Everything You Need to Know About Ethereum 2.0
Ethereum was founded in 2013 and up today is considered the second most popular cryptocurrency after Bitcoin. Ethereum 2.0 is based on this popular crypto and it is an improvement in many different levels.
We have all been excited about the Ethereum 2.0 launch. So, let’s have a closer look at what will be the newest changes and the upgrades planned for Ethereum 2.0.
What is Ethereum 2.0?
Ethereum 2.0 (ETH 2.0) is an improvement to Ethereum in many different ways. The main goal of Ethereum 2.0 is to improve the capacity of Ethereum for transactions, to have fewer fees, and to be more durable. To achieve this Ethereum will change the current mechanism from proof-of-work to proof-of-stake.
Basically, this means that Ethereum 2.0 will represent the new better consensus model of Ethereum, which will allow faster transactions and fewer fees. Also, this model will have the option to ‘stake’ your holdings and earn rewards by doing it. This will work in a similar way to other famous exchanges like Binance and Coinbase.
The new improved Ethereum 2.0 will have the ability to process more than 100.000 transactions per second. Another great thing is that with the reduced cost for transactions Ethereum 2.0 will be more practical to use for average people.
What are the main changes?
There are a couple of upgrades that are going to be implemented in Ethereum 2.0. These are the major ones that will greatly improve Ethereum.
Transition to Proof-of-Stake
Proof-of-Stake will be the primary upgrade of Ethereum 2.0 which is different from the previous mechanism used by blockchains that were proof-of-work. PoS will make it possible to make many more transactions with smaller fees.
While PoW worked with physical miners to build blocks, PoS works with stake pools and is less electricity-consuming. PoS is a great improvement because unlike PoW it is safer, it has increased scalability and it doesn’t rely on electricity and physical miners. This upgrade will allow users to stake their coins and earn rewards.
Introducing Shard Chains
Ethereum 2.0 is going to scale its capacity by introducing a new safer method called sharding. With the implementation of Shard Chains, the Ethereum blockchain will be significantly improved. Sharding will divide the blockchain into smaller parallel pieces which will be more manageable.
This will allow more transactions to be instantly processed and improve the speed of transactions. One of the founders of Ethereum said that Ethereum 2.0 will be able to handle up to 100.000 transactions per second using sharding. If everything goes smooth Ethereum 2.0 can be revolutionary.
When is the Ethereum 2.0 launch date?
The improvement and the upgrade to the new Ethereum will be in 3 phases. The first phase which is called ‘phase 0’ is already live and running. In this phase, the users are introduced to the beacon chain. Basically, this is a brand new PoS blockchain that will connect with the current chain of Ethereum in the next phase.
Ethereum 2.0 launch date for the second phase (Phase 1), which is called the merge is set for late 2021, or maybe even early 2022. In this phase, we will see a switch to the PoS consensus model where the current Ethereum network will merge to the beacon chain.
After the merge users will be able to stake their coins and earn rewards. It is also very important to say that this process will be automatic and holders don’t need to do anything.
The third and final phase (Phase 2) is going to integrate sharding so that Ethereum will have the opportunity to scale and can have a bigger transaction capacity. Shard coins will be available after the second phase, sometime in 2022.
What does this mean for the price?
There are a lot of speculations around the price of Ethereum 2.0. Many people are saying that after Ethereum 2.0 launch there will be an increase in its price. This is because Ethereum 2.0 will be available and more practical to use for the average users that don’t have a lot of money to invest.
Transactions fees on Ethereum will decrease and will allow users to move smaller amounts of value. This means that people who have less money can also make transaction fees. The biggest benefit of the Ethereum 2.0 launch will see third-world citizens, refugees, and almost 2 billion people who don’t have access to banks or similar financial accounts.
These people don’t have bank accounts and do not use any of today’s payment applications. Ethereum’s new financial system will give them the opportunity for these people to have financial accounts, loans, and many other opportunities like investment and saving. With all these new upgrades there is a possibility for Ethereum’s price to grow.