After Ethereum, Cardano is set to get an update — and here's how that will change things for the cryptocurrency

• Cardano’s prices have more than doubled over the last 30 days.
• Within the last 24 hours, the cryptocurrency’s price has jumped by over 11%.
• The surge comes amid anticipation of the Alonzo hard fork, an update that will take Cardano to the next stage.

The Cardano cryptocurrency may not get as much time in the limelight as Ethereum or Bitcoin does, but it’s still a popular crypto token amongst investors. It recently became the world’s third most valuable cryptocurrency with an upcoming update on the cards called the Alonzo Hard Fork.

The public blockchain platform is based on a proof-of-stake system. This is where miners have to put up the cryptocurrency they already own as ‘stake’ in order to validate a transaction. The more tokens they have, the more likely they are to win the auction.

Ethereum, the world’s second largest cryptocurrency by value, is in the midst of its transition from proof-of-work to proof-of-stake. And this, according to many in the crypto community, makes it Cardano’s direct competitor.

However, Cardano is no slouch either — the new update scheduled for next month will put it head-to-head against Ethereum in its own kingdom, the space of decentralised finance (DeFi) and smart contracts. The update will allow Cardano to mint non-fungible tokens (NFTs), automate lending and bring in other use cases.

Cardano is the world’s third most valuable cryptocurrency

The Cardano cryptocurrency has recaptured the interest of investors over the last two days. After becoming the world’s third most valuable cryptocurrency last week, the price of the currency grew by around 11% in the 24 hours leading up to August 23.

Coinmarketcap shows an upward trend of about 2% since then. Cardano is currency priced at $2.89, with a market capitalization of over $90 billion.

Why are Cardano’s prices increasing?

The hike in prices is presumably because of upcoming updates to the network. Cardano’s prices more than doubled in the last one month.

Dubbed the ‘Alonzo Hard Fork’, it is the third major update in Cardano’s Shelly era. The token has five main stages of development, often called “eras” — Byron, Shelley, Goguen, Basho, Voltaire — all of which will enhance the overall network’s functionalities. Alonzo is the last major update for the Shelley era and moves the platform towards the Goguen era.

The crypto token is also going to be listed on Japanese crypto exchanges, which are considered to have some of the most stringent listing requirements in the world. “In addition to general bullish sentiment in the cryptocurrency space, Cardano is also enjoying positive momentum ahead of Ada's listing on Japanese cryptocurrency exchanges, which is set to take place Aug. 25. Ada also appears to be generating excitement ahead of a pending update that will roll out in September and pave the way for smart contracts on the Cardano blockchain,” The Motley Fool reported earlier.

What is Cardano’s Alonzo Hard Fork?

The Alonzo update itself is broken into three phases, Blue, White and Purple. They will be followed by Alonzo Red and Alonzo Black, which will add more users to the networks and fix any bugs.

Alonzo Blue will introduce smart contracts to the network, similar to those on the Ethereum network. Smart contracts are algorithmically driven contracts, where the terms of the agreement are directly converted into code. As a result, these agreements can be defined over a blockchain network and their execution and transactions can be tracked by the platform.

This means that Cardano can now be used to mint non-fungible tokens (NFTs), which have been gaining popularity during the pandemic era. OpenSea, the world’s largest NFT platform, saw $1.5 billion in trading volumes over the last one month.

Decentralised finance (DeFi), automated lending and other use cases will also be able to build around Cardano.

The second phase, Alonzo White, is basically an expansion of Alonzo Blue. The platform will take the features introduced in the previous update to more users and continue testing them.

The third phase, Alonzo Purple, is the final public test which will see thousands of participants come onboard the network. The Purple stage is split into ‘light purple’ and ‘dark purple’ phases, which will increase the complexity of the smart contracts.

The new update is likely to land on September 12. Often called the ‘ethereum killer’, Cardano has very few use cases right now. The new update, the Alonzo Hard Fork, will hopefully tip the balance in the cryptocurrency’s favour.

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