Better scaling capabilities, faster transactions, and a transition to a whole new level of security are just a few exciting updates that we will see with the upcoming Ethereum 2.0 release. The main aim of the new update is to improve the security and scalability of the network and is aiming to shift the current mining model to a new staking one.
The Ethereum 2.0, simply called ETH2, is a set of interconnected updates to the already existing network. The new update mainly focuses on the security as well as the sustainability of the Ethereum ecosystem.
Although many are very excited about the new update, some questions still remain a bit blurry. What is ETH2? Why is there a need for an update? What is going to change? I am going to discuss all of these things below, so let’s dive deep into the new update and see what makes ETH2 a real game-changer and how it could impact the price of ETH.
Main changes coming with ETH2
The current network of Ethereum supports around 15 transactions per second. When it comes to onboarding millions of new users, this becomes a very limiting factor. To make the network more scalable, the ETH2 aims to support thousands of transactions per second, which is a huge advantage and a step forward.
The second factor that is going to change is security. The new update aims to increase the security of the network against all forms of attack. In addition, the ETH2 also strives to make the network more sustainable by replacing energy-intense work with proof of stake. A great thing about these changes is that all of the things that the new update is going to bring have been discussed even before the initial launch of the network.
The impact on trading
Some experts say that Ethereum will see a major rebound following the release of the new upgrade. According to market experts and analysts, the price of ETH is very likely to increase during the release of the update.
In fact, some experts are even saying that the update could challenge Bitcoin for the price dominance in the crypto market. One of the founders of Ethereum even said that the new update will make Ethereum more “sound” than Bitcoin.
In fact, prior to the release of the update, following the presentation of the roadmap of Ethereum, the price of it increased tremendously. By just mentioning the several updates that we will be seeing over the year, the price of the crypto jumped drastically.
This can be a sign that traders are very excited about the update, and it could influence further changes in the price of Ethereum. With many other updates to come, the price of Ethereum is very likely to be affected by the upgrade.
How are people trading Ethereum?
Ethereum can be traded much like any other cryptocurrency. You can simply go to your crypto wallet, find Ethereum, and buy it. Selling the crypto is not a huge challenge either, it can be done in the same exact way.
There are many things that influence Ether’s price movements. However, it is less exposed to many of the economic as well as political factors which could affect traditional, fiat currencies. Among the things that could affect the price of Ethereum are market manipulation, availability, wider acceptance, regulations, media coverage, and many others.
Because there are so many things that traders have to keep an eye on, some prefer to use easier methods. For example, a lot of crypto traders are using trading robots to better plan their trades. By using trading bots, you can better predict the possible price movements of Ethereum with minimum research.
To better understand how the bots work, let’s discuss an example. If you look at the Bitsgap.com, which is among the most popular trading bots in the market, you can see that it takes into account numerous different things that could potentially affect the price movements.
The trading bot automatically sets buy and sell orders according to the best opportunities in the market to make a profit. This, and many other trading bots, connect to the exchanges directly and do the hard work on their own.
Why were the changes needed?
Although Ethereum is a very useful and popular network, there are some drawbacks that this network has. The major purpose of the upgrade is to solve those drawbacks and enhance the usability of the network.
The current version of Ethereum uses a consensus mechanism, which has two different versions. As of now, Ethereum uses proof of work, while the upgraded version will feature the proof of stake system.
While PoW needs high energy and very complex math puzzles for transaction verification, the PoS system features transaction verification from validators and not miners. Simply put, another block is added to the blockchain only after the majority of validators acknowledge the block. Because of this, the complexity is reduced a lot.
To further enhance the network’s efficiency, the newer version will feature a processing mechanism called sharding. A huge problem that Ethereum had was that adding any data to the blockchain needed a lot of processing speed and was connected to increased transaction costs.
Thanks to sharding, adding data to the blockchain does not require verification from all participating nodes. It basically breaks the task of verifying into smaller sets of nodes. Because not every node is required to verify the data, the overall capacity is increased drastically and the needed time is decreased as well.
One thing that makes Ethereum 2.0 different from the current version as well as all the other cryptos in the market is that it will require less power to validate transactions. All of this makes Ethereum 2.0 simply a revolutionary update that might forever change the way we see the crypto market.