Towards Ethereum 2.0-the Future of Scalable Blockchain
Jan 25, 2022by, S Hemanth
Blockchain technology has revolutionized global markets. It had affected various sectors like banking, fintech, agriculture, and healthcare. It works on the principles of cryptocurrency, which has made transactions simple and secure, but it contributes massively to rising carbon emissions. Bitcoin consumes a great deal of energy for mining and has already sparked global outrage over concerns about climate change.
What is Ethereum 2.0?
Ethereum 2.0 is an improvement over the existing Ethereum blockchain and aims to increase the speed, efficiency, and scalability of the Ethereum network.
Ethereum 2.0 has some fundamental structural and design changes from the previous version. It will switch to the Proof of Stake (PoS) model from the Proof of Work (PoW) model. Bitcoin takes advantage of the latter and is very energy-intensive as computers compete with each other to process transactions and receive rewards (these rewards are technically mined coins). The concept of “sharding” is also introduced.
What Is Proof of Stake?
The Proof-of-Stake consensus mechanism has validators, not miners. Their main role is to propose new blocks, providing computing power, storage, and bandwidth to validate transactions. Validators receive recurring payments in ETH. There is a deposit contract where the minimum required Ethers should be locked in by these validators. It’s a form of security deposit that can be totally or partially forfeited in the event of fraud. This method is very effective in restraining malpractices.
What Is Sharding?
Sharding is the process of dividing a blockchain into multiple blockchains known as shards. This makes the entire network more efficient because a single validator does not need to handle the workload alone. Each validator stores information about “its” segment. These validators are also regularly moved between shards to avoid any manipulation. The Beacon Chain is used for shard communication and coordination.
Difference Between Ethereum and Ethereum 2.0?
The main difference between Ethereum 2.0 and its counterpart is the consensus mechanism they use. Ethereum uses a Proof-of-Work (PoW) mechanism, while Ethereum 2.0 uses a Proof-of-Stake (PoS) mechanism.
Proof-of-work is an energy-intensive process in which miners solve complex mathematical puzzles using the processing power of computer hardware. This is also used to verify new transactions, and whoever solves the problem first adds a new transaction to the blockchain that contains all of the prior transactional records.
In the Proof-of-Stake mechanism, transaction validators use cryptocurrency to verify transactions instead of miners. Validators must propose a block based on the quantity of crypto they own and the time. Once the majority of validators claim to have seen a block, it will be added to the blockchain, and validators will be rewarded. This is the process of “forging” or “minting.”
PoS is a more energy-efficient mechanism than PoW because it uses less processing power.
The Future of Ethereum 2.0
Ethereum 2.0 is working in stages and the first phase is Phase 0, known as the beacon chain, and has already been launched. It introduces a new PoS model, prepares the blockchain for staking, and serves as a base platform for future versions.
Phase 1 is called “merge” and represents the formal transition from old systems to new processes. It also introduces sharding, which helps you partition databases or pools to distribute load across multiple servers. It is an integral part of the revamped blockchain and plays an important role in improving efficiency.
Finally, Phase 2 will implement sharding to help scale and improve transaction capacity, which is expected to be live by the end of 2021. If you have any projects regarding Etherium blockchain, contact us.
Disclaimer: The opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Dexlock.