Ethereum 2.0 Summarized in 2 minutes
Ethereum sustains its position as the 2nd most popular cryptocurrency, behind Bitcoin. In 2017, a game called CryptoKitties was released on Ethereum. It is famous for causing the gas fees on Ethereum to skyrocket and created many bottlenecks for the blockchain.
As the world’s first programmable blockchain that can host smart contracts, Ethereum has built a thriving community of consumers and developers. But in order to meet global demands, the current state of Ethereum needs to undergo some changes. These changes will make the blockchain more sustainable, more secure, and more scalable.
(1) Transitioning the network from Proof-of-Work to Proof-of-Stake makes the blockchain more sustainable
In summary, whoever adds data to the blockchain gets a crypto reward for doing so. This incentivizes people to participate. In POW systems, everyone is competing to out-mine each other with their processing power and only the fastest person gets a reward. In POS systems, there is one node who is chosen to validate the block. This makes the blockchain more sustainable because POS is not as energy intensive. A 3 minute explanation of POW vs POS can be found here: https://eunicepang.medium.com/proof-of-work-vs-proof-of-stake-in-5-minutes-9098fc267188?source=friends_link&sk=eb5e1ca745193ade4f34453f42fda46b.
(2) Staking makes the blockchain more secure — owning 51% of all ETH staked is difficult
Decentralized systems have vulnerabilities too. Since blockchain systems are based on popular vote, if an attacker somehow obtains 51% of the voting power, they would be in a position to successfully commit fraud. In a POW system, if someone gets control of 51% of the nodes, they can potentially attack the system. In a POS system, if someone can get control of 51% of all the staked ETH, they could commit fraud. But 51% of all staked ETH is a lot of money so that is a highly unlikely scenario.
(3) Sharding into 64 new chains allows for parallel processing, making the blockchain more scalable
The Ethereum network is currently pretty slow because of the same reason the Bitcoin network is slow — adding a new block changes the database and this change must be propagated throughout the entire network. Ethereum 2.0 introduces something called sharding, which is similar to parallel processing in computer science terms. Instead of every node having to update its ledger every time a new block is added, the blockchain is split up into 64 shards and each node runs one shard so less processing power and hardware is needed to run a node. This makes the entire system more decentralized because the requirement to help secure the network is lowered to having enough processing power for one shard, instead of for the entire network, and more people will be incentivized to participate.
