Ethereum 2.0 is not something very new team is working on it since 2015, it is a big transition as being the 2nd largest coin in terms of market cap so there are billions of capital is on stake. They can not afford any single mistake.
What is Ethereum 2.0
Its a major update in the ongoing Ethereum Blockchain technology. If I talk in technical terms then Currently Ethereum is working in Proof of Work (POW) mechanism which has a major role of minors during the transaction. So shifting this mechanism to Proof of Stake (POS). Actually this POS mechanism is new and in a way it is necessary also you will get to know why this is important.
If i have to say as a layman what changes will be there in Ethereum 2.0, then I can simply say that for someone who is out of the system there will be no change for them. Because its a structural change in the way Ethereum blockchain functions. 2.0 will replace one way route with multi way routes, actually multi transitions can be carried out in parallel, this is Sharding. This will save huge amount of time, money and energy.
Advantages of Ethereum 2.0
- Do you know using POW mechanism for 1 transaction of Ethereum it almost take 1day of electricity an average American household will consume. With POS its is considered that it is very efficient in saving electricity. Do you want to know how much electricity can be saved?
- As per IEEE (Institute of Electrical and Electronic Engineers) the estimate is Ethereum 2.0 will cut almost 99% of electricity usage.
- After 2.0 upgrade the scalability issue will get solved.
- Actually the speed of one transaction is quite slow because of one-way now when this path will become multi way then just think the speed of transactions. So if the speed of transaction will increase, it will automatically attract more customers hence business will scale.
Before moving towards the disadvantages that may come with Ethereum 2.0 I think you must know about Sharding.
What is Sharding?
Sharding is the technology that effectively split the mainnet into loads of tiny shard chains that run alongside each other. So what will happen is now instead of following consecutive order during transactions, there will be simultaneously different transactions being processed. So in a smart manner the using same power we are executing different transactions.
I think by now you know that reduction in power consumption, increase of speed and scalability all three of them is because of sharding. So now the question arises that if any disadvantage is there or not…
Disadvantage of Ethereum 2.0
As you have seen above how transactions will get executed in a parallel fashion. This parallel execution arises a doubt of security. Actually nothing to doubt, why i am saying this is If it is implemented poorly then there will be surely compromise in security.
Actually POS will reduce the number of validators involved during transaction hence there is a risk in keeping these mini shard chains secure as one malicious actor can overtake everything. So in my eyes security is a challenge. You can not get all three ( scalability security and decentralisation) in one go, you have to compromise in atleast one of them.
You can also read our article where we have discussed about the business of Ethereum by Clicking Here
When will Ethereum 2 be launched?
Ethereum 2.0 phase 1 has been released in Dec 2020, however phases 2 is expected to get released in 2023. It is a slow process as it is really complex.
Will there be a new coin after Ethereum 2.0 is completely implemented?
No there will not be a new coin after implementation of Ethereum 2.0 infact it will be a rebranding else nothing will change for ETH holders except its price may increase or decrease :p
Will there be reduction in Gas fees after 2.0?
Yes it is expected that gas fees will get reduced as number of transactions will increase.
Disclaimer: This is just writer's personal view on the topic with his/her limited knowledge. It is just shared for educational purpose. This post is not meant to give any kind of financial advice to any of its reader, Please do your own research before landing on any conclusion. If you disagree or find anything which is misleading or inappropriate in the above post, then please reach out to us at via our contact page and we will definitely work on it.
Sources: 1. Ethereum official website 2. Wikipedia