Introduction
As of February 2022, the price of Ethereum is around $3000, and within a week, the prices started to shoot up. The beginning of the year 2022 saw a drastic price drop in Ethereum. On January 24, Ethereum prices dropped below $2200, marking the lowest Ethereum price since July 2021, and till now the market prices have been fluctuating.
With respect to the latest market conditions, investors are altering their portfolios. It shows that the new market cycle has begun with federal reserves increasing their interest rates in March, helping in reducing inflation.The increasing inflation was one of the main reasons for the price drop in Ethereum and Bitcoin and perfectly shows that there is more volatility to be expected in the future of cryptocurrencies.
In such a situation, it is a must to know the more information, and here are five updates about Ethereum that you should not miss.
1) Ethereum 2.0 update
As of February- 4th, 2022, Ethereum has a market cap of 365.2 million US dollars. Since its launch, the Ethereum blockchain has grown enormously and competes with Bitcoin all the time.With its next update, Ethereum 2.0 is foreseen to overthrow Bitcoin and become the top cryptocurrency in the world. However, the upgrade is still under process due to various issues like congestion in network scalability, enormous gas fees and will be installed in different phases.
So, what is the difference between Ethereum and Ethereum 2.0?Ethereum and most of the cryptocurrencies function based on proof of work mechanism. In this technique, miners solve various crypto puzzles, add the blocks. It is an energy-intensive process and a problem that affects the environment. Whereas Ethereum 2.0 will function based on the proof of stake method.
It will eliminate the drawbacks of the previous technique and alter the validating structure, energy requirement, and hardware requirement for mining.
In one word, proof of work is a mechanism with a complicated mining method, whereas the latter has a much-simplified energy-efficient mining process. It also makes the network more scalable, easily accessible, replaces miners with validators, and takes off its coins to maintain them.In the case of the upgraded Ethereum 2.0, every validator must stake 32 ETH by depositing 21 official deposit contracts.
I would highly recommend going through this latest video of Vitalik Buterin , the founder of Ethereum in Jamie tree , a channel linked to authentic finance updates.
So when is Ethereum 2.0 expected? As previously mentioned, there is a big problem related to the network upgrade, these processes are still on the go and they will be implemented in 3 different phases.
This year Ethereum is switching to proof of stake, proof of stake is better and more secure than proof of work, and after the merge, Ethereum will be the most secure base layer- Vitalik Buterin
Ethereum 2.0 phase zero is already live with its beacon chain in the network. In this phase, the registry manages the validators who create the blocks on the Ethereum 2.0 network.In phase 0, all the frameworks for the future stages are kept in place.
Ethereum 2.0 phase 1 objective is to implement shard chains and roll-ups. It splits the transaction data across 64 blockchains in the network. All the information is passed on with multiple changes functioning altogether to reduce the burden on the network. Ethereum 2.0 phase 1 has been planned to be implemented during the second and third quarters of 2022.
After phase 1, there is a small phase called 1.5. It is soon to be implemented after the launch, and this phase will provide a bridge for Ethereum 1.0 and 2.0. It merges with the core systems effectively.Ethereum 1.0 will link with the same beacon chain and then will be treated as one of the 64 shard chains implemented in phase 1.
Ethereum 2.0 phase 2 will start after the docking process. It initiates the interoperability between the cross shards and permits decentralized application development of the network. In this phase, the network will handle smart contracts and transactions. It is the fully-functioning last stage and this phase will be released in 2023.
2)Ethereum upgrades – beacon chain is live
Ethereum 2.0 is the most awaited update for Ethereum fans. The Beacon chain was set alive on December 1, 2020, marking the first and most crucial step in Ethereum 2.0. So what does a beacon chain do? in Ethereum 2.0, the beacon chain constantly scans and validates all the information. It correctly analyses the blocks reducing rewards and preventing malicious activity, just like a police officer on patrol 24× 7× 365.
