What's the deal with Ethereum 2.0?

Many users are eagerly awaiting the new version of Ethereum 2.0. Its creators decided to ensure an increase in the degree of its security and scalability. The goals facing the second version of the cryptocurrency are to reduce the energy consumption of the network, process more transactions and increase the overall security of the system. Interestingly, using ETH you do not have to make any changes, Ethereum 2.0 is to be compatible with the previous version.

Where does the need to update the network come from?

Unfortunately, since 2015, when Ethereum debuted, it turned out that the cryptocurrency network began to become overloaded over time. Interest in ETH has become very high and it is possible that it exceeded all the expectations of both creators and users. The challenge is to maintain efficiency, security and decentralization. Unfortunately, the original version of the network consumes too much energy. For this reason, network nodes must be distributed in order to be able to retrieve, calculate, store and read each transaction in their subset, not across the entire network.

What impact will this have on the Ethereum rate?

Many ETH may disappear from the exchange market, due to the need for investors to store a certain amount of cryptocurrency. Hence, a smaller supply will make the exchange rate increase. If the idea is successful, then traders will make money on savings, and the so-called cryptocurrency staping on taking part in the new PoSprocess. Such revolutionary changes will allow Ethereum to compete with many giants on the market.

The vision of ETH2 and its impact on value.

What exactly were the goals set by the creators?

Scalability

According to the developers, Ethereum should handle even more transactions per second, withno need to enlarge nodes in the network. Network nodes are key participants who store and operate the blockchain. Why is it not practical to increase the size of a node? Unfortunately, only powerful and expensive computers can do this. For scalability, it is necessary to increase the number of transactions per second along with the connection to more nodes. The more nodes, the more network security increases.

How will more nodes contribute to the amount of work performed by validators? Network maintainers will only run their part, without having to process the entire chain. The nodes will become lighter, and thanks to this, Ethereum will scale and while maintaining decentralization.

Safety.

Ethereum 2.0 will be more secure,thanks to protections against attacks on most of the network (51% or more). Such an attack is dangerous due to the ability to control the network and force unauthorized changes. The cryptocurrency system will switch to proof-of-stake,which will significantly improve security. Thanks to staking, there will be no need to invest in very expensive equipment to run an Ethereum node, which may encourage more people to be a validator. This will increase decentralization,while reducing the area of the attack surface.

Reduction of the amount of energy consumed.

The creators also set themselves the goals of protecting the natural environment by reducing the energy intensity of mining. By running a tracking chain and a shard chain, the network will become secured by ETH,and less energy-intensive.

What are the advantages of Etehreum staking?

Ethereum staking helps more network participants get involved. They can become validators and thus earn rewards in ETH. This kind of action will allow them to earn passive income and work in favor of decentralization of the network. What's more, there is also the possibility of staking your funds thanks to cryptocurrency exchanges or with the help of external companies.

What are the disadvantages of staking Ethereum?

In principle, there is no real risk resulting from ETH staking. If you secure your private keys, your assets will also be well secured. To become a validator, you need to have 32 ETH. It's quite time to invest, because you will need several thousand USD to buy Ethereum.

ETH funds are locked during staking. If you are a validator, your funds can be blocked for up to two years.

If you follow the rules, you are not at risk of being removed from the network. However, such an option is reserved for dishonest validators.

What are the predictions for the new version of Ethereum?

The new version will make the cryptocurrency more deflationary. Which will raise its price. The number of transactions and the popularity of cryptocurrency will increase. According to experts, the price of Ethereum will increase positively. 2022 is likely to be a breakthrough year for ETH.

Author

  • Since childhood, he has been interested in saving money. Currently, its task is to collect ways of investing. In his spare time, he is interested in music and playing the guitar.

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