What Is Ethereum 2.0?
Ethereum 2.0 is the next level of blockchain technology and cryptography. Some would regard the original cryptocurrency, Bitcoin, as a near-perfect substitute for the existing global monetary system. Ethereum, however, isn’t sitting idle. It’s altering its state as time goes on.
What Is Ethereum 2.0?
Ethereum 2.0 — referred to as the Ethereum upgrades — is the long-term roadmap adopted by the Ethereum ecosystem. Innovations to the Ethereum ecosystem are making it more scalable, secure and sustainable.
Ethereum 2.0 consists of three core steps, two of which are now complete:
- Launch of the Beacon Chain — complete
- The Ethereum Merge — complete
- Ethereum Sharding — the next step
Step 1: Ethereum Beacon Chain
The Beacon Chain was the first stage of migrating Ethereum from a proof-of-work mechanism to proof-of-stake. It was a test to ensure PoS was a sustainable way forward for Ethereum’s blockchain before its introduction to the ecosystem. When the test proved successful, the PoS mechanism worked alongside the previous PoW system as the next phase began developing.
Step 2: Ethereum Merge
The Ethereum Merge followed the introduction of the Beacon Chain. Before the Merge, PoS and PoW co-existed, but the purpose of the Merge was to eliminate the need for PoW.
The overarching goal is to end energy-intensive mining. Additional benefits include reduced environmental damage, increased scale usability and improved security.
The blockchain data collected since Ethereum’s inception remained separate on the Ethereum Mainnet. The Merge brought the two together to create one mechanism dedicated to the PoS consensus.
While PoW still exists, it has been altered so that it’s no longer profitable for miners to use it. Post-Merge, it’s estimated that the amount of energy used for Ethereum will decrease by 99.95%. Using Bitcoin’s energy consumption as a comparison, estimated to be 150 terawatt-hours per year — equivalent to the amount of energy Argentina expends annually — the Ethereum Merge works as a far more energy-efficient monetary system.
Step 3: Ethereum Sharding
Sharding is the last step of the Ethereum upgrades roadmap, but it isn’t expected to be finalized until 2023. While the previous stages focused on security and sustainability, Ethereum Sharding concentrates on scalability and encouraging network participation.
Sharding isn’t a new concept. It’s an ideal frequently shared in the computer science industry. It divides data into smaller subsets, making it easier for a network to handle.
Going back to its relevance within the Ethereum network, Sharding seeks to reduce transaction times and network congestion. The belief is that increasing data availability removes the need for expensive computing hardware. Therefore, anyone with a regular phone or laptop will be able to contribute to securing the network.
Will Ethereum 2.0 Be a New Coin?
There is no new coin or crypto resulting from Ethereum 2.0 upgrades. One of the main reasons developers have changed the wording from “Ethereum 2.0” to “Ethereum upgrades” is to avoid confusion.
Those holding ETH do not need to take any action. ETH can still be used in the same manner as always — trading, staking, exchanging and other usual functions.
Binance issued a warning that anyone asking users to buy “ETH2” tokens may be a scammer. Any contact suggesting funds need to be sent to an unknown third party should be ignored. Crypto scams are prevalent, and holders of digital assets must remain skeptical of suspicious activity.
Will Ethereum 2.0 Reduce Gas Fees?
Will ETH 2.0 Make ETH Worthless?
The move to Ethereum 2.0 does not affect the Ethereum people currently hold. Each Ethereum token is no different from before. It is simply an upgrade that gives the community of Ethereum holders the option to earn yield from the proof of stake model. Participants will receive a percentage reward in exchange for using Ethereum to secure the network.
In fact, some analysts predict that the upgrades will increase ETH’s price, though that remains to be seen.
Insiders Weigh In on Ethereum 2.0
A key Ethereum researcher, Justin Drake, commented that Ethereum 2.0 “dramatically increases the security of Ethereum.” In his words, the upgrade will make it far more challenging to make any attacks on the Ethereum ecosystem.
Co-founder of Ethereum, Vitalik Buterin, also made his feelings known following the successful Merge. He took to Twitter in September 2022, proclaiming that the event will cut “global electricity consumption by 0.2%.”
Ethereum’s 2.0 upgrades promise to create the positive results they have set out to achieve. Cryptocurrency remains in a bear market for the time being, but there could be significant future relevancy for Ethereum if its final plans come to life.
FAQHere are some questions people ask about the Ethereum 2.0 upgrades.
- Is Ethereum 2.0 available now?
- The Ethereum upgrades are in the process of completion. The first and second steps, the Beacon Chain and the Ethereum Merge, are now complete. The final step, Sharding, is expected to be finished in 2023.
- How much will Ethereum 2.0 be worth?
- The price Ethereum will command following its upgrades is unknown. Finder, a fintech specialist, predicts a price between $1,339 to $1,711 by the end of 2022. It also estimates Ethereum 2.0 to be worth $14,412 by 2030.
- When did the Ethereum Merge happen?
- The Ethereum Merge was completed on September 15, 2022, solidifying the move to PoS consensus.
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- World Economic Forum. 2022. "Ethereum Merge: what it means for the crypto-currency industry."
- Finder. 2022. "Ethereum (ETH) price prediction 2022."
- Binance. 2022. "What Will Happen to My Ether After Ethereum's Merge?"
- University of Cambridge Judge Business School. "Bitcoin network power demand."