What is Ethereum 2.0? – New Zealand’s Ethereum 2.0 Guide
Ethereum is changing. Later this year, roll out of Ethereum 2.0 will take Ethereum into what Vitalik Buterin calls ‘Beast Mode.’ Transactions will settle faster. Network scalability will improve. Ethereum will even start consuming less power. The only question is, what is Ethereum 2.0?
What is Ethereum 2.0?
Ethereum as we know it first hit the cryptocurrency market in 2015. However, Ethereum has since been following a 4-step long-term development roadmap. These stages of development are as follows:
- Frontier: This was the original Ethereum blockchain that first came to market in 2015.
- Homestead: Ethereum Homestead was a major version release that developers bought to market in 2016. This saw Ethereum benefit from several protocol changes and also several major network enhancements.
- Metropolis: Metropolis is the Ethereum development stage Ethereum is in at present and is a two-part phase. These phases have the codenames Byzantium and Constantinople.
The fourth stage of Ethereum development has the codename Serenity. This is the phase we will enter in 2020. Calling this year’s release Serenity is also meant to symbolize the fact that Ethereum 2.0 will improve significantly in terms of usability.
Ethereum 2.0 Release Key Features
To understand the importance of the coming Serenity update, it is necessary to take a look at current problems facing Ethereum.
- At present, Ethereum mining requires more power annually than the entire country of Bolivia. ?
- Ethereum can currently only process (approximately) 20-transactions per second.
- Slow transaction speeds undermine the ability of the Ethereum Virtual Machine (EVM) to process secondary computational tasks as efficiently as it could. This limits the size and type of decentralized apps that can be built on Ethereum.
To address the above problems, 2020 will see Ethereum migrate away from proof of work (POW) mining.
Ethereum 2.0 and Proof of Stake Transaction Processing
Today, Ethereum is mined just like Bitcoin. However, as Vitalik Buterin sees it, mining isn’t sustainable.
Cryptocurrency mining sees millions of individuals and mining farms run power-hungry ASIC miners 24/7 to process Ethereum transactions. In return for processing transactions, miners receive newly minted ETH. However, almost all of the electrical and computational power that goes into mining goes to waste.
At some point in 2020, Ethereum will abandon proof of work mining in favour of proof of stake (POS) transaction processing. This will see holders of large amounts of Ethereum verify transactions and receive rewards, in place of miners. This will also see Ethereum reduce waste and shrink its environmental footprint.
Second Layer Transaction Processing
Proof of stake transaction processing will reduce the amount of energy needed to maintain the Ethereum blockchain. However, POS alone will not increase transaction settlement speeds. To improve speeds, Ethereum 2.0 will, therefore, see an extra payment processing layer called Plasma added to the Ethereum blockchain.
Plasma will facilitate faster transaction processing, while also freeing network resources for the benefit of the EVM. Plasma will also benefit from extra transaction processing support available off-chain.
- Ethereum 2.0 will see the addition of off-chain scaling solutions similar to the Bitcoin and Litecoin Lightning Network.
- The Ethereum 2.0 release will introduce Sharding. This will see the main Ethereum database broken up into smaller clusters.
- A Serenity update known as eWASM, will enhance the data processing capabilities of the Ethereum Virtual Machine.
What is Ethereum Serenity in a Nutshell?
In simple terms, the upcoming Ethereum 2.0 release promises to make Ethereum faster and more scalable. This means that Ethereum will be able to compete better with mainstream payment processors. It also means that it will be possible to run larger and more powerful decentralized apps on Ethereum.
As for when Ethereum 2.0 will arrive, no one is 100% sure. Ethereum 2.0 will not take the form of a standalone upgrade. Rather, what we will see this year are gradual changes being made to Ethereum, which will cumulatively result in Ethereum 2.0.
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