Ethereum, or ETH, is the second largest crypto by market cap. It functions on a decentralized software platform where smart contracts and decentralized apps, or DApps, can easily be built. As of writing this article, there are thousands of DApps that have already been launched on the platform. At the time of writing this article, Ethereum is valued at $3,846.35, making it the highest valued altcoin on the market by a long shot.
If you've been reading up about Ethereum, you've probably noticed their declaration of Ethereum 2.0, or ETH2. Ethereum 2.0 is an upgrade to the already exiting Ethereum blockchain. Their main goals are to increase speed, efficiency, and scalability of the Ethereum network. When obtained, this will enable the platform to address the bottlenecks and increase the number of transaction per minute. This should decrease the amount of gas needed per transaction... which is great because the Ethereum gas fees are astronomical right now!
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This is not financial advice. I am not a financial advisor.
Please do your own research before making any decisions before investing.
This article is meant for educational purposes only.
Imagine a world where you can stake your ETH and receive ETH2 as a reward. You're living in it! Before we dive in, I just want to make sure everyone knows that you can stake your ETH by converting it into ETH2, locking it, and enjoying the accumulation! You can read more about this here, officially on the Ethereum website. The most popular way to stake your ETH currently is on Coinbase if you've been accepted on the waitlist. If you haven't gotten on the waitlist, I definitely suggest you do so now... even if you don't have any ETH yet!
So what's this Ethereum 2.0 upgrade all about?
In order to make applications faster and cheaper to use, Ethereum needs to be able to have the power to support thousands of transactions every second. Imagine your local grocery store with 100,000 checkout lanes and everyone is completing their transaction at the same time each and every second. Sounds insane when you put it into perspective, right? Ethereum is venturing into the proof-of-stake (PoS) system from proof-of-work (PoW). One of the main advantages of PoS is that it's far more efficient than PoW, as it decouples energy-intensive computer processing from the consensus algorithm. Basically, those are fancy words for it's much more energy efficient because you don't need a lot of computing power to secure the blockchain. With the current Ethereum platform, it's limited to around 2 transactions per second, clogging up the network and causing major delays and higher gas fees. Ethereum 2.0 is promising up to 100,000 transactions per second.
The current state of the Ethereum network is secure, but not entirely as secure as it could/should be. While most proof-of-stake networks have small sets of validators, Ethereum 2.0 requires a minimum of 16,384 validators. This makes the network way more decentralized which means it will be way more secure. To enhance security measures, The Ethereum Foundation is gathering a dedicated security team for the Ethereum 2.0 platform. They will conduct research into possible cybersecurity problems to make sure platform stays free from any unknown attacks.
The promise of sustainability of Ethereum and Ethereum 2.0 has been gathered from their promises of scalability and security. The technology today on the platform is utilizing far-more computing power than ever before. This increase in computing power only leads to one thing... increased energy usage. With electricity becoming the growing cause of concern with cryptos, specifically mining and operation within the blockchain, it's no wonder why The Ethereum Foundation is tackling this issue as well. Without the need to utilize massive amounts of computing power, the maintenance to keep the machines operating efficiently should decrease in cost. This is because in a PoS system, miners do not need to solve complex puzzles to prove their work on the blockchain. Instead, the PoS miner is limited to mining a percentage of transactions that's reflective of their stake. Put it this way... if you own 1% of the token available, you're able to theoretically mine 1% of the blocks in the chain.
Ethereum 2.0 is currently being rolled-out in phases for individuals to share their stake in the upgrade. Given that the media is blowing up over crypto, this free publicity only enhances the need for the Ethereum 2.0 platform. The Ethereum Foundation goes farther into detail here about the upgrade if you want to take a look at the official statements. I am excited to see this upgrade become live all over the world and see how it will benefit each and every individual who currently has their stake in ETH and ETH2. The rising value in ETH is definitely keeping everyone intrigued, and only time will tell where this new upgrade takes Ethereum as a whole.
What do you think about the Ethereum 2.0 upgrade?
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