Ethereum has pulled its socks up and is ready with an upgrade that can revolutionize the way we see Ethereum, today. The new Ethereum, upgrades will radically bring about a change in the manner the blockchain network is used and secured. With numerous upgrades over the past few years since its inception, what does Ethereum, 2.0 and London Hard fork have in store for the blockchain protocol? These two upgrades intend to improve the scalability and usability of the Ethereum, blockchain.
Ethereum underwent its 11th upgrade on the 4th of August 2021 which was called the London Hard Fork This improvement consists of a total of five EIPs (Ethereum improvement proposals) that intend to optimize the functioning of the blockchain network.
HISTORY OF ETHEREUM: WHAT IS ETHEREUM 1.0?
Vitalik Buterin, the co-founder of Bitcoin Magazine and a programmer in 2013 described the idea of ethereum blockchain in a white paper for the first time. The argument that Vitalik proposed is that blockchain technology has much more use-cases than finance. He mentioned the requirement of a scripting language for the development of various applications which could attach real-world entities such as stocks and properties to the blockchain.
Ethereum blockchain was then launched in 2014 with smart contracts where decentralized applications (dApps) could be built expanding the use-cases of blockchain from P2P (peer-to-peer) money transfer to a much-advanced technology that possessed the potential to become the backbone for any platforms to come.
However, numerous issues were later figured out and thus, there was a need for up-gradation.
ISSUES WITH ETHEREUM 1.0
- Scalability
- High miner gas fees
- Proof-of-work mechanism
- Security
SCALABILITY
The ethereum network before up-gradation could handle 30 transactions every second which was insufficient to handle all the users across the globe.
HIGH MINER GAS FEE
The high demand for ethereum has raised the miner gas fees (transaction fees) to an unprecedented amount.
SECURITY
The proof-of-work (PoW) model was also vulnerable in the case of security. The PoW can protect the blockchain network from getting hacked only if there was a presence of a large number of nodes. The smaller blockchains are pretty vulnerable to attacks and the ability of the hacker to gain over the computational power of the network was quite high. Therefore, there was a severe need for improvements.
WHAT IS ETHEREUM 2.0? WHY DO
The greater scalability leads to quicker transactions with better security and lower miner gas fees. The best part about ETH 2.0 is that it uses the proof-of-stake (PoS) consensus algorithm.
What is proof-of-stake consensus? Well, the PoS algorithm unlike the PoW mechanism does not require a lot of computational energy to ensure the security of the blockchain protocol. Rather, it is based on the enormous amount of wealth that is staked by locking up a certain amount of cryptocurrency coins as collateral in the network itself. This not only minimizes the amount of energy required but also pulls down the security attacks to a great extent.
Sharadding improves the overall efficiency of the blockchain network as it splits the entire network into multiple blockchains to ensure the simultaneous transactions which otherwise occur consecutively. This enhances the processing power as the workload is divided among different validators.
Since ethereum 2.0 brings about a switch in mechanism from proof-of-work to proof-of-stake, it means that validators will be assigned certain rules to perform and shall be paid instead of ethereum miners who used to compete for the block reward. It is extremely important to understand the economics of staking to maintain the hygiene of the network.
DIFFERENCE BETWEEN
This EIP aims to make the transactions across the ETH network more efficient with the use of a hybrid system of base fees. It also aims to evenly incentivize the Ethereum, miners during the time of low and high congestion. Ethereum 1.0 used the variable first-price model which shall be replaced by a better and more deterministic base fee model. EIP-1559, arrived as a part of the london hard fork. This upgrade was to overhaul the Ethereum, network’s maligned fee structure. Transaction fees will be more predictable with EIP-1559 along with reducing delay
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