What is Ethereum 2.0?

Ethereum, as the world’s second most important blockchain was working on consensus mechanism Proof of Work (PoW). That was why, it was decided to change this mechanism to Proof of Stake (PoS). This change was an upgrade to Ethereum 2.0. This upgrade was intended to increase Ethereum’s capacity for transactions, reduce fees and make the network more sustainable. Ethereum 2.0, which is called Serenity, is an upgrade that hasn’t been activated yet. This change will make mining more difficult for the miners which finally end up in almost getting nothing as the reward. In this mechanism, it takes 32 ETH to mine and hypothetically it would make it impossible to mine new coins.

The Proof of Work PoW mechanism in its current form is a computationally and energy-intensive process, which solves complex mathematical puzzle currently used by Ethereum miners for validation of transactions.  The fastest miner to solve the puzzle gets a reward.  It is hoped that the PoW mechanism will foster innovation in the renewable energy sector.

In Proof of Stake, transactions are authenticated and confirmed by the Validators instead of miners.  PoS is more energy efficient than PoW because securing a blockchain by PoS uses much less computing energy for block creation. It is estimated that ETH 2.0 Will Use 99.95% less energy than ETH 1.0.

Another approach which has been applied in this upgrade is called Sharding. Sharding means splitting a blockchain into shards (multiple blockchains) which improves efficiency. The reason behind that is that validators can keep their own shard’s data. Validator will also be shuffled in different shards which will prevent manipulation. This approach will increase the speed of transactions and as a result cheaper fee. So, the number of users will certainly rocket in a large scale.

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