What’s the problem with the current network?
Like Bitcoin, Ethereum 2.0 came out using the proof-of-work (PoW) protocol. Its data allows computer nodes to agree on the legitimacy of the published information. It also prevents attacks on the network.
Of course, the proof-of-work algorithm has its drawbacks. Some of them are slow transaction times and too big gas fees.
The importance of an efficient network was also determined by the rise of DeFi (Decentralized finance), although its growth was somehow repressed for the last year.
Some developers have opted out and went for other blockchains.
Ethereum aims to beat traditional finance, providing great scalability and stable fees.
What is Ethereum 2.0?
Ethereum 2.0 is not the first upgrade of Ethereum, but it is the one to have a huge impact on the network. It is also known as Serenity or Eth2 and has little changes in its blueprint and structure compared to Ethereum.
Ethereum 2.0 is a huge upgrade of the existing network. It is supposed to be much more scalable and accelerate the adoption of the blockchain.
The biggest change is the switch from PoW (proof-of-work) protocol to PoS (proof of stake). This will bring greater security to the Ethereum network and will create a more decentralized blockchain. The Ethereum 2.0 is made to increase the number of transactions and to deal with the bottlenecks.
Ethereum vs. Ethereum 2.0
As we already mentioned Ethereum 2.0 is a newer version aimed to improve the speed, the transaction number and the efficiency of the Ethereum. The main difference is the mechanism, as Ethereum 2.0 uses Proof-of-Stake.
While at the PoW protocol miners had to solve complex mathematical algorithms, the PoS method where validators are used to verify the transaction.
Ethereum 2.0 comes with great features, and one of the best is its scalability. It used Shardingto to increase the number of transactions and validate thousands of them.
What are the benefits of Ethereum 2.0?
To sum up, here are the greatest benefits of the Ethereum 2.0
Scalability
Ethereum 2.0 supports around 10,000 transactions per second, thanks to the PoS algorithm. Greater scale will be created, which will bring a higher TPS without the need of more electricity.
Security
Ethereum 2.0 will be much more secure as it needs to stop any attacks. Its users should feel safe using it.
The Beacon Chain will help with the security of the network.
Sustainability
Ethereum 2.0 will not consume so much energy as its predecessor which will make it better for the environment.
When will it happen?
The transition from Ethereum to Ethereum 2.0 can’t happen overnight, and there is a reason for that.
Although the Beacon Chain is a fact since 2020 it is in testing mode and can’t really be used until the other parts are completely ready.
The second Phase will be when the Beacon Chain is merged into the Ethereum blockchain network. This will put an end to the Ethereum tokens mining. This is expected to happen in 2022.
The last phase will be the adding of the shard chains. This will give the network the capacity to increase the number of transactions per second.
Future impact of Ethereum 2.0
If everything comes out as planned, Ethereum 2.0 will be a total game changer. The new network would process a huge amount of transactions per second, will be much more sustainable and energy-saving.
Of course, the new version of Ethereum is expected to affect its price. It will become available to the average person and users will be able to move smaller amounts without having to pay the huge transaction fees.
Ethereum 2.0 will be accessible for people who don’t have access to modern financial products.
The success of Ethereum 2.0 will bring lower fees and easier entry in the DeFi. It will grow along with Ethereum's price. Of course, this is only a hypothesis, and we will have to wait and see what happens in the future.
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