Hey Cadets! Even if you are someone who doesn’t
really keep up with the crypto sector, you have probably heard of Ethereum at least once.
This crypto giant has been trending throughout the year, along with Elon Musk’s dogecoin and
the rest of crypto twitter’s bitcoin maxi’s. For all the Ethereans, something big is on
the way… That’s right… It’s Ethereum 2.0! The implementation of this long-awaited
major upgrade started on December 1, 2020, and it is going to revolutionize
blockchain technology forever. Ethereum’s current systems will be getting
a complete overhaul with the 2.0 version, with the aim of making the existing
Ethereum public mainnet more powerful, more scalable, greener, more sustainable,
and more secure. Phew, that’s quite a lot. But wait! There’s more! From a user’s perspective,
the most important thing is that there will be a ton of opportunities to earn a great passive
income on your ETH investments through staking. However, we have to keep in mind
that this upgrade is not an act of snapping fingers like Thanos to make
the previous version of Ethereum disappear.
The process of changing will be gradual
and require a lot of development and patience. In this video, we will be trying to make the
concept of ETH 2.0 as understandable as possible, so you can explain this concept to
anybody in simple terms. You might even impress your next-door crush who just
might be a crypto nerd. Hey, you never know. So, ready to explore the world of Ethereum 2.0?
I’m Captain Crypto and welcome to Cryptonauts. The best way to figure out Ethereum 2.0 is by
understanding how it differs from its predecessor. Originally, Ethereum operates on the
Proof-of-Work consensus mechanism. It is the same mechanism that Bitcoin
currently uses at the moment.
However, this system is far from perfect, as there
are three major flaws associated with it. Number 1! It consumes a lot of energy to
validate transactions and keep the network secure. 717,797 US households could
be powered by the energy expended on validating the Ethereum
network for a single day! Number 2! It’s way too slow. The current version
of Ethereum can process around 15 transactions per second, which is miles behind VISA that can
process a massive 65,000 transactions per second.
Number 3!: It is a bit centralized. Large
crypto miners build their facilities in places where the electricity is cheap. As
an example, four mining pools of which the majority are located in China control more
than 50% of the total Bitcoin mining power. Learn more about the differences between Proof-of-Work and Proof of
Stake by clicking right here Now that we’ve established the main problems
that hold Ethereum back from reaching its goals, we can move on to the solutions.
every story has a hero, and this is where the Ethereum 2.0 development
program swoops in to save the day. The upgrades to scalability, security,
and sustainability from Ethereum 2.0 come from the swap to the
Proof-of-Stake mechanism. However, there is one more thing that makes
this upgrade complete, and that is sharding. So, what is sharding and how does it solve
the problem? Well, think of a glass jar. If I accidentally drop it on the floor, it
breaks into hundreds and thousands of shards. In a similar way, the Ethereum
blockchain can be split into several shards. Shard chains split the
Ethereum blockchain and divide the data processing responsibility among multiple
nodes instead of a single node. As a result, sharding makes it possible for transactions
to be processed in parallel rather than consecutively. This makes Ethereum capable of
executing thousands of transactions per second! So, this amazing duo of PoS & Shard Chains
are the two most important things about Ethereum 2.0. Alright. Now let’s move
on to the next part – the timeline. For those who are wondering if
Ethereum 2.0 has been launched yet, the answer is both a yes and a no.
is going to be a multi-phase rollout starting with Phase 0 and ending at Phase 3. Phase 0
already kickstarted on December 1 2020, but a full upgrade rollout might take 2 or 3 years.
One important thing to keep in mind here is that Ethereum 2.0 will launch as a separate network.
What this means is that Ethereum 1.0 will not be instantly flushed out but will co-exist in
parallel with the Ethereum 2.0 development phase. Let’s take a closer look at the
separate phases of the upgrade. PHASE 0:
The Ethereum 2.0 launch was officially set into motion with
the Phase 0 deployment on December 1, 2020. The objective of this phase is to allow
the seamless migration of validators from a Proof-of-Work-based Ethereum to a
Proof-of-Stake-based Ethereum network with the help of the Beacon chain.
The beacon chain
acts like a bridge that makes all this possible. The new PoS mechanism, called Casper, will replace
the current Proof of Work engine in Ethereum 2.0. Casper will be delivered via the Beacon Chain,
which will be the system chain of Ethereum 2.0. We should also keep in mind that the beacon
chain doesn’t change the Ethereum you use today. You can still send ETH to a friend,
swap tokens on MetaMask or Uniswap, and play with those blockchain
games you so dearly love.
With the beacon chain and its PoS system running smoothly, Phase
1 will activate Ethereum 2.0’s primary scalability solution – sharding. As we previously mentioned,
sharding will multiply the network’s throughput and speed. The 64 PoS shards that will be deployed
in this Phase will boost the throughput 64 times. PHASE 1.5: Ethereum 2.0 acts as a separate network from
Ethereum up until the rollout of Phase 1.5. Once the docking is done, the transfers of ETH
made from Ethereum to Ethereum 2.0 would become impossible to reverse, while the dApps built
on one network will not exist in the other. This phase signifies the merge
of Ethereum 1.0 and Ethereum 2.0.
Phase 2 represents the activation of the functionality for
dApp deployment natively on Ethereum 2.0. Once communication between all 64 shards and the
beacon chain is fully tested, Phase 2 will enable users to store and deploy new smart contract data
on any of the shards in the Ethereum 2.0 network. PHASE 3:
Out of all the previous phases we discussed, Phase 3 is the least defined.
In the words of Vitalik Buterin, this phase is reserved for “other stuff that we want to add down
the line.” This could mean adding more shards to the Ethereum 2.0 network or new cryptographic
technology such as Zero-Knowledge Scalable Transparent Arguments of Knowledge (ZK-STARKs).
STAKING ETH 2.0:THE PASSIVE INCOME GENERATOR One of the most exciting opportunities with
Ethereum 2.0 is the ability to earn passive income by staking your ETH. The good thing here is that
staking eliminates the need for expensive hardware and greatly reduces the entry barrier to the
staking game. You can run a validator node with just three things:
A decent laptop 32 ETH
Good internet connection For those that think that 32 ETH does not
fit in their pocket size, no need to fret: there are already several staking pools and
services that make participation possible for everyone, regardless of the size of your holdings.
In order to earn staking rewards on Ethereum 2.0, you will need to lock your ETH holdings.
The purpose of this is to make sure that you participate in the network as an honest validator.
If you want to learn more about staking on Ethereum 2.0, you can check out the Ethereum
launchpad, which will take you through the process of setting up a validator node
in a step-by-step fashion.
Just hit the URL – www.launchpad.ethereum.org
in your favorite browser. With all that being said, be mindful of one thing:
once you migrate your Ether into Ethereum 2.0, you won’t be able to extract it back
until Ethereum 1.0 and Ethereum 2.0 merge. So, what do you say, fellow Cryptonauts?
Are you going to stake your Ether right now, or possibly wait until the network finishes with
the Ethereum 2.0 deployment? Or are you maybe staking your Ethereum already? Let us know
in the comments! And if you liked the video, don’t forget to like, subscribe, and push
that notification bell.
And as always, HODL, secure your crypto, and may
Satoshi and Vitalik be with you, always..