Ethereum 2.0

Ethereum is a decentralized and open-source blockchain (blocks) platform, which is a growing list of cryptographic blocks. Ether (ETH) is the cryptocurrency token of the Ethereum platform.

Key Points

  • It is the 2nd largest cryptocurrency in the world by market capitalization, only after bitcoin. It is also the most actively used blockchain in the world.
  • Ethereum was first proposed in the year 2013 by a Russian- Canadian cryptocurrency researcher and programmer Vitalik Buterin. The system became live in the year 2015.
  • Ethereum has been used in many decentralized financial transactions and initial coin offerings.

Ethereum Upgrade- Ethereum 2.0

  • Recently, the cryptocurrency was launched in a faster, cheaper, and more environmentally friendly platform, as the upgraded version called ‘Ethereum 2.0’ or ‘Eth2’.
  • Eth 2 will be designed in three phases- Proof of stakes, sharding, and implementation of sharding.
  • This upgrade may permit additional 1000 transactions in a second.
  • The largest cryptocurrency ‘Bitcoin’ works on the principle of Mining, which in turn requires solving complex problems leading to large consumption of electricity.
  • This updated Ethereum 2.0 will upgrade the system into ‘proof of stake’, which will consider the quantities of the ether to choose validators.
  • As per proof of stake, Ethereum 2.0 will depend on the stakeholders who already have some ether with them.
  • For a transaction, a staker will have to deposit 32 ether tokens in a crypto wallet as a contract. This will lock their ether for a period.

 What does it mean for investors?

As through “Proof of stakes”, the ether of stakers will be locked for a period of 1 to 1.5 years; investors can borrow against their locked up ether.  The upgrade will also bring a new concept called “Sharding” that will split a network into parallel chains and increase the speed of the network.

Written by IAS POINT

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