A Short Guide on Ethereum 2.0
Ethereum 2.0 refers to a set of interconnected upgrades that are meant to improve the
network’s scalability and security.
After a long period of anticipation, the new phase is finally up and running. This
upgrade has been the driving force for the rising price of ETH, which has already
surpassed the $4,600 mark. And it got many people interested in how they can buy
Ethereum with a credit card or any other available method. If you’re one of them, take a
closer look at ETH2 in this short guide.
What Is Ethereum 2.0?
Ethereum 2.0 is a massive undertaking to improve the network’s speed, efficiency, and
scalability. The biggest change is switching the consensus protocol from proof-of-work
(PoW) to proof-of-stake (PoS). Staking brings in the concepts of engagement and
reward, and greater participation leads to a stronger blockchain network.
The first phase took place in December 2020 under the name Beacon Chain. This was
the coordination mechanism responsible for creating new blocks. The second phase,
The Merge, went live in October 2021 and transitioned the network to the new
mechanism.
The final phase is Shard Chains, which isn’t expected until 2022. This will spread the
network’s load across 64 new chains.
What Problems Does ETH2 Solve?
At the time of Ethereum’s initial release in 2015, the technology was groundbreaking.
But the network quickly became so popular, hosting multiple projects and tokens, that
users started experiencing some issues. These issues were left unaddressed until this
upgrade:
● Clogged network: Ethereum’s capacity wasn’t ideal for such wide adoption.
Since sacrificing security wasn’t an option, the verification process took longer,
and the transactions became slower.
● Insufficient disk space: The verification process also became more difficult for
the nodes that run the software
● High energy consumption: Ethereum relies on a processing-power-intensive
process due to the PoW consensus. Currently, one transaction consumes the
same amount of electricity as an average US household uses in a workweek. In
the long run, this would be too unsustainable.
Developers aim to resolve all of these issues as much as they can with ETH2. But the
bottom line is that no solution or improvement must keep the most important feature of
the network intact - decentralization.
How to Stake ETH for Ethereum 2.0
ETH holders can start validating transactions and earn Staking rewards if they have a
minimum-required balance. For ETH2, there is a minimum of 32 ETH.
The process of becoming a validator is very simple:
1. Go to the ETH2 page on the official website.
2. Scroll down and click “Visit staking launchpad”.
3. Confirm staking address so that existing validators can check you’ve got the
right address and the right amount of ETH.
Wil This Transformation Help ETH Overtake BTC?
Ethereum 2.0 is a long-term play. It’s unlikely to cause a description to make Ethereum
bigger than Bitcoin, at least in terms of market capitalization.
We briefly mentioned the concerns about Etehreum’s environmental impact. But those
are not nearly as severe as Bitcoin’s. And when ETH2 raises its processing ability from
30 transactions a second to potentially 100,000, it will gain a massive advantage over
Bitcoin.
Bitcoin is currently worth about double Ether, but the talks about “flippening” are
floating around. It’s hard to say how successfully the final phase will go. So far,
Ethereum has delivered on every promise, which makes investors very hopeful.