The invention of cryptocurrencies has provided a new way to make payments and investments. With cryptocurrencies, blockchain technology came into existence which is known to revolutionize the global markets. Blockchain, along with cryptocurrencies, is helping various industries like healthcare, banking, agriculture, and more. It is working on making the transactions secure, less costly, effective, and simple. Some people face difficulty understanding cryptocurrencies, but it is a digital currency that is transferred over the internet in simple terms.
Bitcoin was the very first cryptocurrency that was introduced in the crypto space. After Bitcoin, Ethereum is another cryptocurrency that has topped the charts and has passed in impressing people. Ethereum is recognized as the second-largest cryptocurrency that is also a currency but focuses more on technology. It functions on a completely decentralized software platform and allows decentralized apps to be built on it. Ethereum was the first version that was introduced in 2011, but now, an upgraded version of Ethereum has been introduced, known as Ethereum 2.0. Apart from Ethereum you can read about who control price of bitcoin here.
In this article, we will learn about what Ethereum 2.0 is, what its features are, and it will replace Ethereum or the older version or not. If you’re interested in Ethereum, this guide will help you and will clear your queries.
What is Ethereum 2.0?
Ethereum 2.0 is an upgraded version of Ethereum cryptocurrency that already exists. Ethereum 2.0 is developed with the motive to improve the scalability, speed, and efficiency of Ethereum. The upgraded version is made to work on increasing the transaction numbers and dealing with the bottlenecks. The short names used for Ethereum 2.0 are Serenity, and some people even call it Eth2. As compared to Ethereum, or the older version, Ethereum 2.0 has elementary changes in its blueprint and structure.
Ethereum used to work on a consensus method known as the proof-of-work method, but Ethereum 2.0 is built on sharding and Proof of stake mechanism. Let us know about these two major changes in Ethereum 2.0 in this article.
The process of dividing a blockchain into various blockchain is known as Sharing. Multiple blockchains in Ethereum 2.0 are often referred to as shards. The sharding process enables the entire network to work as a solitary validator to handle the entire workload as a single entity or process. There are various validators, and each validator has to maintain their shard that keeps track of information. Unlike blocks in the blockchain, the validators are mixed up to prevent alteration or manipulation of data. To make the different shards coordinate and communicate, a chain is used, known as the Beacon Chain.
Proof of Stake
Earlier Proof of work consensus method was used in Ethereum, but Ethereum 2.0 has introduced us with a Proof of stake consensus mechanism. In the Proof of work method, some miners mine bitcoins, whereas there are validators and not miners in Proof of stake. The validators do the job of creating new blocks with enough storage space and bandwidth and computing power to verify and validate the transactions.
Like miners, the validators are also given payouts for their efforts and hard work to create blocks. The validators have to make a deal or complete the contract in which the validators have to deposit 32 ETH, which will get locked. It is a kind of deposit submitted by validators that will get forfeited according to the protocol in case of any fraud or malpractices. This is a major improvement that is done in Ethereum 2.0 as it will prevent malpractices.
What are the points of differences between Ethereum and Ethereum 2.0?
Ethereum is an older version, whereas Ethereum 2.0 is an upgraded system that is introduced with new ways of operations. Ethereum 2.0 is aimed at improving the speed, and efficiency, and a number of transactions. The main difference between the older and new versions of Ethereum is the mechanism on which it is based or used. Ethereum uses a proof of work consensus mechanism, whereas Ethereum 2.0 uses a consensus mechanism of Proof of stake.
Ethereum uses the Proof of Work consensus method; the miners have to put their efforts and energy into solving the highly complex mathematical algorithms. Miners use computing power to solve mathematical puzzles and to verify the Ether transactions. The miners compete, and the miner who solves the algorithms first gets the Ether reward. This was surely a complex method, and the earnings or rewards were less.
Ethereum 2.0 uses the Proof of stake consensus method; validators are used instead of miners to verify and authenticate a transaction. The validators are given a specific time in which they need to validate the transactions or cryptos. The validators in Ethereum 2.0 are required to claim to see the block after a majority of validators approve the claim, it is then added into a chain of blocks, and then they are rewarded in ETH2.
Is Ethereum 2.0 more secure than Ethereum?
Ethereum 2.0 has definitely introduced the crypto world with better features, but the main benefit that Ethereum 2.0 has provided is scalability. Ethereum 2.0 uses Shardingto to increase the number of transactions that take place on the network and to verify and validate more than 10,000 transactions in a second. This is the best thing that makes Ethereum more superior or powerful than Ethereum. It could only support around 30 transactions in a second, leading to delays in confirming transactions.
Sharding helps Ethereum 2.0 speed up processing transactions that are handled easily in parallel chains. Ethereum 2.0 is developed to provide more security to transactions that were not possible in the proof-of-work consensus method.
What is the future of Ethereum 2.0?
Ethereum is one of the largest blockchains after Bitcoin in today’s time. It has provided some ultimate features that not even Bitcoin was able to introduce. Shards and Proof of stake help enhance the speed of transactions and scalability that were highly required.