Better scaling capabilities, faster transactions, and a transition to a whole new level of security are just some of the exciting updates we’ll see with the next version of Ethereum 2.0. The main objective of the new update is to improve the security and scalability of the network and it aims to change the current mining model to a new one.
Ethereum 2.0, simply called ETH2, is a set of updates interconnected to the already existing network. The new update is primarily focused on the security and sustainability of the Ethereum ecosystem.
Although many are very excited about the new update, some questions remain a bit fuzzy. What is ETH2? Why is an update necessary? What will change? I’m going to discuss all of these things below, so let’s dive into the new update and see what makes ETH2 a real game changer and how it might affect the price of ETH.
Main changes coming with ETH2
The current Ethereum network 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 network security against all forms of attack. Additionally, ETH2 also strives to make the grid more sustainable by replacing energy-intensive work with a proof of stake. The good thing about these changes is that all the things the new update will bring has been discussed even before the initial launch of the network.
The impact on trade
Some experts say that Ethereum will see a big rally after the release of the new update. According to the experts and market analysts, the price of ETH is very likely to increase during the release of the update.
In fact, some experts even say that the update could challenge Bitcoin for price dominance in the cryptocurrency market. One of Ethereum’s founders even said that the new update will make Ethereum more “robust” than Bitcoin.
In fact, before the release of the update, after the presentation of the Ethereum roadmap, its price increased enormously. Just by mentioning the various updates that we will see throughout the year, the price of crypto jumped dramatically.
This may be a sign that traders are very excited about the update and could influence further changes in the Ethereum price. With many other updates to come, the Ethereum price will most likely be affected by the update.
How do people trade Ethereum?
Ethereum can be traded like any other cryptocurrency. You can simply go to your crypto wallet, find Ethereum, and buy it. Selling the crypto is not much of a challenge either, it can be done in exactly the same way.
There are many things that influence the price movements of Ether. However, you are less exposed to many of the economic and political factors that 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 traders need to watch out for, some prefer to use easier methods. For example, many cryptocurrency traders are using trading robots to better plan their operations. By using trading robots, you can better predict possible Ethereum price movements with minimal research.
To better understand how bots work, let’s look at an example. If you look at Bitsgap.com, which is among the most popular trading robots on the market, you can see that it takes into account numerous different things that could affect price movements.
The trading robot automatically sets buy and sell orders according to the best opportunities in the market for profit. This, and many other trading robots, connect directly to exchanges and do the hard work on their own.
Why were the changes necessary?
Although Ethereum is a very useful and popular network, there are some drawbacks to this network. The main purpose of the update is to resolve these issues and improve 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 enhanced version will feature the proof of stake system.
While PoW requires very complex and high-energy 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 most validators recognize the block. Due to this, the complexity is greatly reduced.
To further improve network efficiency, the latest version will feature a processing mechanism called fragmentation. A big problem that Ethereum had was that adding any data to the blockchain required a lot of processing speed and was related to higher transaction costs.
Thanks to fragmentation, adding data to the blockchain does not require verification of all participating nodes. Basically, you divide the task of checking into smaller sets of nodes. Because not all nodes are required to verify the data, the overall capacity increases dramatically and the time required is also reduced.
One thing that makes Ethereum 2.0 different from the current version, as well as from all other cryptocurrencies on the market, is that it will require less power to validate transactions. All of this makes Ethereum 2.0 simply a revolutionary update that could forever change the way we view the cryptocurrency market.