Global Market has been revolutionized through the Blockchain technology. The technology has disrupted the major sectors which include finance, agriculture, banking and health care. Ethereum is one of the largest cryptocurrencies in the market and a lot of decentralized apps and smart contracts have been build using the Ethereum network. Let’s look at what exactly is Ethereum 2.0 and Will it replace Ethereum?.
What is Ethereum 2.0?
Ethereum 2.0 is the modified or an upgraded version of the already existing Ethereum blockchain. The main aim of Eth 2.0 is to increase the number of transactions by increasing the scalability and the speed of the previous Ethereum network. Ethereum is known as Eth2 or Serenity and it is the pseudo name for the new version.
As compared to the previous version of Ethereum network, the Ethereum 2.0 has some fundamental changes in its design and structure. The two major changes that were done in the Ethereum 2.0 are sharding and proof of stake.
What is Sharding?
Sharding is a process through which there is a multiple blockchain split through a single blockchain. The multiple blockchains will be known as shards and it would make the entire network of the Ethereum blockchain more efficient.
There will be an increase in the efficiency as the multiple blockchains will be handled by multiple validators which will reduce the workload. The information related to a particular shard will be maintained by a particular validator and there would be regular shuffling between the shards in order to avoid any kind of manipulation between the validators.
The communication and the coordination of shards are conducted and maintained through the beacon chain.
Proof of Stake
In the mechanism of proof of stake, the miners would be replaced with the validators. Their major role would be to validate the transactions by providing storage, computer power, maintaining the bandwidth and proposing new blocks.
The validators will be paid using ETH periodically and in order to reduce the malpractices the validators will have to provide a deposit of 32 ETH which should be locked in and the deposit will be forfeited fully or partially if the validators involve in a malpractice.
Working of the Ethereum 2.0
The most important aspect of the Ethereum 2.0 blockchain is the validators. They are the ones responsible for the maintenance and the infrastructure of the cryptocurrency. Every validator will have two keys with them which are the signing key and the withdrawal key.
In order to perform the work for the blockchain, a signing key is used. The sign in key must be active 24/7 as the validators have 3 main functions which include adding blocks and proposing the blocks to the beacon chain or the shard chain, to report if there are any malicious behaviors from the validators and to attest the validity of the shard chain or beacon chain.
The actions on the funds are controlled by the withdrawal key. There is no necessity that the withdrawal key should be available 24/7 like the signing key. However, the validator needs to ensure that the withdrawal key is secure as it has control over all the funds and that is one of the major reasons why the validator has to lock up 32 ETH in the beacon chain.
However, the validators do not work alone, they work in a group of around 128 validators as a committee.
Difference between Ethereum and Ethereum 2.0
The Ethereum and Ethereum 2.0 have a major difference in the mechanism they work on. Ethereum works on the mechanism of miners, where they have to solve a puzzle to record a transaction and whoever solves the math puzzle first will record the transaction, it is called proof of work. Whereas Ethereum 2.0 works on the basis of proof of stake where the validators record the transaction.
Ethereum consumes a lot of energy as it requires a high amount of computer power but Ethereum 2.0 uses a comparatively lesser amount of energy.
Price Predictions of Ethereum 2.0
There are a lot of price predictions related to Ethereum 2.0 PrevisioniBitcoin has predicted the price to be around USD 4740 for the year 2022. Coinpedia, Longforecast and Coinpriceforecast have predicted the price to be around USD 8000.
However the highest prediction is that of Brian Shuster who is the CEO, president and chairman of several companies. He predicts the price of an average single coin of Ethereum 2.0 to be around USD 100,000 and expects a market cap of 10 trillion which is that of gold.
When will Ethereum 2.0 launch?
The Ethereum network is already the second largest in the cryptocurrency market with around more than 1,400 Ethereum projects being built. The launch of Ethereum 2.0 will be in stages and is expected to be in the market by the year 2022.
The Eth 2.0 however has a lot of advantages and a higher scalability option compared to the Ethereum network and it is expected to increase the interest of the investors in the coming years.
Ethereum 2.0 is considered to be much more secure than the Ethereum network and will be faster as it is expected to have a transaction of around 10,000 per second. The Ethereum 2.0 will concentrate on building more projects.
When will Ethereum 2.0 launch?
A full scale launch of Ethereum 2.0 is expected till 2022.
Will Ethereum 2.0 replace Ethereum?
No, Ethereum 2.0 will not replace Ethereum but It is an upgraded version of Ethereum.
Will Ethereum 2.0 affect Ethereum price?
The value of ETH goes up and down every day so its unclear to say Ethereum will affect the price or not.