What Is Ethereum 2.0, and How Will it Affect the Cryptocurrency Space in 2020? What is the difference between ethereum and ethereum 2.0
As one of the hottest topics in 2020, Ethereum will initiate a major upgrade this year, leading to the birth of a second blockchain: Ethereum 2.0.
The high-profile upgrade of the second-largest cryptocurrency’s network is expected to fix some of Ethereum’s most burning issues that will eventually lead to the evolution of the blockchain platform.
In this article, we’ll take a deep-dive into these upgrades while exploring their potential benefits to blockchain users and the cryptocurrency industry.
☑ What is Ethereum 2.0 and Why Do Users Need it?
Ethereum 2.0 — also known as Serenity — is by date, the blockchain project’s most ambitious network upgrade that will take place in multiple stages.
Ethereum will get a new, separate blockchain called the Beacon Chain with its own cryptocurrency (ETH2), a new virtual machine (eWASM), as well as a consensus algorithm switch — from Proof-of-Work (PoW) to Proof-of-Stake (PoS).
The main purpose of the upgrade is to facilitate Ethereum’s evolution while providing solutions for the blockchain platform’s underlying issues.
This makes sense as Ethereum users are currently facing multiple problems, with the most burning one being limited network scalability.
Last year, even Ethereum co-founder Vitalik Buterin admitted that the project’s blockchain is almost full, which often leads to increased transaction fees and confirmation times. Without a solution, Ethereum users could experience something similar in 2017 during the CryptoKitties craze that got the whole network congested.
While many enterprises see Ethereum as an attractive platform, they are hesitant to join the network due to the issues mentioned above. And the blockchain’s limited scalability is a real bottleneck as Ethereum (in its current form) can only process about 15 transactions per second (TPS), 1,600x less than payment giant Visa (24,000 TPS).
To address this problem, Ethereum developers introduced the concept of sharding, a solution that divides data processing among several nodes. As a result, the network can process transactions simultaneously while allowing for the parallel storage and procession of data.
Furthermore, changing the PoW algorithm (that requires tens of thousands of miners to maintain the network) to the PoS consensus model (where validators have to lock up or stake some of their Ether) could make the network more efficient and secure.
Finally, eWASM, the new virtual machine for Ethereum will offer increased scaling capabilities as well as new coding languages, which relieves smart contract developers’ burden of smart contract developers of using Solidity on the platform exclusively.
☑ What Are the Goals of Developers?
1. Developers listed five different design goals for Ethereum 2.0’s upgrade:
Decentralization: Allowing typical consumer laptops to participate in the network
2. Resilience: Network should remain live even when a substantial portion of nodes go offline
3. Security: Using techniques to allow a large number of validators to participate in the network
4. Simplicity: The goal is to reduce the level of complexity to the minimum, even when it costs the network to lose efficiency
5. Longevity: Preparing to resist quantum attacks by selecting components that are either quantum-proof or can be easily swapped out to such counterparts in the future
☑ Ethereum 2.0 Upgrades We’ll (Probably) Get in 2020
Last year, Ethereum developers initiated the Istanbul hard fork, the final network upgrade before Serenity.
Simply put, the main goal of the Istanbul fork was to reduce the efficiency of ASIC miners (expensive, highly-efficient mining rigs) to encourage GPU mining as well as to preserve the decentralization of the network.
With the Istanbul fork being live, Ethereum’s evolution is ready to take place. And in the upcoming sections, we’ll cover all the crucial upgrades of Ethereum 2.0.
☑ Beacon Chain (Serenity Phase 0)
While its testnet was launched a few months ago, Ethereum’s new blockchain, the Beacon Chain’s full release is expected to occur in early 2020.
As part of Phase 0, developers are setting up the Beacon Chain alongside Ethereum 1.0 (the “old chain” we are currently using) where the planned transition from PoW to PoS will be executed. The Beacon Chain will feature ETH2, the new Ether, as the native crypto of Ethereum 2.0.
The goal of the Beacon Chain is to coordinate the PoW and PoS networks, while communicating with Shard Chains — a subnetwork consisting of shards that allow increased scaling capabilities — and the Ethereum Virtual Machine.
Important: The new blockchain doesn’t mean that Ethereum 1.0 will cease to exist. The original chain will remain active with ETH as its native cryptocurrency until developers decide about its future.
👉 Shard Chains (Serenity Phase 1)
Expected to release in 2020, Shard Chains will provide increased scalability via a subnetwork of 1,024 shards.
While Shard Chains provide a more efficient mechanism to process transactions, the Beacon Chain will monitor the network to ensure that everything goes as planned using a collection of 128 nodes for validation.
It’s important to note that — while Shard Chains are a core component of Ethereum’s future scaling upgrades –, it will mostly function as a “test run” during Serenity’s Phase 1.
👉 eWASM (Serenity Phase 2)
Expected to take place between 2020 and 2021, Phase 2 will be the highest-profile of the upgrades as this is the point where Ethereum 2.0’s functionalities will come together.
As a result, Shard Chains will exit the test phase, becoming fully-functional transactional chains with the potential to scale the whole Ethereum network.
Serenity’s Phase 2 will also feature the Ethereum-flavored Web Assembly (eWASM) that replaces EVM as the new virtual machine.
Using the open-source standard Web Assembly will boost the speed of code execution, while allowing Ethereum developers to program smart contracts in multiple languages, including C, C++, Rust, and Go.
👉 Ethereum 2.0 Upgrades After 2020 (Serenity Phase 3)
After Serenity Phase 2, Ethereum developers were not so specific about the Phase 3 (and beyond) upgrades of the blockchain’s network.
However, one thing is certain. Ethereum devs will continue working on upgrading platform to ensure that it meets the growing demands of blockchain technology.
The improvements mentioned above may include:
– A light client state protocol
– Connecting with mainchain security
– Super-quadratic or exponential sharding
– And eventually, Ethereum 3.0 to facilitate the continuous evolution of the network
☑ Ethereum 2.0: a Promising Evolution of a Blockchain Platform?
Along with the next Bitcoin halving, Ethereum 2.0 is clearly among the most prominent events to look out for in the cryptocurrency industry this year.
As the proposed solution to the platform’s underlying issues, if it succeeds, Ethereum 2.0 could facilitate growing enterprise and end-user interest into the blockchain industry, potentially raising the adoption of the technology.
While we can’t predict what will happen, we are eagerly waiting for the upgrade that will take us through the evolution of the blockchain platform to Ethereum 2.0.
Since Ethereum 1.0 will go nowhere, ETH Limited (ELD) will continue supporting Ether (ETH) as a digital asset on our secure non-custodial exchange platform.
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