- The launch of the second version of Ethereum, popularly known as Ethereum 2.0 (Eth 2.0), is the new buzz.
- The next phase of development in Ethereum is crucial in comparison to the prior phase to execute the Proof of Stake (POS) mechanism.
- The expectation is that Proof of Stake and sharding will bring up-gradation in terms of scalability, accessibility, and security.
After the halving event in May 2020, another event is creating a buzz in the Blockchain Technology. It is the launch of the second version of Ethereum, popularly known as Ethereum 2.0 (Eth 2.0). Though Ethereum has not been in the market for a long time, this ever-evolving trade demands for an upgrade.
Ethereum, launched in 2015 is an internet platform with built-in money and payments. Users can own their data and everyone has access to an open financial system. Moreover, it enjoys the status of the world’s most programmable blockchain. The next phase of development in Ethereum is crucial in comparison to the prior phase to execute the Proof of Stake (POS) mechanism. Further, it will be an upgrade from the existing Proof of Work (POW) framework.
Proof of Stake Substitute for Proof of Work
Proof of Stake ( POS) is the pioneer in Ethereum 2.0. It has remodelled the structure of the corroboration of the Blockchain. Further, the Blockchain community has a good knowledge of the existing framework of Ethereum i.e., Proof of Work(POW). It is the most utilized blockchain like Bitcoin, Litecoin, etc, use it. Although POW is highly secure, it faces two major issues of scalability( Ethereum can process only limited information in a particular time period) and accessibility(a purchase and set up of all the necessary hardware is a must).
POS, however, substitutes two POW’s essential components i.e., miners and electricity with validators and stake on Ethereum 2.0. In a POS system validators pledge 32 ETH. Whereas in the POW system, the miners disburse physical energy by consuming electricity to confirm blocks. Ethereum Foundation has developed a contract, in which the validators claim a minimum of 32 ETH by monetary investment in the contract.
Anticipated Benefits of Ethereum 2.0
There has been a long wait for Ethereum 2.0 in the Blockchain community. It is the most talked about in the community. The expectation is that Proof of Stake and sharding will bring up-gradation in terms of scalability, accessibility, and security. In addition, a new opportunity for ETH holders awaits as Ethereum 2.0 provides for participation and reward collection for maintaining the network.