Ethereum 2.0 is live now!
Ethereum 2.0 is live now!
The second-biggest cryptocurrency Ether, the digital token of the Ethereum blockchain recently performed a major upgrade. It was mainly for solving its issues on network scalability and security. With the new version; which is called Ethereum 2.0, ‘Eth2’, or ‘Serenity’; the developers aimed helping to the network for running at scale, processing at a faster pace, and the new version is also able to support apps with millions of users.
With Ethereum 1.0, the network was only able to support around 30 transactions per second; this has caused delays and congestion. As of January 2016, the Ethereum protocol could process about 25 transactions per second. On 19 December 2016, Ethereum exceeded one million transactions in a single day for the first time. The lack of capacity disturbed users since 2017 when the popularity of an Ethereum-based game, CryptoKitties, caused the network to become heavily congested and significantly slowed the trade.
Ethereum 2.0 promises up to 100,000 transactions per second. The network was split into lots of parallel chains that can handle transactions to speed up in seconds, which is called sharding. The shards communicate with each other via the Beacon-chain, the parallel Ethereum blockchain, which also regularly finalises the state of the shards. That brings more usage, more scalability, and more demand.
Another crucial change is in the business model. The cryptocurrency switched it from a Proof of Work (PoW) consensus mechanism to a Proof of Stake (PoS) model. In the PoW model, “miners” with purpose-built computers compete to solve complex mathematical puzzles to validate transactions, and who wins that race is awarded with ethers. In the PoS model, instead of miners, the network will rely on “stakers” who already hold some ether to process new transactions. In order to validate a transaction on the new network, a staker must deposit a minimum of 32 ether tokens into a crypto wallet using what’s known as a smart contract. These are contracts on the Ethereum blockchain that are automatically executed using code. The stakers are then awarded ether for validating transactions, like crypto miners. This process of “staking” effectively gives crypto investors the ability to earn interest on their holdings after a certain period of time.
With the release of Ethereum 2.0., expectations of investors were met partially by the increased transaction speed, the switch from PoW to PoS and having a new business model which fully supported by the stakers. Even though the scalability has increased, the network still depends on the computing power of miners.
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