the Alonzo hard fork for Cardano (ADA) and her course

Tomorrow, September 12, the Alonzo hard fork for Cardano (ADA) will take place. What does this update include? Why is this update so important and what does the Alonzo hard fork mean for the Cardano (ADA) price? We will answer these questions in this weekend special so that you are well prepared for tomorrow.

What is the Cardano (ADA) Alonzo hard fork?

If we start at the beginning, a hard fork means that the protocols for a blockchain are getting an update. To implement this, the blockchain is split and the computers on which the blockchain runs, the so-called nodes, must receive an update in order to continue to support the blockchain. Tomorrow (September 12) such a hard fork will take place. The nodes then get the Alonzo update applied to the hard fork.

Without getting very technical, this Alonzo update ensures that the Cardano blockchain is suitable for executing smart contracts. Smart contracts are contracts that are automatically executed as soon as both parties have met the conditions.

Why is this Alonzo update so important?

So far, Ethereum (ETH) is the second largest cryptocurrency because it offers the most possibilities. Executing Dapps and smart contracts are two of these possibilities. However, Ethereum has 3 drawbacks. First, there are questions about scalability. The transaction costs are often very high, making the platform less attractive. Finally, the platform is less suitable for integration with other Blockchains.

Because the Cardano blockchain also scores better on other points, this application can lead to Cardano (ADA) becoming a serious competitor to Ethereum and perhaps even surpassing it. With this update, Cardano is also called the ‘Ethereum killer’.

What developments can we expect after the Alonzo update?

Because the Blockchain is suitable for smart contracts after the update, Cardano (ADA) can fully focus on developments in the field of decentralized finance or DeFi. For example, they are looking at opportunities for NFTs, decentralized exchanges and Dapps.

What does this mean for the Cardano (ADA) rate?

All of these positive developments could lead to the expectation that the price of Cardano (ADA) should rise now that the update is imminent. Yet that is not true. There are two reasons for this. First of all, the old stock market saying “buy the rumor, sell the news” also applies here. When the Alonzo update was announced, the price shot up and it did again when the date for the hard fork was announced. This means that the value of the extra options is priced in. That is why we see that the Cardano (ADA) price declining at the time of writing. The on chain metrics for Cardano (ADA) are also bearish.

The second reason for the price drop is that testing the update on the so-called testnet has raised concerns about the scalability of this Ehtereum killer and that lack of scalability is precisely a major annoyance about Ethereum. Investors are worried and that’s natural not a good sign for the price development.

So it will be not just for Bitcoin, but also an exciting weekend for Cardano (ADA).

Want to stay informed of the latest price developments?

You can always follow the developments yourself with our WANT crypto-analyses or the background articles and Looking ahead to the crypto market on Bitcoin. Of course you can also use the follow live quotes 24 hours a day if you want to stay informed in real time.

Note: We never give financial advice, so you can’t interpret our contributions that way. Always do your own research and make rational decisions about whether, when, in what and how much you want to invest.