Blockchains entered the world of business only recently. Their various manifestations have only given desirable outcomes, proving they are here to stay. The deconcentrated, open-source type of blockchain that is Ethereum also includes intelligent contracts that eliminate unnecessary hassles of physical contracts.
Its native token, Ether, may quickly catch up with Bitcoin in the race of market cap in due time as it has a first-mover lead.
History And Founders
Ethereum, the brainchild of Vitalik Buterin, was developed in 2013, keeping decentralized application building in mind. It is based on a proof-of-work system. Deriving its name from the word “ether,” it was supposedly established to be the undetectable medium for programs being operated on it.
Upgrading and improving the functionality happens in every area as it is unavoidable. Ethereum is also on its path of upgradation sequences to give us Ethereum 2.0, also known as Eth2 or Serenity. This reform is being brought about to increase the speed, effectiveness, and flexibility of the Ethereum network and shift towards the proof-of-stake system.
Sharding ensues in which different functions are partitioned into many other corresponding blockchains, thus reducing the expenses and creating more secure transactions with lesser hiccups.
The shift in the system got invoked to benefit the entire humankind. The foresight to make Ethereum familiar and established enough to be accepted by everyone makes it more secure, scalable, and sustainable.
What Is The Revamp Version Of Ethereum?
The modified rendition of Ethereum has been outlined to be launched in three phases, namely:
Phase 0 or The Beacon Chain
Rolled out on 1 December 2020, this standalone blockchain serves as the epicenter of control and consensus for the proposed proof-of-stake shift. The phase includes archiving the validators and employing the PoS consensus mechanism for Ethereum 2.0, even as the original PoW chain runs parallelly without any data interruptions.
Phase 1 or the Merge
Also known as “the docking,” it is expected in the first half of 2022. The Merge denotes the transition from proof-of-work to proof-of-stake. Simply put, it merges the Beacon Chain into the original Ethereum blockchain, allowing Ethereum holders to earn rewards as they stake Ether.
Phase 2 or Shard Chains
With a proposed release date of 2022, this stage would be pivotal for the scaling process. It is implied that it would diversify functions in different blockchains, which would reduce the load and data required to be stored in any hardware.
How Is Ethereum A Better Option?
Updating anything that already exists is entailed to do away with irrelevant features and bring in constructive changes. Let us elaborate on how the modifications would lend Ethereum 2.0 its supremacy:
Proof-of-Work to Proof-of-Stake
The transition has veered the new avatar away from proof-of-work to become synonymous with a proof-of-stake mechanism. This makes it more energy-efficient and secure, eliminating any potential risk of attack by miners. So, the pasture looks greener (literally) due to sustainability.
You may be privy that Ethereum is only capable enough to support transactions as low as 15 per second, causing roadblocks. With the application of shard chains, Ethereum 2.0 can easily guarantee transactions up to 10,000 per second.
One of the primary goals for updating Ethereum is cost reduction, as the users were intimidated by the high costs involved. Ethereum 2.0 is being developed in a way to reduce the fee and expedite transactions, consequently making it usable for a wider group of users. Thus, its decentralized finance would become more practical for people with lesser means.
What Is The Future Of Ethereum?
With the guidelines already being charted out for the next five to ten years, Ethereum is expected to have a smooth transition. The evolution process has shown promise due to the robust shift from theoretical study to tangible research and development and enhancing crucial basics.
But the development process is not without troubles too. The futuristic Ethereum 2.0 has to bank on the current scaling methods for a minimum of two years before the shard chains can be applied. It may render results that could prove to be obsolete and thus futile.
However, then came the London hard fork with a bang. Its successful trial run for the next phase of Ethereum 2.0 has instilled confidence regarding the next course of action for the Ethereum network. It is also proof that the entire system of Ethereum is capable of making compelling transitions, which makes the phase of the Merge seem more feasible.
Is Ethereum Going To Replace Bitcoin?
The current darling that is Bitcoin already has an established territory and loyal followers. Its consistent performance has contributed to maintaining its popularity. However, experts say that the arrival of the new player may threaten its environment.
Granted, Bitcoin is the oldest and widely accepted cryptocurrency. Well, that is not reason enough to deny the credibility and versatility of Ethereum, which is on the path of further development that would render it various viable features.
Ethereum is a wonder in itself and the native token that is Ether; it also includes smart contracts and decentralized operations. Bitcoin may face a challenge here due to the absence of smart contracts and decentralized operations.
Since Ethereum is an open technology, anyone can create new programs, thus providing limitless opportunities. This is a scenario unheard of in Bitcoin.
Ethereum also enables fast processing of transactions. It is also moving towards a proof-of-stake system that would make it more sustainable, thus giving it an upper hand as Bitcoin has a proof-of-work system and is energy-intensive.
The decentralized functioning of Ethereum can prove to be gold as it is capable of helping people who face difficulty in availing of banking or other financial facilities due to the lack of necessary infrastructure.
Though not as popular as Bitcoin, it is slowly gaining ground. Moreover, if Ethereum 2.0 becomes a functional reality, that would mean an end of the reign of centralized platforms.