Ethereum 2.0 and Its Possible Impact on the Industry
Ethereum is the second-largest crypto by market capitalization. The project was launched in 2015 and changed the entire approach to blockchain and cryptocurrencies. For the first time, the blockchain was used not only to register transactions but to create Smart Contracts and applications by companies.
Since its launch, the Ethereum network has undergone several modifications. They all were planned and were intended to improve the network scalability and efficiency. These upgrades also delayed an algorithm called the difficulty bomb. It increases the mining until it is impossible to mine Ethereum. Then, a transition to proof-of-stake shall occur.
The main difference from proof-of-work will be that transactions will not be confirmed by miners anymore. They will be confirmed by stackers — users who own a specific number by Ethers. Scalability though is not the main focus of the hard fork. In the future, through the introduction of Ethereum 2.0 which is also called Serenity, the balance shall be found between scalability, decentralization, and security.
Ethereum 2.0 Implementation Stages
The implementation of Ethereum 2.0 which is basically a new blockchain will proceed in several stages throughout several years.
This stage was planned and successfully implemented in December 2020. The beacon chain was launched. This chain has solved the scalability problem of the network. The main difference from the previous blockchain is the possibility to confirm several transactions simultaneously by different validators. A validator is a user that stakes 32 coins for the right to validate transactions in the network.
This stage is planned for 2021. At this stage, shard chains are going to be implemented and sharding will be introduced. Shard chains are supposed to run as interconnected blockchains. They will take the additional load from the main blockchain. During this stage of implementation, shard chains are not supposed to support smart contracts.
This stage is planned for 2021, too. At this stage, the existing Ethereum 1.0 blockchain will be migrated to a shard. It will mark the end of Ethereum mining.
At this stage, ethereum will work based on shard chains. At this stage, shard chains will be tuned up enough to support smart contracts. The new scalable, absolutely safe, completely decentralized blockchain will be created. It is not clear when stage 3 is going to be implemented but some people believe we shall expect it somewhen in 2022.
Possible Impact on Users
For users, there will be no major impact. The transition is going to be smooth and painless. All users will continue using the system. Also, there are no plans to abandon Ether as a system token. It will power the system like it was always the case. The only impact might be in Ethereum growing in price because transaction fees will be reduced and the network engagement will increase.
Impact on Investors
Here, there are several possible outcomes. In the first line, Ethereum will be migrated to the new blockchain without disrupting all the current operations. It is something that has never been done before. If there are any issues during the migration process, it might cause sudden and significant drops in the coin price.
Therefore, investors or users who want to profit from Ethereum, need to be attentive because that is going to be the best time to buy coins. You can purchase Ethereum and other cryptocurrencies safely on LetsExchange. Moreover, if you choose a fixed exchange rate, you will get the coins at the rate valid at the time when you have requested a transaction. Along with Ethereum, on the platform, you can buy and sell more than 200 coins.
Further, Ethereum mining will be stopped which means no new coins will be produced. Thus, we might face a phenomenon called a supply shock. While the coin supply will drop to zero, the demand for coins might increase drastically. It might cause a rally that we have never seen before.
Every hard fork is a turning point in the development of a project. The same applies to Ethereum and its hard fork Ethereum 2.0. If everything goes smoothly, as planned, we can expect the evolution of a new blockchain with features that are going to beat any other cryptocurrency. Some experts say it might be the start of the Bitcoin dawn. We would not be so categorical but for sure the impact on the cryptocurrency world is going to be immense. Those who will be able to assess the events correctly might earn good profit.
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