Though it was launched in 2017, Cardano has grown very popular. While reading this article, Cardano’s price is still fluctuating around $1. However, its market cap is a whopping $41.89 billion, even though that is about 20% the value of Bitcoin’s market cap.
To improve the Cardano network, developers wish to increase its block size. Currently, the Cardano block size is 72 KB. However, Cardano’s developers have proposed an increment to 80 KB. If this increment is successfully implemented, it will improve the network and influence Cardano’s price. But first, let us understand what Cardano blocks are all about.
What Are Cardano Blocks?
Cardano blocks are more like a data structure within the Cardano network. The use of the Cardano block is to record transactions in batches in a public ledger. Blocks record both crypto transactions that have not yet been validated and those validated by the network. Note that irrespective of the cryptocurrency, its blocks have a definite size. And as in the case of Cardano, a block is currently 72 KB.
Blocks are very important because they permanently store every transaction on the crypto network. When a transaction is recorded in a block, it keeps recording more transactions until it is validated. When the transaction is validated, it closes the block, and a new block is formed, and the same process is repeated. And because these data are available to the general public, it makes cryptocurrency very transparent.
Influence of Proposed Block Size on Cardano Price
Now that you understand what blocks are, let’s talk about why their size is important. Cardano’s developers propose increasing its block size to improve the network capabilities. If Cardano block size is increased, it will influence Cardano price in the following way;
Increase Transactional Volumes
As you already know, blocks are where crypto transaction data are recorded. The size of the crypto block will determine the number of transactions that can be recorded in it before it is closed. If the block size is small, fewer transactions can be recorded on each block. Similarly, when the block size is large, more transactions can be recorded on each block.
However, you may be wondering how an increase in transactional volume will influence Cardano’s price. Well, think of it this way, increment in the transactional volume Cardano can handle at the moment will make the network faster. This alone can make more people want to use Cardano, thus increasing the demand for Cardano. When the demand goes up, so also will its price.
Increase Transactional Volumes
Cardano blocks record transactional data, and for a transaction to be validated, it means a transaction fee was paid at one point. If the size of its block is increased, the number of transactions its block can handle at one point will also increase. And with more transactions being handled at a point, irrespective of Cardano price, this will mean that the network can afford to reduce its transaction fees.
There will be a reduction in transaction fees because of the model of incentivizing miners to validate transactions on a block. Since the fee model is more like an auction because of limited bandwidth, an increase in block size will reduce the pressure in the auction. In other words, the increase in block size will be a win-win situation for everybody, Cardano users, and improve the Cardano network.
Improves Performance of Applications Built on Cardano
Like Ethereum, Cardano also supports smart contracts and DApps. However, Cardano was a little late on this and is coming to speed on what is already in the market. Perhaps the reason they have not been so fast about getting on board DApps could be because of the block size limit of its network. However, Cardano developers’ block sizes increment proposal will help improve the network to better support DApps.
If the block size is not large enough to handle the apps, it will impede the performance of applications. Think of it like running an application on a PC with low RAM – frustrating, right? Well, that has exactly been the mind of many developers and one of the reasons they want this increment implemented. The increment will also mean that the Cardano network will support more DApps. And with Cardano, better-supporting DApps will increase its value and demand.
