Ethereum 2.0 has been moving the crypto scene for years. Because the plan behind it is to fundamentally reposition the second most important cryptocurrency Ethereum (ETH). Away from the slow and resource-hungry proof-of-work as a protocol, Ethereum 2.0 is supposed to accomplish and instead introduce proof-of-stake.
Time and time again, corrected schedules for Ethereum 2.0 were also the subject of heated public discussion and caused skepticism as to when the idea would become reality. Now, the Ethereum Foundation’s progress report from the machine room indicates a concrete date of December 1st, 2020.
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Ethereum 2.0 starts with restrictions
It is important to know: Ethereum 2.0 in Phase 0, which is now at stake, does not yet replace the existing ecosystem. Rather, it will create a parallel blockchain for Ethereum under the name Beacon, whose functionality for Smart Contracts and DApps is only rudimentary. The very large, preferably complete, migration to Ethereum 2.0, also known as Serenity, is still not planned until the end of 2021.
According to the Ethereum Foundation, at least 16,384 participants must be found for staking and, added together, provide ETH with more than $200 million in liquidity. If this is not achieved by December 1st, the launch will be postponed by seven days. ETH on Ethereum 2.0 cannot be “turned back” to Ethereum 1.0, but are irrevocably stuck on the new standard.
Conclusion: Ethereum is waiting for a major upgrade
The markets rewarded the specific launch date for Ethereum 2.0 with a plus of just under 5 percent and ETH is currently quoted at just under $400. For users, Beacon at Ethereum is not very relevant in daily business, because the DeFi division, which ETH is driving, will continue to be handled by Ethereum 1.0.
The situation is somewhat different for medium and long-term investors. Ultimately, Ethereum 2.0, which will be fully rolled out in 2021, will solve the problem of overloading the ETH blockchain and the resulting high transaction fees. If this step is successful, Ethereum will demonstrate its future viability. On the other hand, ETH is threatened with a loss of trust if Beacon launches prematurely and shows security gaps or other problems. In any case, Ethereum 2.0 is a good example of how sometimes boring sounding technological topics can influence the price of cryptocurrencies.
Already in 2014, Ethereum was presented to the world public by a certain Vitalik Buterin at the Bitcoin conference in Miami. Since then, the technology and the associated cryptocurrency ETH has started its triumphant advance. In contrast to Bitcoin, Ethereum can also process smart contracts. It is therefore conceivable, for example, that notary services or elections based on the Ethereum blockchain will take place in the future.
Proof-of-stake as the new protocol that Ethereum is striving for is fundamentally changing the mechanics of the blockchain. Instead of time-consuming calculations, network participants should check transactions themselves. This saves energy and allows significantly more TPS as long as many nodes participate in PoS. Ethereum 2.0 wants to process up to 100,000 transactions per second and wants to achieve this through sidechains (sharing), among other things.
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First published in BLOCK-BUILDERS.de, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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