Ethereum blockchain has been working on an upgrade of its Ethereum network to Ethereum 2.0. In this article, we will provide you with comprehensive information about the significance of this upgrade by Ethereum. The Ethereum upgrade will soon be released to the public, but what are the advantages of this new mainnet? How does Ethereum 2.0 work, and how will it inspire the blockchain revolution.
There have been raging debates within the technology circles on which cryptocurrency and blockchain pair will dominate the rest and rule the market. Since the onset of the cryptocurrency wave, Bitcoin has remained the clear consensus choice. BTC has remained on top of the market capitalization chart for day one. Meanwhile, most experts have said they don’t expect Bitcoin to maintain that position forever. Although several blockchain implementations have tried to solve some of the inherent problems associated with Bitcoin’s blockchain, none have been able to successfully capture a significant part of the market.
Ethereum has been the lone and large-scale competitor to the Bitcoin blockchain. To establish its dominance, Ethereum will have to overcome some issues too. The founders of Ethereum hope to achieve this through this upcoming Ethereum blockchain upgrade. You will learn about all these and more as we go through this article together. Therefore, let’s ride along as it promises to be engaging and undoubtedly informative.
Although the Ethereum blockchain processes about three times as many transactions as Bitcoin, it is still not enough. Therefore, in the bid to meet the increasing user demand for the cryptocurrency and mitigate network congestion, the team initiated a software upgrade. This software upgrade is Ethereum 2.0 (Eth2). According to Vitalik Buterin, the co-founder of Ethereum; Ethereum 2.0 will boost the speed of the Ethereum network
The long-planned upgrade to the Ethereum network will give it the scalability and security required to serve the booming market. Phase 0 of Eth2 is scheduled to launch before the end of 2020. The upgrade will have an enormous impact on how Ethereum works, and the prospects are promising. This new Eth2 upgrade will only impact the Ethereum infrastructure. If you are an ETH holder, a dapp user, or a developer, you have nothing to worry about. The new upgrade will remain compatible with the main Ethereum network that you already use today.
Vitalik Buterin disclosed that the roadmap of Ethereum 2.0 provides scalability. However, base-layer scalability applications will come as the last major phase of Eth2 that is still a couple of years away. Vitalik further went ahead to disclose that the usability of Eth2 as a data availability layer or roll ups is available in phase 1. However, that will be long before Eth2 becomes usable or “traditional” layer-1-applications.
There will be many changes that will come with the Eth2 upgrade, but we will highlight the major ones.
Early blockchain implementations like Bitcoin and Ethereum suffered performance issues because they mostly relied on the processing-power intensive process called proof-of-work to record and validate transactions. In the proof-of-work system, participating computer nodes compete to generate cryptographic hashes that satisfy the network’s determined level of complexity. For security to be maintained, the complexity level is kept high enough to deter anyone from attacking the network. It will be too costly to operate the required hardware for such an attack.
The major problem with the proof-of-work concept is that it is grossly inefficient.
Proof of work requires that all miners attempt to solve its complex mathematical problems. The winner is often always the person with the most powerful hardware, hence the high energy consumption. On the contrary, proof of stake consensus protocol randomly chooses the winner based on the amount they have staked.
The inefficiency of proof of work lies majorly in its energy consumption. The Bitcoin network uses about 0.14% of global energy consumption and consumes more power than several developing countries. With such power consumption, the proof of work protocol can only verify ten transactions per second while new blocks can be added to the blockchain every 10 minutes.
To solve this problem, Ethereum 2.0 will transition its blockchain to a more efficient proof-of-stake system. In the proof-of-stake system, the algorithm selects the node that records each transaction. The chances of selection increases with the amount of the currency the node’s owner holds.
This approach dramatically decreases the complexity of the cryptographic work, hence leading to enormous throughput for the entire network. Each node stakes its currency before it can participate, hence making it expensive for anyone to attack the Eth2 network.
To improve Ethereum’s efficiency and scalability, Eth2 will introduce a processing technique called sharding. The current version of the Ethereum blockchain ensures that all data added to the chain undergoes verification by all participating nodes. Therefore, this means that the processing speed of the whole system is dependent on the speed of its slowest participant. This creates a hitch that increases transaction costs and also decreases throughput.
Ethereum 2.0 uses sharding to increase efficiency. Firstly, let's get to understand sharing.
Sharding is the process of breaking up large amounts of data into smaller chunks. These chunks are "shards". These shards are spread across multiple servers and they serve a portion of the overall workload of the total data set.
In this case, applying sharding helps to break data verification among sets of nodes, and each node is only responsible for the verification of the data received. This way, the whole blockchain uses parallel processing which in turn increases the overall capacity of the network. With the combination of sharding and proof-of-stake, the Eth2 upgrade will make the Ethereum blockchain more efficient and faster than its predecessor.
The Ethereum Virtual Machine (EVM) is one of the many features that made Ethereum a worthy challenger of Bitcoin. Ethereum Virtual Machine (EVM) is an execution environment that runs on all network nodes that facilitates the use of smart contracts. It is these smart contracts that made the Ethereum blockchain a globally renowned computational device, and not just a mere financial system. The smart contracts on EVM have the ability to run games, execute complex financial transactions, or operate social networks.
Although the usage of EVM is on a large scale, to people with programming skills it is still a mystery. Therefore, in a bid to address this, Ethereum 2.0 will launch the use of web assembly language. This web assembly language will be in a system they are calling eWASM. eWASM will make it possible to execute the Ethereum app code in today’s web browsers. This is a massive improvement over the initial EVM. It will also enable programmers to choose from different languages like Rust, C, and C++ to write code to run on the blockchain. This will increase the number of potential programmers for the ecosystem because it opens the door to users who don’t need to learn a native Ethereum-only language.
This is undoubtedly a new dawn for Ethereum, although the process won’t be a quick one. The Eth2 upgrade is expected to be put in place via three stages and would take place within a space of at least three years. These stages are outlined below:
The Beacon chain is launched and it will run a simplified proof-of-stake blockchain in parallel with the existing system. This will help to facilitate the transition between the two types of validation concepts.
Sharding is introduced at the second stage and it will initiate the first divisions of processing, thereby enabling parallel transaction validation.
The replacement of EVM with eWASM.
At each of these stages, the developers perform a thorough test to ensure the system is both secure and stable. It will give users the needed time to adjust to the sacrifices of the new blockchain implementation. If these three stages go over without any hitch, the new Ethereum 2.0 should emerge in a great position to lead the cryptocurrency market. It will be a trusted system with little or no scalability issues with better features.
The Ethereum 2.0 upgrade promises to be the solution to most of the challenges we face in the Crypto space especially scalability, cost, among others. At the moment, it is safe to say that the upgrade is another interesting development in the rapidly evolving blockchain space. With time, we will see where it leads and the level of impact. The broader blockchain ecosystem.
Also, Read Compound DeFi Protocol Explained.
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