Tomorrow is the day; Cardano (ADA) launches Alonzo and with it smart contracts. It will then be possible to develop and run decentralized applications on the network. But does Cardano immediately go into battle with Ethereum (ETH)? In Timo’s take this week, I look at this upcoming update in the context of recent Cardano news.
The crypto sector is great; new technologies that can really take humanity a step further and revolutionize the current system. But this sector is also marked in many ways by the most primitive behavior of people, namely tribalism. And that’s not so crazy. Suppose you have a large bag of ethereum. Either way, you will want Ethereum to perform well as a network and to stay ahead of its competitors.
At the same time, many of these competitors have big promises; ‘We do what Ethereum does, but better, cheaper and faster!’ And if these promises are not immediately fulfilled, ethereum investors will of course take immediate action. This also applies to almost every smart contract platform. With every project there is a group of fanatics who are only too happy to share and magnify negative news with the rest of the world.
This kind of news is also called a fear, uncertainty, and doubt (FUD). These don’t necessarily have to be lies. Sometimes the criticism is justified, but sometimes its sole purpose is to portray a project as failure. This week we saw some examples of both types.
Smart contracts are coming, but not at full speed
This is how the news was last Sunday that a decentralized exchange (DEX) on the Cardano testnet ran into problems. Cardano works on a different transaction model than, for example, Ethereum. As a result, this DEX could not process more than a few transactions per block. A stumbling block, especially for a DEX that has to be able to handle large amounts of transactions.
Over the course of the week, it became clear that these issues can eventually be resolved, or have already been resolved. Due to the different kind of transaction model than Ethereum, developers have to approach smart contract development differently. So it’s not surprising that developers run into problems here and there. There is nothing wrong with Cardano itself, the Cardano founder assured this week: “There is nothing to fix.”
Still, it was cause for panic. Because the big promise that smart contracts are coming does not seem to meet the expectations of many investors. In the end, the bottom line is that, yes there will be smart contracts on Cardano, but these will not directly ensure that Ethereum will face major competition. Developers will have to get used to it first and Cardano himself is not finished after Alonzo either.
For Cardano it is a very important step. But to the average crypto investor, it may not feel that spectacular. Yet it is another step forward and the competition between the various projects remains great due to these kinds of developments. Will we see a monopoly in the future, or will the projects coexist ‘peacefully’ and help each other? I hope the latter.