Ethereum 2.0: The Highly Anticipated Merge of the Ethereum Blockchain
Introduction to Ethereum 2.0
Ethereum 2.0 is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud, or third-party interference. These apps run on a custom built blockchain, an enormously powerful shared global infrastructure that can move value around and represent the ownership of property. This enables developers to create markets, store registries of debts or promises, move funds in accordance with instructions given long in the past (like a will or a futures contract) and many other things that have not been invented yet, all without a middleman or counterparty risk.
Cryptocurrency – Ether (ETH)
The Ethereum network is powered by ether, a cryptocurrency that is used to pay for the computational resources needed to run applications on the network. Ether is also used as a means of exchange and can be bought and sold on cryptocurrency exchanges.
In addition, Ethereum is known for the ability to facilitate the creation of new cryptocurrencies, also known as tokens. These tokens can represent a wide range of assets, including traditional financial instruments like stocks and bonds, as well as more abstract concepts like votes or loyalty points.
Ethereum 2.0 Updates – The Merge
Ethereum has undergone several updates and upgrades since it was first launched in 2015. One of the most significant of these updates is the Ethereum merge, also known as Ethereum 2.0. The ETH2.0 is a major overhaul of the Ethereum network. That aims to address several key challenges facing the Ethereum platform, including scalability, security, and energy efficiency.
The Ethereum merge is being implemented in several phases, with the first phase, known as the Beacon Chain, being launched in December 2020. Firstly, the Beacon Chain serves as the backbone of the Ethereum 2.0 network. In addition it is responsible for maintaining the overall state of the network, including the list of validators and stakes.
One of the main goals of the Ethereum merge is to increase the scalability of the Ethereum network. The Ethereum network in past relies on a proof-of-work (PoW) consensus algorithm, which requires a large number of computations to be performed in order to validate transactions and secure the network. This can lead to bottlenecks and high fees when the network is under heavy usage.
Ethereum 2.0 – PoS
To address this issue, the Ethereum merge introduces a new proof-of-stake (PoS) consensus algorithm, which allows validators to participate in the network by staking a certain amount of ether as collateral. Validators are then selected to propose and vote on the next block of transactions based on the size of their stake, rather than the amount of computational power they can bring to bear. This allows the Ethereum 2.0 network to process transactions more efficiently and at a lower cost.
In addition to increasing scalability, the Ethereum merge is also designed to improve the security of the Ethereum network. The PoS consensus algorithm is more resistant to certain types of attacks, such as the 51% attack, in which a group of malicious actors attempt to take control of the network by accumulating a majority of the computational power.
The Merge – Energy Consumption
Finally, the Ethereum merge is expected to significantly reduce the energy consumption of the Ethereum network by 99%. The PoW consensus algorithm used by the Ethereum network required a large amount of energy to run, as miners must constantly perform computations in order to validate transactions and secure the network. The PoS consensus algorithm used by Ethereum 2.0, on the other hand, requires far less energy, as it relies on validators staking their ether rather than performing computations.
In conclusion, the Ethereum merge is a major overhaul of the Ethereum network that aims to address several key challenges facing the platform, including scalability, security, and energy efficiency. By introducing a new proof-of-stake consensus algorithm, the Ethereum 2.0 network is expected to process transactions saving 99% of enery need for PoW.