Ethereum, the second largest digital currency in terms of market capitalization is now on the precipice of a significant upgrade that is referred to as Ethereum 2. 0 upgrade nears completion. This large update to the Ethereum network isn’t exactly new either but what this brings to the table is the capability of solving problems of scalability and sustainability that have plagued blockchain and beyond.
The Ethereum 2. 0 upgrade, also called Serenity, is the transition from the current PoW consensus mechanism that is extremely demanding in terms of energy consumption to PoS. It is expected that this transition will significantly decrease the network’s energy consumption, which poses one of the main concerns of cryptocurrencies and blockchain.
It has been done progressively with the last phase still undertaken in the current months of the year. What might be the biggest upgrade in Ethereum 2. 0 is the adding sharding which is a scaling solution which will enable the network to process the transactions faster.
By splitting the whole network into segments known as shards, Ethereum is expected to handle a significantly greater number of transactions per second than it currently is capable of, and even compete with payment giants such as Visa. This increase scalability is essential for the expansion for decentralized applications (dApps) and decentralized finance (DeFi) on the Ethereum network.
It has been seen that this upgrade has already led to improvements in the value of Ethereum and the cryptocurrency hit fresh records in anticipation of the Ethereum 2. 0. The future of the platform and its integration with car manufacturer companies is the reason behind enthusiasts of investors and developers.
That is why, as the update continues, many projects in the Ethereum ecosystem are already adjusting to the changes. Ethereum, particularly, DeFi platforms can benefit from the current upgrades which aims to enhance its scalability and reduce the cost of executing a transaction. This could lead to a new round of technological disruption of this industry, opening up new higher-order applications of the financial industry on the blockchain.
The(ca, it means The parameters of Ethereum 2. It may not be an exaggeration to say that any changes with 0 at their base, could pose significant risks to the whole decentralized monetary system, including various cryptocurrencies. As Ethereum is one of the most prominent platforms based on the blockchain technology, this transition makes it possible to initiate a shift towards a more efficient and environmentally friendly direction for other projects, as well. But it is not a smooth process as many would expect.
With the shift to PoS there are fears of centralization of the network since big stakeholders control more of network resources. The Ethereum development team has taken measures to counter act these risks, however, the long term outcome is yet to be determined.
Before concluding, it is imperative to look at the last part of phase two of Ethereum 2. It is the so-called 0 upgrade approach, which attracts the attention of the crypto community. The accomplishment of this large-scale project could be a turning point in the development of the blockchain technology with its potential for broader utilization and further evolution of the distributed systems.
