Nonfungible tokens(NFTs) innovate the progress of Ethereum 2.0 and bring more concerns to Ethereum itself. More miners are curious about the transition to PoS in Ethereum 2.0. This guide will lead you to the crypto world of Ethereum.
What is Ethereum?
Launched in 2015 and evolved as the second-biggest cryptocurrency, Ethereum is a decentralized blockchain network powered by the Ether token. It enables users to make transactions, earn interest on their holdings through staking, use and store nonfungible tokens (NFTs), trade cryptocurrencies, play games, use social media and so much more.
More about Ethereum check out here.
Ethereum vs. Bitcoin
ETH is currently secured by the Ethereum blockchain in much the same way Bitcoin is secured by its blockchain.
Bitcoin’s network is just for Bitcoin. Bitcoin is meant to be digital money, and it serves that purpose reasonably well. But Bitcoin has its limitations. It’s a PoW network that’s struggling to scale, leading some to believe that it’s more of a store of value, similar to gold.
Ethereum intends to overtake our current internet infrastructure and is used more as a way to interact with the network than as a way to transfer money. It plans to automate many processes that still require intermediaries, such as using an "app store" or working with "fund managers".
What is Proof of Work(PoW)?
When ETH 1.0 launched, it adopted the consensus mechanism pioneered by Bitcoin: the aptly named Proof of Work, to make sure nobody pay for twice without using any middle-media.
Proof of Work requires a huge amount of processing power, which is contributed by virtual “miners” around the world who compete to be the first to solve a time-consuming math puzzle. The winner gets to update the blockchain with the latest verified transactions, and is rewarded with a predetermined amount of ETH. This process happens every 30 seconds (compared to Bitcoin’s approximately 10-minute cadence).
What is Ethereum 2.0?
Ethereum 2.0, also known as Eth2 or “Serenity,” is an upgrade to the Ethereum blockchain. The upgrade aims to enhance the speed, efficiency, and scalability of the Ethereum network in order to process more transactions and ease bottlenecks.
Why is Ethereum 2.0 necessary?
ETH wants to be a world-class computer. It has the world's largest blockchain open source community and the world's most active public chain, processing millions of users' transactions and smart contract settlements. In recent years, Ethereum has rarely exceeded ten transactions per second (TPS). But for further development, improving transaction throughput (Transactions Per Second, TPS) is an important goal for the survival and development of Ethereum in the next step.
For a platform aiming to become a “global computer,” this number is surprisingly low. The Ethereum 2.0 updates intend to provide scalability that is orders of magnitude greater than what is currently available with Ethereum — a jump from roughly 10 TPS to potentially 100,000 TPS. That's why Ethereum 2.0 is necessary for further Ethereum blockchain development.
Ethereum 2.0 V.S. Ethereum(1.0)
While Ethereum 1.0 uses a consensus mechanism known as proof-of-work (PoW), Ethereum 2.0 will use a proof-of-stake (PoS) mechanism.
What is Proof of Stake (PoS)?
Similar with Proof of Work's, those who participated in Proof of Stake can be regarded as validators as they literally are stakeholders of successful enterprises. They contribute ETH to a “staking pool” which is considered as staking.
Staking is open to anyone interested in. The more validators participating in staking, the faster enhancing Ethereum blockchain processing speed.
Like getting interests from savings account, once stake ETH and you will get the awards in proportion. All participating validators receive a reward in ETH, which is distributed by the network in proportion to each validator’s stake. Based on the amount of ETH each validator has in the pool and the length of time they’ve had it there, the network will literally reward the most invested one. Once the winner has validated the latest block of transactions, other validators can attest that the block is accurate. When these attestations have been made, the network updates the blockchain.
Several phases of Ethereum 2.0
Following a series of testnet launches, Topaz, Medalla, Spadina, and Zinken, the full roll-out of Ethereum 2.0 will take place in three phases: Phase 0, 1, and 2 (developers like to count from zero).
Phase 0 launched on December 1, 2020, with the other phases set to arrive in the following years. The first upgrade is called the Beacon Chain which introduces native staking to the Ethereum blockchain, a key feature of the network’s shift to a PoS consensus mechanism. It stores and manages the registry of validators as well as deploying the PoS consensus mechanism for Ethereum 2.0. The original Ethereum PoW chain will run alongside this so there is no break in data continuity.
The second phase, Phase 1, also called The Merge, is expected in the first or second quarter of 2022 and will officially bring an end to PoW on the network. Users who staked Ethereum on the Beacon Chain will then be assigned validator roles.
Now we are in the middle stage of phase 1 and phase 2 which can be regarded as phase 1.5.
Phase 2 will introduce Shard Chains to the network, with an expected launch of 64 shards (enabling 64 times more throughput than Ethereum 1.0) though at launch they won't support accounts or smart contracts.
What can Miners do with Ethereum 2.0?
If you have already hold ETH, you won’t have to do anything. Your holdings on the ETH 1.0 blockchain will automatically migrate to the ETH2 blockchain.
As the exact landing date of Ethereum 2.0 has not yet been clear, it is still an opportunity to collect ETH. Our platform will also follow up the progress of PoW to PoS and look for more mining projects which can provide stable profit. More latest information will synchronize with each users in time.
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