Ethereum 2.0: What to Expect from the New Blockchain?

The Ethereum blockchain update is one of the most long-awaited events in the crypto industry. Since ETH is one of the most popular digital currencies on Chatex and around the world, I could not ignore such an event. In this article, I will explain what the new platform is and how it will affect the price and influence the popularity of ETH.

There are now over 2000 decentralized applications (dApps) running on the Ethereum platform. Ethereum co-founder Vitalik Buterin has stated many times that the ultimate goal of the very project was to create a universal blockchain that can be used in any field.

As a result, the popularity and excellent functionality of Ethereum made ETH the second cryptocurrency in the terms of market capitalization. However, nothing in this world is perfect. Therefore, the Ethereum team is on the road to upgrade the blockchain.

One of the Ethereum problems is scalability. The more applications are launched on Etherеum, the slower the blockchain works, the higher the commission that must be paid for higher processing speed.

Update history

Ethereum was founded in July 2015. The network has gone through several major upgrades since then. Vitalik Buterin prefers to talk about updates not forks. All of them are made to improve the Ethereum platform but not to create new versions and cryptocurrencies based on ETH.

The following updates have already been made to Ethereum: Homestead, Metropolis and Istanbul. They all prepared the network for the main update, the launch Ethereum 2.0, with the features that will be 1,000 times better than the existing ones, according to Buterin.

Technical highlights

The main changes in the network are the transition to the Proof-of-Stake algorithm, where the confirmation of transactions and the issue of new coins are made not by mining but due to the validators shares of ownership. Such an algorithm does not require special hardware for calculations and lowers energy consumption. One can become a validator by making a deposit of at least 32 ETH and installing the client software. Validators receive rewards for confirmed blocks.

Ethereum 2.0 will also solve the scaling problem I have already mentioned above. Sharding technology will be used, that is, the creation of side blockchains, shards. Shards make possible the parallel computing and greatly increase the network throughput.

What took so long?

Ethereum 2.0 has been talked about for years. But such significant changes require a lot of work. Therefore, the transition to Ethereum 2.0 is now delayed. According to the Roadmap, the “zero phase” was supposed to begin in January 2020. Now they say this will happen in November.

In total, according to the plan, 4 phases of the transition should occur. The zero phase means the launch of PoS itself and the registration of validators. Since it is easy to become a validator without special hardware, Ethereum developers believe that they will register quickly. Meanwhile it is planned that Phase 0 will run for a whole year.

Phase 1 will be connected with the launch of sharding. 64 shard chains will be launched, interacting with each other. That’s the phase when Ethereum’s throughput will grow hundreds or thousands of times.

Phase 1.5 means connecting the “old” Ethereum and the new blockchain. The exact date has not been announced, but Phase 1.5 is likely to occur close to Phase 1.

Phase 2 is related to the launch of smart contracts.

It is critical to note that despite the complete merger of the Ethereum blockchain with PoW with the new Ethereum 2.0, ETH mining will become impossible after Phase 1.5 is completed.

And what about ETH? That’s quite all right! ETH will retain their value in the new Ethereum 2.0 blockchain. Now it is hard to predict what the price will be.  Most forecasts argue in favor of the ETH will soar after Ethereum 2.0 is launched. Market analysts are confident that the rise of ETH will begin when validators registration starts in Phase 0.

You can buy ETH in the Chatex neobank, having found matching ads for sale in the [Exchange] section. Just don’t forget to follow the market news and, of course, read my blog. With love, Chatex!