How do you make a good thing even better? By upgrading it, of course. In the tech world, we often call that 2.0.
Chances are you’ve heard talk about Ethereum 2.0, a.k.a. Eth2. It’s been talked about a lot this year … almost as much as COVID-19 and the rising price of Bitcoin. But while it looked for a while like it might not make its 2020 release goal, Eth2 was launched a few days ago, on December 1 (cutting it a bit close, but still made it!).
Ethereum 2.0 is also known as “Serenity” since apparently it needed another nickname. But whatever you call it, it’s an upgrade to the Ethereum blockchain, which is supposed to enhance the network’s speed, efficiency, and scalability. The goal is to ease bottlenecks and allow the processing of more transactions.
Ethereum 1.0 was awesome. It was a powerful smart-contract blockchain system that allowed for the creation of stablecoins, tokens, decentralized apps (dApps), decentralized finance (DeFi) projects and more. It’s safe to say that Ethereum was one of the most impactful inventions in the crypto world … next to Bitcoin, of course. And its adoption proved that theory correct.
But 2.0 is going to be MORE powerful and MORE awesome. How? Mainly by changing from the proof of work (PoW) system to proof of stake (PoS).
Ethereum 1.0 used the same PoW system as Bitcoin, which involves miners solving formulas to verify transactions and write them to the blockchain. The mining process also creates new coins, which are given to the miners as rewards.
The PoW system is very energy-intensive since it involves high-powered computers working at a super-fast rate.
PoS is more energy-efficient because instead of requiring fast computers, whereby one solves the puzzle, PoS involves a lot of computers validating the same transaction. This consensus approach means a lot less energy requirements overall.
Basically it’s a pay-to-play system with transaction validators staking crypto in exchange for the right to verify transactions. The amount of crypto you own, and how long you’ve owned it, play a major role in deciding how much “voting” power you have.
Imagine a game of bingo where one lady is playing ten cards and another has only one. Obviously the player with ten times as many cards has ten times the chances to win. Just like the Eth2 holder with ten times as much crypto has ten times the chance to solve the puzzle.
Once one stakeholder has verified a transaction, a bunch more have to confirm that it’s correct. How many is a bunch? Over 16,000. Yeah. And all that happens so fast that, while Ethereum 1.0 could validate 30 transactions per second, Eth2 boosts it to a whopping 100,000 transactions per second. Yes, you read that right!
And then validators are rewarded for solving the block just like miners are. While PoW processes are called “mining” or “minting,” PoS processes are called “forging” or “minting.” So if you say “minting,” you might need to clarify which process you’re talking about.
Etheruem 2.0 also promises to be more secure than 1.0, which comes as a byproduct of all those validations and confirmations. In addition, the Ethereum Foundation is setting up a security team dedicated to researching potential cybersecurity problems in Eth2. Just to make sure.
We’re now in Phase 0 of Eth2, with Phase 1 slated to launch in 2021. Phase 2 probably won’t arrive until 2022, but by then the whole system is expected to be much more scalable.
We’re looking forward to seeing what Ethereum has in store. In the meantime, you can buy Ethereum’s Ether coin (ETH), as well as Bitcoin and 28 other altcoins, at any Coin Cloud Bitcoin ATM.
Disclaimer: The information and views supplied on the Coin Cloud blog are for educational and entertainment purposes only. We are not financial advisors, so please do your research and consult with a trusted financial specialist before investing your money.
Founded in 2014 in Las Vegas, Nevada, Coin Cloud is the leading digital currency machine (DCM) operator. With over 4,500 locations nationwide, in 48 states and Brazil, Coin Cloud operates the world’s largest and fastest-growing network of 100% two-way DCMs, a more advanced version of the Bitcoin ATM. Every Coin Cloud DCM empowers you to quickly and easily buy and sell over 40 cryptocurrency options with cash.
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