The crypto community is waiting for the Ethereum network to upgrade to the second version that is also known as Eth2 or ‘Serenity’. The research analyst Ryan Watkins believes that ETH 2.0 is a much stronger catalyst than the Bitcoin halving simply because it’s an uncertain and fundamental change. Hundreds of people are working on the development of Ethereum 2.0.
The work is coordinated by the Ethereum Foundation research team, and additionally involves a great number of other research and implementation teams. Ethereum 2.0 will be made in a variety of different programming languages for different use cases and the teams are paying much attention to the design and specifications.
Increase the number of transactions
The altcoin blockchain today is capable of conducting up to 15 transactions per second. This figure is about twice higher than that of bitcoin. However, it is not enough for a large number of users. To compare Ethereum 2.0, let’s have a Visa payment system with its up to 24 thousand transactions per second.
According to Vitalik Buterin, a creator of Ethereum, Optimistic Rollup development will help to solve the scalability of the problem. Optimistic Rollup is a layer 2 technology that scales Ethereum smart contracts and DApps up to 100 – 2,000 transactions per second. Its implementation will occur after the update of the altcoin network and allow conducting up to 1,000 transactions per second.
Changing the algorithm
Another solution is the change of the algorithm. Ethereum now runs on Proof-of-Work (the same as Bitcoin). This algorithm uses the computing power of computers and hinders the growth of Ethereum network bandwidth. Therefore, the Ethereum development team is planning a move to the Proof-of-Stake algorithm in Ethereum 2.0. The main difference is that instead of utilizing energy to answer Proof-of-Work puzzles, a Proof-of-Stake miner is limited to mining a percentage of transactions that is reflective of holder’s stake.
Ethereum sharding
The Ethereum network is now a common database. Sharding is definitely the most complex Ethereum scaling solution. After the update, the blockchain will be divided into autonomous, interacting blocks – shards. Each shard would contain its own independent state, meaning a unique set of account balances and smart contracts. In December 2018, Buterin said that this method would make the altcoin network more efficient by a thousand times.
Becoming a validator for Ethereum 2.0
A unique option is to be implemented for Ethereum holders, as they can become validators on the Ethereum network. A validator is an account with enough Ether to be considered a stakeholder and for today, this amount is 32ETH. There are two ways to study. The first is when users run their own validator node and stake the ETH themselves.
The second variant is to stake ETH using a staking provider. Staking providers allow crypto investors to stake their Proof-of-Stake digital assets via a third-party service, which is in charge of the quality operation of the technical aspect of the whole process. It is likely that the number of platforms with similar services will increase before the launch.
To conclude
Updating the Ethereum network will improve its technical characteristics, as it will speed up transactions, reduce their cost and make it more secure from centralization. Moreover, it will be possible to receive passive income for storing cryptocurrencies. Most experts agreed that due to the upgrade the price of Ethereum will increase. If you believe in the principles behind the Ether coin, it is high time to buy it.