It is now clear that 2021 marks a milestone year for Bitcoin and other cryptocurrencies. For this reason the price of the Ethereum cryptocurrency can be extremely volatile. But what is Ethereum 2.0? It is a long-awaited upgrade of the Ethereum network (ETH), which promises significant improvements in the functionality and experience of the network as a whole. Some of the most notable upgrades include the Shifting Item (PoS), shard chains and a new blockchain in the kernel, called the beacon chain. All this is expected to be implemented gradually through a planned schedule.
However, this is just the tip of the iceberg. As Ethereum is one of the most popular networks on the planet, there are important details about what Ethereum 2.0 really is and how it will affect the crypto-universe as a whole.
What is Ethereum 2.0?
Since the release of Ethereum, the development of new technologies in the form of decentralised applications (DApps) and other blockchains has expanded significantly. Most importantly, many of these technologies are built on the Ethereum network. Consider some of the biggest Decentralized Finance (DEFI) innovations – a significant portion of which run on Ethereum.
Unfortunately, scalability issues began to emerge. As the number of transactions in the Ethereum network increased, so did the cost of executing these transactions (which is paid for by gas). If Ethereum is supposed to be the platform that will accompany the next generation of the Internet, finances must make sense because otherwise, its mass adoption becomes impossible.
That’s where Ethereum 2.0 comes in. The proposed ETH 2.0 upgrades to the Ethereum network are expected to address primarily the issue of scalability.
Ethereum 2.0 (also known as ETH2 or “Serenity”) is the long-awaited upgrade of the Ethereum network, which promises, among other things, improved network scalability. With the implementation of various improvements, speed, efficiency and scalability should be improved without sacrificing security and decentralisation.
This version of Ethereum has always been on the horizon, but it took a few years to launch. The primary reason for this is that scaling up a blockchain in a secure and decentralised way is a difficult task.
Fortunately, Ethereum 2.0 aims to resolve this issue by implementing some very important features. These new features create several key differences between the Ethereum we know and the Ethereum we should expect.
Differences between Ethereum and Ethereum 2.0
The biggest differences between Ethereum and Ethereum 2.0 are the use of the Proof of Stake (PoS) consensus mechanism, shard chains and the beacon chain. Let us examine these differences in more detail.
Presumption of share
Proof of work (PoW) is the way Ethereum (and many other blockchains) keep their network secure and up-to-date, allowing miners to create and validate blockchain transactions. Unfortunately, PoW is not scalable, as it requires increasing computing power as blockchain technology grows.
The share presumption (PoS) solves it by replacing computing power with the phrase “skin in the game”. This means that if you have at least 32 ETH, you can take over (i.e. risk), become a validator and pay by confirming the transactions.
Anyone wishing to access the Ethereum network must do so through a node. A node stores a copy of the entire network, which means that the node must download, calculate, store, and process every transaction from the beginning of Ethereum. Although, as a user, you do not necessarily need to use a node just to trade, because it slows down everything.
Disintegrating chains are just like any other blockchain, unless they contain only specific subsets of an entire blockchain. This helps the nodes manage only one part, one synthetic, of the Ethereum network. This is expected to increase the turnover and overall capacity of Ethereum.
With the shard chains operating in parallel, the beacon chain came to make sure that everything remained intertwined. Indeed, it takes care of this by providing consent to all the decomposition chains that operate in parallel.
The beacon chain is a new blockchain technology that plays a central role in Ethereum 2.0. Without this, the exchange of information between the individual components would not be possible and the possibility of escalation would be non-existent. For this reason, it has been stated that it will be the first feature to be ported to Ethereum 2.0.
The road to Ethereum 2.0
Development of Ethereum 2.0 will not be completed immediately. Instead, it will be released in three phases, each with distinctive features to ensure the success of the new Ethereum.
Ethereum 2.0 is a major upgrade of the Ethereum network for a number of reasons, especially in terms of scalability and accessibility by a large number of people. Without the new PoS features, shard chains and the beacon chain, Ethereum could eventually become unsustainable and no longer the leading smart contracting platform in the cryptocurrency economy.
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