Ethereum is a brand new groundbreaking technology that needs to improve in every form if it’s to fulfill its promise of being the world computer.
Upgrades are being developed to ensure Ethereum does become the world computer, the platform for decentralized applications that power global industries.
But these upgrades are frustratingly slow, and to the unconvinced a long, long way away. But Ethereum 2.0 is not far away, and we will begin to see it roll out over the next couple of years, and as each phase rolls out we will see some major improvements.
But what is Ethereum 2.0 and how will it become the world computer?
Ethereum 2.0 Explained
Ethereum 2.0 will be rolled out in three phases and aims to address current scaling, mining and security issues that will see it become the platform for decentralized applications (dApps) and eventually the world computer.
Phase 0 is expected to launch any time now. It will introduce the beacon chain, which will be a proof-of-stake (PoS) chain.
Although the main Ethereum proof-of-work (PoW) will remain the main chain and do all the complex functions, the beacon chain will be used to test the validity and security of the PoS consensus that Ethereum 2.0 aims to be.
The beacon chain will manage the registry of validators, who will begin validating blocks into existence on Ethereum 2.0.
For the beacon chain to launch, it needs a minimum of 524,288 ETH staked on the network, by a minimum of 16,384 validators.
Anyone wanting to become a validator will have to send a maximum 32 ETH to a deposit contract. This contract essentially destroys the ETH 1.0 coins and the destruction can be used as proof to issue new ETH 2.0 coins.
How much you will earn staking ETH hasn’t been confirmed yet, but that article gives a good idea as to the likely earnings.
The beacon chain won’t be used for processing transactions, executing smart contracts, or hosting dApps, as it will be mainly to test its validity as a consensus mechanism. So, the Ethereum main chain will run parallel with it.
What’s more, because there will essentially be two Ethereum chains with two consensus mechanisms, it’s expected the inflation of ETH will rise to cover the costs of miners and stakers.
The main focus of Phase 1 is the implementation of shard chains. This is commonly known as sharding and will introduce 64 sidechains (shard chains).
The shard chains will run parallel with each other and the beacon chain. They will all be interoperable and each one will host its own selection of transactions, but the shards will not be used for things like smart contracts or be able to function with the Ethereum Virtual Machine (EVM).
Because Ethereum will then be basically 65 separate but simultaneous PoS blockchains it will absolve much of the data burden of the main chain, and at a very conservative estimate Ethereum will be capable of transacting at least 65 times more than it’s capable of today.
Although the shard chains will be limited in their functionality, once they have proven their validity, the main Ethereum 1.0 blockchain will merge with the PoS blockchain.
This is being dubbed Phase 1.5 in the Ethereum community, and it will see the main chain become one of the shard chains. There will be no need for a hard fork, so all token holders will be able to use the tokens they have from ETH 1.0.
It will be done gradually, and will likely see part of the PoW chain hand over a section of the chain to PoS validators, and this will happen every 1000 blocks or so, until eventually it all transitions into ETH 2.0 PoS blockchain.
From this moment on there will be no PoW and miners will become obsolete in the Ethereum community, and it’s expected Ethereum inflation will begin to drop back towards where we are today.
Once Ethereum is a PoS blockchain, we will begin to see what we all expect of Ethereum: a platform capable of scaling to meet the demands of being the world computer.
If phase 1 is designed to introduce staking and test Ethereum as a PoS blockchain, phase 2 will introduce much more economic activity on PoS Ethereum.
The shard chains will start being used for much more than the basic functions used in phase 1, and will begin to resemble the features of the Ethereum main chain.
This is when smart contract execution and the EVM will be used in every shard, thus freeing up much more burden from the main chain, making Ethereum much more scalable, and ready for mass adoption.
Ethereum is the second biggest cryptocurrency, but the one with the biggest potential use case. It is too slow to meet the demands of 5 billion Internet users, and must improve in every single aspect.
Ethereum 2.0 will introduce a much faster and more secure blockchain, capable of hosting any decentralized application, for any industry.
It will transition from the painstakingly slow PoW algorithm and become a PoS consensus mechanism that will allow anyone to stake and earn a genuine passive income.
It’s about to launch in the next few months, but as it does and the phases successfully evolve, Ethereum will become the world computer for the web 3.0.
Author: Tommy Limpitlaw