Ethereum 2.0 – what to know about this cryptocurrency?
Ethereum 2.0 – everything you need to know
For many years now, investors have eagerly awaited Ethereum’s technical upgrade to Eth 2.0 (or Ethereum 2.0). This improvement of Ethereum’s underlying blockchain is widely believed to be one of cryptocurrency’s most widely recognised and ambitious projects.
Ethereum’s vision is to ensure excellent benefits for people worldwide by being more secure, sustainable, and scalable. But how is Ethereum different from the newest upgrade to Ethereum 2.0? Let’s take a closer look.
The blockchain Ethereum uses Proof of Work (PoW) to confirm users’ transactions. However, the upgraded Ethereum 2.0 version will use Proof of Stake (PoS) instead. Does this mean that the new version will be better than the old one? In this article, we’ll answer this question and give you an insight into what you can expect from Eth 2.0.
Is Ethereum 2.0 better than Ethereum?
There are several ways in which Ethereum 2.0 is going to be a distinct improvement over the original Ethereum cryptocurrency. They include:
- Better security
- Ethereum 2.0’s PoS system will minimise the chance of cyberattacks, making the platform far more secure for developers and investors alike.
- More scalable
- Ethereum hosts around 80% of all DeFi apps, with around 90% of NFTs being part of the Ether ecosystem. This amount of activity results in an enormous amount of traffic, with thousands of transactions taking place constantly. The original Ethereum blockchain was only capable of handling 15 transactions every second which resulted in users paying higher transactions fees while dealing with delays in transfers. The new Eth 2.0 version will eliminate these issues.
- More sustainable
- Eco-friendliness is the way forward for blockchain. Ethereum’s old PoW model was dependent on mining, with complex computing devices being required that consumed huge volumes of electricity. In contrast, the new PoS model eliminates the need for a mining network so Ether will become more eco-friendly and sustainable.
Ethereum vs. other cryptocurrencies
The most popular cryptocurrency apart from Ethereum is Bitcoin, with a market cap of more than $363 billion. The first ever cryptocurrency, Bitcoin was launched back in 2009 with a promise to be an alternative to fiat currencies with a transparent and decentralised financial system that could be accessed by everyone.
Meanwhile, Ethereum was launched a few years later in 2015 and is a community-driven, open-source project that has evolved considerably over the years. Like Bitcoin, Ether is a decentralised peer-to-peer network without surveillance and censorship that gives everyone access to commerce and financial services by allowing other cryptos to be developed and smart contracts to be executed on the platform and, thanks to these functionalities, Ethereum is more versatile than Bitcoin.
As Ether is programmable it has a broader scope beyond being solely a digital currency, allowing it to become a marketplace for games, apps, and financial services.
When determining whether Ethereum or Bitcoin are best, it’s important to take each one’s pros and cons into account.
|The Advantages Of Bitcoin||The Disadvantages Of Bitcoin|
|1.||Being the first crypto available and thus having the highest brand recognition and highest liquidity.||The price of Bitcoin is very volatile.|
|2.||Having an enormous potential for growth.||There is limited functionality offered by Bitcoin.|
|3.||Using blockchain technology to protect from identity theft and fraud.||It uses a large amount of energy, fuelling climate change.|
|4.||Having a value based not on political interference but on supply and demand.||It cannot provide users with 100% anonymity.|
|5.||Offering speedier transactions than fiat currencies.|
|6.||Having a cap of 21 million bitcoins that may drive up prices as the coin becomes more scarce.|
|The Advantages Of Ethereum||The Disadvantages Of Ethereum|
|1.||Leveraging of the blockchain for a transparent, decentralised system.||It isn’t the world’s most popular cryptocurrency.|
|2.||Functionality that goes beyond digital currencies including smart contracts and decentralised applications.||It may have higher fees for transactions than Bitcoin.|
|3.||An enormous developer community.||It has an unlimited supply.|
|4.||Faster transactions than those processed by Bitcoin.|
|5.||The 2.0 upgrade that reduces Ethereum’s carbon footprint by 99.95%.|
Which major events will affect the ethereum price after its launch?
