It came as a great surprise to many people in the crypto community that immediately after the launch of Cardano’s new Alonzo upgrade, it has continued to gain huge popularity in the community. The Alonzo upgrade was released and implemented on the mainnet on September 13, 2021. And that comes with the great news that smart contracts can now be implemented on the Cardano blockchain.
The new Alonzo upgrade uses the simple Plutus scripts to provide Cardano with smart contract capabilities, giving it an edge over many cryptocurrencies in the crypto community.
With such enthusiasm around Cardano smart contract and its potential benefits, it is good to know some things about it, especially if you are considering adding Cardano (ADA) to your portfolio. So, in this post, we have highlighted important things you need to know about this recent move by Cardano and what it could mean to investors.
What is a Smart Contract?
A smart contract is an automated digital agreement written in codes. That makes them reliable, and they are also self-executing. That means once the agreement in the contract is met, it goes ahead to execute the contract without the need of any third parties. Smart contract codes are stored on a decentralized blockchain network. Therefore, they are known to be very transparent but also irreversible.
Cardano Smart Contracts Will Come with Three Major Upgrades
The Alonzo upgrade is one that the Cardano community has looked forward to for a long time. Cardano developers promised that the new upgrade would be bringing additional functionalities to the blockchain, hence making it scalable. Since it will also be making the Cardano blockchain programmable, it will hence make it easy for developers to create decentralized applications on the blockchain.
With the new ADA smart contracts, investors will be expecting three major upgrades happening to the Cardano ecosystem. And these upgrades include:
- More DeFi applications on the blockchain. With ADA smart contracts now here, we all should expect to see more decentralized finance (DeFi) applications on the Cardano blockchain. DeFi apps are financial applications that allow individuals to easily conduct peer-to-peer transactions between themselves without the need for any third parties like banks or brokerages.
- The rise of NFTs. Non-Fungible Token is now currently taking a lead role in the crypto community. The new Alonzo upgrade might usher in NFT minting on the Cardano blockchain.
- More Gaming activities. Smart contracts will also likely be bringing more gaming activities to the platform. Now, gamers will be able to buy and sell in-game assets containing their own digital signatures using NFTs.
What Programming Languages Does Cardano Use For Its Smart Contract Development?
To bring the smart contract functionality to live on the Cardano blockchain, three specific languages were used for the smart contract development. They include:
This is a domain-specific language (DSL) that allows users to easily create financial applications on the blockchain. Using this language ensures smart contracts are fortified with better security, assured certainty, guaranteed termination, contracts are time-bound, etc.
Plutus is another important language Cardano used to develop its smart contracts. It enables the development of apps that communicate with the Cardano blockchain. Plutus makes it possible to develop safe apps, acquire new assets, and construct smart contracts in the most profitable, deterministic environment possible. What more? Plutus allows users to create fresh tokens in a minimal environment, construct smart contracts, and support simple multi-signature scripts.
This is the primary language that births the Cardano smart contract functionality. Haskell also regulates Marlowe, and always comes first on the list of Cardano when it comes to implementing a programming language. Haskell has the capability to write appropriate and robust codes. Since it provides a high degree of certainty, Haskell helps the Cardano developers have an assurance that their code is both robust and correct.
3 Reasons Cardano’s New Update is Good News for Investors
#1: New utility could mean more adoption
Many things drive the cryptocurrency market, and different tokens and NFTs are presently making their way into the ecosystem. Simply showing that the Cardano team could fulfill their promise and manage to upgrade the network and add potential utility will give them an edge over the dozens of teams that never deliver.
Since the Cardano smart contracts will allow developers to create amazing apps on top of the blockchain easily, that may draw more people in the ecosystem to Cardano. Ethereum is another platform that delivers smart contracts on its blockchain, but gas for transactions is making people get fed up with the platform already. So if Cardano could provide smart contracts at a much cheaper and faster rate, then more investors would be willing to make a transition.
#2: Entering the DeFi, dApp, and NFT ecosystem
Ethereum is undoubtedly one of the crypto platforms with the most utility, which is why many people will want to use it. However, the major concern about it is the excessive gas fee that comes with every transaction. And Ethereum is proposing an upgrade to take that challenge away. Due to this high gas rate, lending, and borrowing, and many NFTs are not accessible for all.
Now that Cardano will be able to provide the same utility at a much cheaper transaction fee, it could mean a lot to the Cardano community. The markets are huge and growing. If Ethereum is not bringing on its upgrade any time soon, Cardano will be having a good share of the increasing number of people exploring cryptocurrency and NFTs. That may eventually bring Cardano to a good point where it can eventually topple Ethereum.
#3: Peer-reviews innovation
Peer review provides an opportunity for experts in the field to comment on the technical side of the Cardano blockchain while also making it possible for them to suggest improvements and developments. With this feature incorporated into Cardano, it means users can trust that there are some people behind the scene making sure that the new upgrade won’t break the system. That makes the blockchain less prone to hacks or exploitation.