Details continue to emerge about the new Cardano (ADA -5.34%) upgrade, currently scheduled for later this year. The upgrade, known as Voltaire, represents the fifth major developmental stage of Cardano, and could have enormous long-term consequences for how the Cardano blockchain will develop in the future.
The big question, of course, is whether the Voltaire upgrade will actually move the needle when it comes to Cardano's price. While Cardano is up 54% for the year, that pales in comparison to the skyrocketing returns of cryptos such as Bitcoin, which is up 70% year to date.
What is Voltaire?
Cardano has one of the most detailed and accessible roadmaps in all of crypto, and according to this roadmap, the next big stage will be Voltaire. As Cardano's own strategic roadmap notes, this update will put together "the final pieces required for the Cardano network to become a self-sustaining system." There will be two key pieces here: a new voting and governance system, and a new treasury system.
Image source: Getty Images.
The goal is nothing less than the full decentralization of the Cardano network and a more democratic way to vote on future updates to the blockchain. It will mean that maintenance and improvements to the blockchain will happen in a fully decentralized and orderly manner. Imagine a large household where all members of a family agree to keep the place looking nice and tidy without being reminded to do so, and on a regular, ongoing basis.
Most importantly, full decentralization means that Cardano will no longer be under the management of Input Output (IOHK), the blockchain infrastructure research group that has carefully cultivated Cardano since its founding in 2015. And it likely means that Charles Hoskinson, the outspoken co-founder of Cardano and co-head of IOHK, will no longer be the focal point for any changes to the blockchain.
The "Age of Voltaire" has been teased since the blockchain's big developer event in Scotland last November, and new events around Voltaire continue to take place this year. For example, a special Voltaire workshop dedicated to community-driven governance took place from Feb. 28 to March 1. And on March 24, IOHK released additional details on what Voltaire will include.
Market reaction
To date, the market reaction to Voltaire has been muted at best. People in the crypto world are obsessed with technological improvements, and this new upgrade to Cardano is much more focused on governance and the community aspects of how voting and the funding of new blockchain projects will happen. In short, there's not a major technological breakthrough to ooh and aah over.
Moreover, let's be honest here: Cardano's second major stage of development (known as Shelley) was already billed as the era of decentralization, so any talk about even more decentralization coming to Cardano seems a bit superfluous for most people.
Fair enough. That's what I thought until earlier this year. That's when the SEC started launching all kinds of probes and investigations into crypto, and reasserting claims that most cryptos (with the possible exception of Bitcoin) should be considered securities. If the SEC had its way, it would probably consider Cardano a security, since Cardano is a proof-of-stake blockchain that relies on staking, and the SEC has expressly warned that it does not approve of staking.
So could Voltaire have an impact here? As I see it, moving to an era of hyper-decentralization is going to absolutely scuttle the legal argument that Cardano somehow represents an investment of money into a common enterprise aligned with an expectation of profit. As long as IOHK plays a central role in the development of Cardano, I can see the SEC making the "common enterprise" argument. But with Voltaire, there will no longer be any central, organizing body, and that argument becomes moot.
Impact on Cardano
So what impact will Voltaire have on Cardano? There might be some additional efficiency gains, thanks to enhancements in the staking and validation process, and that might have an incremental impact on Cardano's price. And Voltaire might lead to a more vibrant Cardano ecosystem and a more active Cardano developer network, and that might also help. But this alone might not move the needle on Cardano's price.
The big gain, however, could be from a regulatory perspective. It will be a lot harder to claim that Cardano is a security, and that could help shield Cardano from SEC scrutiny. Already, Cardano has sought to distance itself from Ethereum and its staking model. And Charles Hopkinson has been very open about his willingness to work with the SEC to create a form of staking that is acceptable to regulators.
At the end of the day, any development that stops the SEC from regulating Cardano as a security is a good thing. And that's what might happen here. The original Age of Voltaire in the 18th century was the age of enlightenment and reason. Investors should hope that Cardano's Age of Voltaire will also be an age of enlightenment and reason -- for crypto regulators and government lawmakers.
Not every crypto should be regulated as a security, and if Voltaire can convince the SEC of this fact, then it could have huge positive implications for the price of Cardano going forward. I'm impressed with Cardano's roadmap for future development, and remain bullish on this crypto's long-term prospects.
