Ethereum will soon undergo evolution and change to Ethereum 2.0. But what does that mean for the network and what is going to change? This article explains Ethereum 2.0 and its implications.
What is the Ethereum Network?
Ethereum is a blockchain that separates itself from Bitcoin by its ability to run smart contracts. Whereas Bitcoin is known as a decentralised currency, Ethereum can be seen as a decentralised world computer. The smart contracts feature of Ethereum allows it to run censorship-resistant programs without the possibility of downtime or third-party interference.
In contrast to Bitcoin, Ethereum is not limited to being a payment network and a store of value. Bitcoin was designed with those two uses in mind, making its architecture very simplistic and unable to host more complex applications. Ethereum can do precisely that, which has contributed to its rise in popularity.
What are smart contracts?
A smart contract is a self-executing code that carries out instructions when a particular condition is met. That can be something as simple as a transaction or something as complex as a digital bank, built with a combination of smart contracts interacting with each other. You need to pay to use smart contracts. This payment is called gas.
What is gas?
Gas is fuel for the Ethereum network. Imagine Ethereum like a highway and smart contracts like cars. These cars need gas to get from point A to point B. Gas is paid in Ether, the native coin of the Ethereum blockchain. Ether are mined, and because of Ethereum’s rise in popularity, gas has been getting more expensive. The gas price has risen so much at times that it made the blockchain unusable for regular users. For this reason, an update was required.
What is Ethereum 2.0?
Ethereum 2.0 is a set of updates to create a scalable and more robust version of the Ethereum blockchain. It will introduce proof-of-stake to replace the current proof-of-work consensus mechanism. That means instead of mining, users will be able to stake Ether with the blockchain to validate transactions. Ethereum 2.0 also introduces sharding to improve the blockchain’s transaction speed.
When will Ethereum 2.0 launch?
The Ethereum 2.0 release is planned in three phases. The first phase started in December 2020. It included connecting the shared chains to the legacy Ethereum blockchain. Sharding is a way of splitting up processed data into smaller pieces. This increases scalability and decreases the workload for individual nodes. In total, 64 shards are planned.
Phase 1.5 and phase 2 will merge the shards together and enable smart contracts on the shared chains to work. At that point, shared chains will be able to communicate with each other. These phases will take place in 2022. Phase 3 will be the continuous improvement of Ethereum 2.0. It will include constant upgrades and bug fixes to ensure full functionality.
What will the Ethereum 2.0 launch change?
The change from proof-of-work to proof-of-stake will be a massive change for Ethereum and the blockchain ecosystem as a whole. Proof-of-stake requires much less energy, making Ethereum a viable “green” blockchain. It will phase out the mining of Ether and make Ether the biggest proof-of-stake blockchain to date. The update should also lead to lower fees and increase its mass appeal for users and developers alike.
Conclusion
If everything goes according to plan, the launch of Ethereum 2.0 will turn Ethereum into the dominant blockchain for decentralised applications of all kinds. Considering the advantage it already has over other blockchains, this could turn Ethereum 2.0 into a piece of infrastructure that is as important to web 3.0 as Google and Facebook are to web 2.0.
