Ethereum 2.0 Is Coming

By Kevin • January 27, 2022 3:22 pm • Comments

Ethereum is currently the second largest blockchain network and has become one of the most popular blockchains of choice for a variety of emerging applications which includes decentralized finance and and non-fungible tokens (NFTs).

The blockchain network also has one of the largest communities of developers that are focusing on building decentralized apps on the network.

With that being said, the high amount of attention that Ethereum is getting has also helped expose a few weak points that the network has such as having high transaction fees and not-so-fast speeds.

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As a result, many competitors are looking to outshine Ethereum by offering networks that can provide lower costs, faster speeds, and higher throughput.

Example of some new blockchains that have been launched for this purpose include Solano and Cardano which have been labeled as potential “ETH-killers”.

However, Ethereum has some well thought out plans on how it plans to maintain it’s dominance in the crypto space going into the future.

The main plan that is ongoing right now is the launch of an initiative called Ethereum 2.0 which may go live later this year for Phase 1 of the transition.

Coindesk explains:

Ethereum’s layer 2, or companion system, which works alongside the main blockchain to speed transactions at lower cost, may help to stave off competition from other layer 1, or base layer, protocols.

Planned upgrades to Ethereum itself, such as a full transition to a proof-of-stake blockchain from the current proof-of-work system as well as the introduction of sharding may also help.

As the ecosystem’s scalability improves, users of decentralized applications, or dapps, may refrain from looking for faster and cheaper alternatives to Ethereum, Coinbase Institutional said in a recent report.

Coinbase Institutional says it still expects “multiple chains to coexist in the crypto space in the near term,” but Ethereum could keep its throne.
“We do think that the culmination of [layer 2] scaling solutions combined with upgrades like the Beacon Chain merge and sharding could limit progress for alternative [layer 1s] in their current form,” according to the Coinbase Institutional report.

One of the main benefits of the Ethereum moving from a proof-of-work system to the proof-of-stake system is that it will help to significantly reduce the energy consumption.

It does not, however, guarantee faster transactions and lower gas fees so it is not a perfect solution, but may be just enough to allow the network to maintain its community of developers and existing users.

The change will essentially allow the network to be able to scale and support more users at the same time which has which will help with problems such as the delay of transactions when the network is congested with a lot of volume.

More importantly, the launch of Ethereum 2.0 could potentially end Bitcoin’s long standing dominance once the issue of scalability is removed.

Computer.org explains:
It will be a trusted system with far fewer scalability issues and a much larger feature set than its primary competitors.
Only time will tell if the launch of the upgrade will be the signal of a new blockchain era, but the one certainty is that a new day is dawning for Ethereum – and for the cryptocurrency space as a whole.
The transition of Ethereum to Ethereum 2.0 is expected to consist of three stages with the final phase of the transition expected to be completed sometime in 2023.

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