The beacon chain will never change anything about the Ethereum presently in use. It will effectively link the network servicing as a primary consensus layer. Beacon chain is the primary introductory point for proof-of-stake systems in the Ethereum ecosystem. As previously explained, this is phase 0 or the initial phase.I recommend you to watch this video from chain safe systems, it educates regarding the blockchain protocol. In this video, Danny Ryan, eth2 developer, explains about beacon chain launch and the future of Ethereum 2.0
The foundational functioning of the beacon chain stays the same and improves security, sustainability, and scalability in the Ethereum ecosystem. The Staking system will be linked to Ethereum by the beacon chain, and it is one of the most crucial features of the beacon chain.This method will promote security in the Ethereum network. Staking and validating are much easier when compared to mining.
It improves security and reduces unwanted power loss. Improving the decentralization aspect of the system will directly increase the safety aspect. Another aspect of the beacon chain is to set up the shard chains. Beacon chains will introduce shard chains into the network after connecting the mainnets.It will increase the network capacity and improve the speed at which the transactions will extend. It allows the network to grow by 64 blockchains.
3) Ethereum merges with the beacon chain.
It is the most anticipated moment for Ethereum investors. The merger of the present Ethereum network with the beacon chain will introduce a proof of stake system. Technically, this represents the transmission of proof of work to the proof of stake method. It is called docking, and this upgrade will occur in the second quarter of 2022. Presently the beacon chain is shipped separately from the mainnet. Until now, the Ethereum network is still functioning on proof of work, and beacon chains run parallel using the proof-of-stake method.
During the merger, the two systems combine, and the proof of work stops functioning.So what can you expect after the beacon chain and the present Ethereum network merge? Well mining will no longer be required, and Miners will invest in staking in the new proof-of-stake system. A crucial fact is that some features like withdrawing staked ETH, will not be supported. They are planned separately for an upgrade post-merge.
4) internal changes in Ethereum with Shard chains
After completing the merge of the beacon chain with the existing Ethereum network, the next step is to introduce shard chains. They provide an extra storage layer for various applications and are much cheaper to store more data. It reduces the transaction fee and increases the security of the Ethereum system. It enables two-layer protection solutions and is needed to happen in 2023. It depends on the merge of the beacon chain and the existing Ethereum mainnet.
It increases efficiency and provides easy access to data but doesn’t support execution.So technically, sharding is a procedure where the whole database of the Ethereum network is horizontally split. It evenly splits out the load. By doing this, the overall condition will be less notable. As a result, more transactions can be done per second by creating new chains. All these new chains are called shards. It will improve network participation and be easily accessed through a laptop or just a mobile phone.Technically, it increases security by enhancing decentralization. All the changes inside the Ethereum sector are expected by 2023.
5) What will Ethereum be worth in 5 years?
With all these updates in line, Ethereum prices are expected to increase in the coming years. In the most famous altcoin, experts predict that it will grow its value up towards the final quater of 2022.Starting from its launch, ETH has grown drastically in its value from $0.311 to a whopping $4800 last year.
One of the main plus points of Ethereum is the software network promotes developers to build it and power new applications tools and coins. Ethereum blockchain has wide applications and is not only restricted to Cryptocurrencies.
Its return on investment is nearly 300 % on an annual scale. In 2014 most of the investors have quadruplet their investment.Ethereum’s transfer to a much lesser energy version becomes more sustainable and widespread. Till then, the experts have said to wait and watch. Have a look at this video from investing made simple. Nathan Sloan’s experience in financial services simplifies money and investing.
Conclusion
When compared to other cryptocurrencies, Ethereum has a bigger and brighter future with its real-life applications.Ethereum can also store great value and has a chance of surpassing 660 billion dollars in cryptocurrency market capitalization.A lot of changes are in store for the Ethereum network. Most of the industry experts predict a rise in the Ethereum price. Some experts also believe that Ethereum may overpower Bitcoins.
Personally,I feel like Ethereum has a stabilized plan and moving in the right direction of reducing energy costs and shifting from proof of work to proof of stake. The shift will make Ethereum more energy-efficient user-friendly and increase its usage among the common masses. With cryptocurrencies making major headlines every day, most people will be aware of this stream and can make an informed decision by the time Ethereum 2.0 reaches the market. It will be an added advantage when the masses are prepared and can recognize the advantages of Ethereum 2.0.