Two key factors are likely to influence the price of Ethereum in the days to come following the launch of Eth 2.0. The first is the evolution of investor sentiment towards risky assets in today’s uncertain economic climate, and the second is how effective the Ethereum 2.0 rollout turns out to be.
It is expected that ETH will reach a value of $5000 after the upgrade is complete, with a prediction of Ethereum beginning 2023 in a bullish way over $3000 as long as there is a reduction in gas and congestion fees in the network along with further adoption after the enormous upgrade. If there is no increased adoption after the upgrade, or if there is an ongoing slump in the crypto market, it’s possible that 2023 could end with ETH at around $2400.
Some factors that will also impact on the Ethereum price in the months and years to come include:
- Traffic and utilisation – smart contracts have allowed creators and artists to mint and sell NFTs using the Ethereum blockchain. While this has brought a host of advantages of Ether, the popularity of the blockchain resulted in a bottleneck that made it increasingly costly to transact on the platform. To resolve this issue, many new companies created their own Layer 2 add-on solutions operating on Ethereum’s existing blockchain, and indeed, entirely new networks (Layer 1s) were also released as alternatives to Ethereum which have driven traffic away from Ethereum’s blockchain, adding more competition that has impacted on the popularity of the product in the marketplace. With the arrival of Ethereum 2.0, it’s likely that this bottleneck will be resolved and the cost of transactions will decrease accordingly. As a result, this could have a positive impact on the Ether market.
- First mover advantage – it has been suggested by experts that Ethereum has a first mover advantage that has placed it in a good position to achieve long-term success despite the arrival of newer technologies. Although new blockchains like cardano and solana can provide a similar level of functionality to Ether, with their own cryptocurrencies too, experts have said that with the arrival of Eth 2.0, Ethereum will be well placed to grow along with users to meet the future’s evolving demand.
- Ethereum-Killer competition – Web3 is rapidly becoming a household name, referring to the open-access internet version that has been built on blockchain technology so financial transactions can be more transparent, users can own the majority of the infrastructure, and individuals can have greater ownership of their data. As Ethereum adopts Web3 technology and integrates it into its own developments, it’s clear that confidence will continue to grow in Ethereum and it will become an increasingly successful option for investors.
What Do I Need To Know To Trade Eth 2.0?
If you are considering trading Ethereum 2.0 it’s important to understand that Eth 2.0 will not be a brand-new coin in its own right. The launch of Eth 2.0 is separate to the original ETH coin and so existing holders of ETH coins, traders, and users of dApps alike won’t need to take any action with regard to the arrival of Eth 2.0. There is not destined to be a migration or hard fork, so users can feel confident that they need do nothing to take advantage of the benefits that Ethereum 2.0 is set to offer investors of all kinds.
With this in mind, when it comes to trading in Eth 2.0, users must be very wary of any service or website that claims to enable users to invest, trade, stake, or swap ETH 2.0 tokens since no such token actually exists. Nevertheless, it’s also important to note that there are some derivative Eth tokens that are legitimately used on exchanges. One example is “wrapped ETH” or WETH which is the packaged or tokenised form of ETH used for paying for items when users interact with Ethereum’s dApps.
Although there is no hard fork predicted to be in the pipeline for Ethereum, should a fork occur, there is a new token known as ETHPOW or ETHW which could emerge in this event.
In general, the most important thing you need to know to trade Ethereum 2.0 is to do your research thoroughly before you take any steps towards investment. Having a clear understanding of this blockchain and cryptocurrency is vital if you’re to explore trading, and you need to be absolutely certain that Ether is the right choice for you and your needs before you make any moves. This holds just as true when investing in cryptocurrencies as when investing in forex or trading in CFDs.
Not investment advice. Past performance does not guarantee or predict future performance.
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