What is Ethereum 2.0?
Ethereum is currently the second most popular cryptocurrency in the world. It introduced a plethora of new functionalities when it was released in 2015, many of them previously not possible on Bitcoin. And while the world of Ethereum is growing rapidly, this seems to be only the beginning.
Ethereum is currently transitioning to a new version that promises to introduce many improvements and new features: Ethereum 2.0
What changes with Ethereum 2.0?
Ethereum 2.0 wil introduce several big changes to the blockchain network. It promises to be faster, more secure and less energy intensive than its predecessor.
To make this possible, it is going to switch to a completely different consensus algorithm. Ethereum is going to transition from a Proof-of-Work (PoW) protocol to a Proof-of-Stake (PoS) protocol.
Proof of Stake
A Proof-of-Work network requires significant amounts of energy to secure the system. It uses miners to validate transactions and to mine new tokens. Miners have to solve computational puzzles to validate transactions and the first miner to decrypt each block transaction gets rewarded with a token. Bitcoin is the prime example that uses a PoW protocol, but its heavy energy usage has received much scrutiny.
Ethereum is also a Proof-of-Work network, but with Ethereum 2.0 it will turn into a Proof-of-Stake network. PoS is an alternative to the PoW consensus algorithm and uses validators rather than miners to verify transactions. Validations are done partly through staking of crypto. The larger the amount of stake, the more validations the staker can process. It’s used as an alternative to PoW and promises to be less energy intensive, less secure but faster.
Another big improvement Ethereum 2.0 is going to introduce is called sharding. Ethereum currently faces one big problem: it’s almost too popular for its own good. In recent years many new cryptocurrencies and functionalities have launched on the Ethereum blockchain, but this has caused heavy congestion on the network. It causes the network to slow down and causes transaction fees to spike to extremely high prices.
Ethereum 2.0 plans to improve those problems through the help of sharding. Sharding basically means splitting the blockchain into smaller chains so that each chain can execute and verify transactions independently. The combination of Proof-of-Stake and sharding means according to creator Vitalik Buterin that Ethereum will scale much better than before. Ethereum can currently only process about 15 transactions per second (TPS), after PoS and sharding that number might increase to a whopping 100.000 TPS.
When can we expect Ethereum 2.0?
The transition to Ethereum 2.0 is a process and takes time. In late 2020 the first phase of the roadmap was completed. The so-called Beacon Chain was launched, it’s the blockchain for Ethereum 2.0 and a bridge to Ethereum 1.0. There are however still several more phases to go. The expectation is that the so-called merge will happen somewhere early 2022. That’s when the blockchain of Ethereum 1.0 and 2.0 will merge together. This is when the transition from PoW to PoS will finally take place. Sharding is expected to be introduced shortly after. After that the network should become much faster and more secure than ever.
Work on Ethereum (2.0)?
It’s clear that the future of Ethereum looks incredibly bright. This also reflects in the growing number of Ethereum blockchain developer jobs available on Blockchain4Talent. Take a look on our jobs pages to find a large range of different job vacancies related to blockchain, Ethereum, smart contracts or other cryptocurrency technology!