending release of the Alonzo upgrade scheduled for the 12th of September. Let’s see what this hard fork means for you.
What is Cardano about?
In case you haven’t read our Deep Dive on Cardano: it is a project with the objective of providing the masses with a secure, scalable and transparent network. That is also why this open-source project has always been very transparent about its plans for the future, including clear steps and a detailed roadmap. After Byron, Cardano’s era of foundation and the Shelley era with a focus on decentralisation, the Alonzo rollout represents the most relevant phase in the Goguen era of smart contracts.
Alonzo: the highlight of Cardano’s Goguen Era
The Alonzo hard fork is scheduled to take place on the 12th of September, and will enable smart contracts on Cardano. Smart contracts are self-enforceable and immutable contracts written in computer code, and this function is set to open a new and broad range of possibilities for the Cardano blockchain, including payments and peer-to-peer transactions, but also crowdfunding, auctions and more.
This also means that DApps (decentralised applications) will be able to run on Cardano for the first time. Therefore, the update is paving the way to making decentralised finance (DeFi) usable in everyday applications available to everyone, in line with Cardano’s goal to bring blockchain technology to the masses.
Cardano in direct competition with Ethereum
Cardano and Ethereum have been often compared to each other. However, thanks to the Alonzo hard fork, Cardano, which was once considered just another potential competitor, could now evolve into a serious contender to Ethereum’s leadership. If everything goes as planned with the upgrade, Cardano could prove a safe and flexible alternative to Ethereum when it comes to running smart contracts.
Ethereum smart contracts are very popular, however, the implementation of smart contracts on Cardano will offer users an alternative that is more environmentally and user-friendly, features a higher number of TPS (transactions per second: 257 for Cardano and 15 for Ethereum), lower fees and similar use cases.
Still, Ethereum is also on its way to providing these features, which will be available for ETH users once the switch to Proof of Stake (PoS) is completed. While the Ethereum London hard fork has set the network to switch to Ethereum 2.0 in the future, Ethereum is still running on Proof of Work (PoW), which requires high amounts of energy. Cardano, on the other hand, is already using a Proof of Stake consensus algorithm, making it, at least for the moment, more sustainable than Ethereum, whose switch to PoS is in the works, but is unlikely to happen this year. It will remain interesting to see how Ethereum and Cardano develop in terms of mass adoption.
Smart contracts, DApps and DeFi… but what does the new hard fork mean for you?
The Alonso hard fork will bring long-anticipated changes to Cardano, enabling users to create and deploy their own smart contracts. It has been open for testing for a while now and if all goes according to plan, the mainnet deployment (which had initially been planned for August) will take place on the 12th of September.
If you’re a Bitpanda user, among the recent Cardano buyers or hodlers, or you’ve simply been keeping a Cardano savings plan: there is no reason to worry about a thing. We at Bitpanda will take care of the update and make sure to process the hard fork when it’s available. We will need to disable deposits and withdrawals for the duration of the update, but trading will not be affected.
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The information contained in this article is for general information purposes only and is not investment advice in any form.