Ethereum 2.0 – What can we expect from the update?

Ethereum was one of the big winners this week pinning down two major points. Their cryptocurrency rose from around $350 to an all-time high of $515 before settling around the $400 mark. But the much more interesting event was the announcement of the 2. generation of Ethereum at the BeyondBlock Taipei 2017. Although there won’t be one date where the platform launches, rather a series of updates, Vitalik Buterin, aka Lama Shirt, laid out the roadmap for the next years of the smart contract platform.

Big statements. It’s true that it handles more transactions than all major blockchains combined. However since many of the popular dApps – such as Storj, Augur, TenX etc. – currently run on the Ethereum blockchain, its performance is of major importance. With only 4-8 transactions per seconds it has huge limitations for mainstream market adaption. How is the Ethereum foundation coping with theses challenges? Here are some of the solutions they are proposing.

Imagine Ethereum as a huge block of data that has to be shared on all participants. Currently this involves sending/sharing big amounts of data with participants who can make no use of this data. This increases the amount of redundancy and is a major waster of electricity, which at the current moment is one of the main flaws of the system.

The problem, according to Buterin, will be solved by sharding. Sharding means splitting the network into smaller components. Each node will only process a small amount of information and validate fewer transactions. This way the system will become more decentralized, It’ll increase in speed and data size will be lowered. Successful implementation will lead to comparable throughputs such as VISA is offering. Ethereum could become a serious competition for the global payment provider. Buterin paints a picture of having thousands of universes that work separately but are working together. “But these kind of 100 universes are not just separate blockchains; they are systems that are also interconnected with each other”, he explains. “Particularly, they share consensus. So in order to break even one of them, you have to break the whole thing.”

Next to a big number of experimental shards, there will be a main Ethereum shard to maintain the safety and stability of the whole network.

Im sorry for all the kids who just invested $3000 dollars into a functioning mining rig. Like many in the community already recognized, the future will be going towards a Proof-Of-Stake solution. With the announcement of Casper it will transition into a hybrid of Proof-Of-Work/Proof-Of-Stake. This means that all PoW mechanisms stay onboard with additional PoS installations. Since the amount of electricity is enormous, the goal is to reduce this with the switch.

When will all this be implemented? The timeline for now is very vague, between 3 and 5 years. Whatever happens: The price is currently doing really well.