Ethereum 2.0 confirmed, what does this mean for the future of ETH?

Key facts:
  • Ethereum adopts the Proof of Stake (PoS) algorithm as its network consensus method.

  • ETH started the year at $ 135 and is now trading above $ 500, a gain of over 270%.

Ethereum 2.0 Genesis Day is officially scheduled for December 1, after Ethereum 2.0 deposit contracts have made a parabolic profit in recent days.

ETH deposits for Ethereum 2.0 PoS staking

Ethereum 2.0 accepted the first deposit on November 4, but much to the concern of many investors, only 106,240 ETH had been deposited by November 20, while the Ethereum 2.0 launch required 524,288 ETH.

As the deadline approached, deposits soared and hit the target 9 hours before this date. To date, 16,384 validators have made deposits and 583,552 ETH have been wagered. After hitting the target, ETH gained more than 10% in the last day and rose to $ 622, its new year-to-date high, while Bitcoin remained stagnant at $ 18K. ETH started the year with US $ 135, now it has gained almost 350%.

Bitcoin price in USD for November 26, 2020.

What is Ethereum 2.0?

Ethereum 2.0 is an update that aims to improve the scalability, programmability and security of the network. After its completion, the Ethereum blockchain will fully adopt proof of stake (PoS) to protect its network, leaving behind the consensus mechanism known as proof of work (PoW) that Ethereum 1.0 employs. The whole process is divided into 4 phases and is expected to last at least 2 years.

Phases of the Ethereum blockchain upgrade

As the second largest cryptocurrency by market cap, ETH is famous for its high transaction fee and constant congestion. This is because Ethereum 1.0 could only handle around 30 transactions per second. But with the release of Ethereum 2.0, up to 100,000 transactions per second could be processed thanks to the chunk chain.

Associated Benefits

Consider driving a car across town and the only way to do it is across a bridge. During rush hour, everyone would have to queue to cross the bridge and you get more and more angry. You don’t know if it will be minutes or hours before you get home. Suddenly the bridge splits and spreads, and soon the long queue in front is found to disappear. The journey that used to take a few hours can now be completed in a dozen minutes. The chunk chain works similar to this. Chunking is the process of distributing data to reduce network congestion by creating new chains, also known as chunks.

Ethereum 2.0 is also more sustainable and could transform the entire ecosystem. The Ethereum 1.0 network consumes a lot of power because it requires all miners to solve complex math puzzles and verify new transactions, and the first miner to solve the block problem will be rewarded with crypto. Instead of working together and winner taking all, the PoS system chooses the creator of a new block based on staking and other validators vouch for the block by receiving the transaction fees proportionally. Therefore, PoS requires less computing power and is more of a fair game.

Another advantage of PoS is that it makes a 51% attack almost impossible, or unwise for the malicious actor. This is because, to launch a 51% attack, a person must stake at least 51% of the total amount of ETH in circulation. Buying such a significant amount of cryptocurrencies will undoubtedly attract the attention of the market, not to mention the extremely high cost.

What about the price of ETH?

The final phase of Ethereum 2.0 is expected to launch in 2021 and it is not the end of the Ethereum blockchain. With the launch of Ethereum 2.0, users could use Ethereum in a much more economical and efficient way, while obtaining more security. The increase in usage comes with increased demand that could send the price of ETH to new heights.

“By the time Ethereum 2.0 and developments work together, there will be 100,000 transactions per second of capacity. That means a completely seamless experience for the next billion people. “.

Jamie Anson, Founder of Nifty Orchard and Organizer of Ethereum London.

Despite the black swan of COVID-19 at the beginning of the year, the end of 2020 is a springboard for the cryptocurrency to go higher. With vaccines on the way, a clear election result, and the dollar falling, the next question is: how high can ETH go?

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