If there is one subject matter which seems to be discussed more often at the moment amongst crypto experts, such is the emergence of Ethereum 2.0. Believe it or not, this topic is one of hottest at the moment due to how it is making headlines. The problem is that most people don’t actually understand what it is basically all about. For instance, there are people who believe that Ethereum 2.0 is another coin which has been introduced to rival others like Bitcoin, Bitcoin cash, Litecoin and many more.
Do you really want to know more?
There are too many rumors about Ethereum 2.0 on the internet. It is very important to get your information from a reliable source in order to know what it is all about. Talking about a source that is trusted and reliable, there is every reason to believe that you have come to the right place. This post will be revealing everything you need to know about Ethereum 2.0.
It will not only provide you with a complete overview of what this technology entails. In addition to such, you will also discover its effects on Ethereum.
Ethereum 2.0 – What Does This Mean?
At the moment, Ethereum blockchain is already existing. Therefore, the aim of Ethereum 2.0 is to make it better in terms of achieving optimum performance. Its primary goal is to increase the scalability, speed and efficiency of the Ethereum network. Contrary to what most people are thinking, it is all about upgrading the present ethereum blockchain. In this upgrade, various factors which have hindered performances will be gotten rid of to ensure transactions are executed effectively and efficiently.
How does this differ from Ethereum 1.0?
As compared to the previous version, Ethereum 2.0 tends to bring some fundamental changes. Typical examples of these changes are “sharding” and “proof of stake”. Don’t forget that Ethereum 1.0 worked based on “proof of work”.
It is very important that transactions are validated in a way which is decentralized. The system being currently practised by Ethereum is “proof of work”. In this system, the hardware processing power of computers are used by miners in solving mathematical puzzles that are complex for transactions to be verified. When a puzzle has been solved by the first miner, a new transaction is going to be included or added to other transactions which make up such blockchain. They will then get rewarded using cryptocoins. It should be noted that this process is not as straightforward as it has been explained as it can prove to be cumbersome and time-consuming.
This is why “proof of stake” has been introduced via Ethereum 2.0. In this a transaction can only be verified once crypto has been staked by transaction validators. Proposing a block will depend on factors like the amount of crypto they are holding and the time duration which it has been held.
Other validators will then attest to having seen a block. The addition of a block will depend on the number of attestations it has gotten. For instance, once there are numerous attestations to a block, it can then be added to the blockchain. For successful block propositions, validators will then be rewarded. Minting or forging is what this process is actually known as. It is very important to note that proof of stake (PoS) is less energy intensive as compared to proof of work (PoW). For a block chain to be secured, too much computing power won’t be needed.
Here is a much better explanation
Proof of stake is quite different from proof of work. This is because rather than having miners, it has validators. Some of their major functions are propositions of new blocks based on attestations, providing computing power and storage. They are also responsible for determining the bandwidth which transactions can be validated. In order for malpractices to be curbed within the system, there is usually a deposit contract (32ETH) which should be locked by the validators. If any form of malpractice is detected, such deposit will be forfeited.
Sharding in Ethereum 2.0
Apart from proof of stake, sharding is also another change that is expected to be introduced by Ethereum 2.0. It is a processing technique that was lacking in the former system. Sharding is a situation or process whereby one blockchain is split into numerous blockchains. These are called shards. The aim is to provide a network that is more efficient. There is decentralization since all the workload will not rest on one validator. Each validator is expected to maintain details/information that relate to its shard. For manipulation to be avoided, validators are shuffled between shards.
The tasks of data verification can be demanding. In order for this process to be efficient, sharding has been introduced. This happens by having such shares amongst different nodes. Through this, parallel processing can happen in the entire blockchain. Experts are predicting that with such changes, blockchain can become much better than it was. Transactions will not only happen faster but the system will also be secured and free of manipulation.
What does this actually mean?
Expectations are very high amidst the emergence of Ethereum 2.0. This is because it is one technology or innovation that is expected to improve the blockchain system with regards to how transactions are being executed. There are even experts who claim that this is a starting point when it comes to ending the dominance of Bitcoin. Well, given the fact that Ethereum is the second largest digital currency after Bitcoin, there is every reason to believe that achieving such a feat is possible. The details below will be explaining what the introduction of Ethereum 2.0 means.
There is no doubting the fact that Ethereum 1.0 has been screaming for an upgrade for a very long time. This is due to some of the shortcomings that have been found in the system. For instance, there was lack of scalability as a limited number of transactions could only be carried out per second. It was reported that only 30 transactions could be processed in one second with Ethereum 1.0. This further brought about the problem of delay as well as congestion. However, Ethereum 2.0 promises to offer something that is much better as compared to what users have experienced before. For instance, reports are claiming it has the capacity to process over 100,000 transactions within one second.
All of these have been made possible through its introduction of shards where the workload has been reduced. In a nutshell, the sharding system has brought about an effective system of decentralization within the blockchain network. Instead of transactions being handled in consecutive forms, shard chains will ensure blockchains have been split up. This ensures that transactions can be carried out in parallel chains. Of course, you will want to agree that there is better scalability.
The world of technology is advancing at such an alarming rate. Without such an upgrade, Ethereum 1.0 will be behind some of the big players in the crypto industry which won’t be good news for its existing and potential investors. Imagine transactions being completed within seconds unlike before when there are too many delays.
This is another area where Ethereum 2.0 will prove to be more superior to Ethereum 1.0. It tries to ensure that transactions are more secured. When a system is decentralized, it is more secured. This is what Ethereum 2.0 tends to offer. For instance, its minimum number of validators required are 16,384 which ensures more decentralization.
Based on the above, it is obvious that Ethereum 2.0 is a combination of scalability and security. It is a system that users have been waiting for all these years.
Ethereum 2.0 instruction stages
Ethereum 2.0 is not going to be completely introduced at once. As a matter of fact, this process is expected to be completed within a period of 36months. There are 3 stages which its introduction will take. These are listed below for a much better understanding.
This comprises Beacon chain launch. In this stage, proof of stake that is simplified is going to be run in parallel to the system which is already existing. The reason is to ensure that there is facilitation of the two concepts of validation.
This is when sharding will be introduced. It is where its initial divisions of processing will be seen. This is the first time when parallel transactions will be enabled based on the decentralized system as already explained above.
This is when eWASM will be finally launched.
It should be noted that a series of tests will be run by its developers to ensure that the system is fully functional as expected. According to its developers, this is very necessary to check its level of stability and security.
Given the above, there is every reason to believe that Ethereum 2.0 promises to bring in lots of improvements that will change how experts see the blockchain network. This is only the start of something huge because more innovations are expected to come up in the future. Ethereum is also the foundation of the Metaverse.
For more information about Ethereum other cryptocurrencies or DEXs such as Uniswap, you can have a look at our crypto guides or read some of the best crypto books.