The cryptocurrency industry’s digital gold and digital silver at the instance are BTC and ether, respectively. The comparison between these two top-notch projects demonstrates that the Ethereum network is faster. Still, bitcoin has a more robust user base despite a less market supply. According to experts, Ethereum 2.0 will imply the Ethereum existing network and bring some significant changes to the existing network.
Check TraderMate to acquire a detailed guide to cryptocurrency trading. The primary concern of cryptocurrency investors is whether Ethereum 2.0 helps Ethereum to surpass bitcoin using market cap and a definite value. So let’s find out what Ethereum 2.0 is and is it potential to surpass bitcoin or not.
Bitcoin came into live actions in 2009, whereas Ethereum came into live actions in 2014. However, as discussed above, Ethereum is the top-notch project of this industry after bitcoin as Ethereum networks have constantly been exploring the use case of bitcoin’s fundamental technology, blockchain, in a diversified manner.
Ethereum’s market cap has crossed a threshold of $490 billion. As a result, Ethereum is set to release its innovative update named Ethereum 2.0. The update will counter challenges like extreme gas fees, complications while scaling data on its blockchain, and overcrowding on the complex.
Ethereum 2.0 seems to be a massive change in the existing network of this project. One of the significant reasons is that Ethereum will transfer its execution to a proof of stakes consensus mechanism. Undeniably proof of stakes will eliminate the business opportunity of cryptocurrency mining but will turn Ethereum into a more scalable network.
Is a change of consensus mechanism necessary?
Currently, both leading projects of this industry imply proof of work, but Ethereum developers have decided to change the consensus mechanism. The transfer of the Ethereum network to proof of stakes will change numerous aspects of the POW mechanism. The proof of stakes will gigantically mutate the dynamics of validating transactions, energy consumption while validating the transactions and a necessity for hardware for mining.
Proof of work consensus is still a robust technology of tallying a new database to a ledger. Under this conventional consensus method, cryptocurrency miners can make a good amount of money by validating the transactions. However, this consensus mechanism uses a massive chunk of electricity. So besides consuming a massive extent of power, hardware expenses in this mechanism are gigantic.
Proof of stakes can counter almost all of these complications, transforming the complex into a very accessible project. Each block on the Ethereum project can hold a definite amount of information. If the blocks accumulate information up to their full potential, the transaction makers have to wait for the addition of another block.
But Ethereum 2.0 will imply the mechanism of sharding, the method of dividing work amongst numerous nodes to make the addition of databases on blockchain easy and fast. Sharding attributes of the following upcoming model of Ethereum will counter the scalability complications of this network.
Mining in proof of stakes!
Mining is one of the mandated actions in any cryptocurrency network. The proof of work generated a high entry point while mining as the miners needed to have expensive mining machines. In proof of work, if the number of validators inclines, the productivity of cryptocurrency mining for individual miners slumps.
The main objective of proof of stakes is to make mining profitable for a single miner, but will it succeed in doing so? As per the reports, proof of stake on the Ethereum network will make only 32 ethers eligible for cryptocurrency mining. Therefore, if a miner does not have 32 others to stake on the network, they will not let mine ether.
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Differences between Ethereum and Ethereum 2.0?
Ethereum and Ethereum 2.0 comprise tons of differences, and the development of Ethereum 2.0 is done in four phases. The phases helping in the development of Ethereum 2.0 are phase 0, phase 1, phase 1.5, and phase 2.0. The significant difference between Ethereum and Ethereum 2.0 is a shift towards the proof of stakes consensus mechanism, as this shift will completely change the dynamics of cryptocurrency mining.