Ethereum 2.0 – When Is Ethereum Moving To Proof Of Stake (POS)?
It’s no secret that Ethereum is planning to move from its current consensus protocol, Proof-of-Work (PoW) to Proof-of-Stake (PoS). The current plan is for Vitalik Buterin and others to come up with a version 2.0 of the Ethereum platform – which is commonly known as “Ethereum 2.0”.
I have been seeing a lot of controversies online about Ethereum moving to Proof of Stake (POS) – of which some people’s opinions indicate that we should expect the switch in 2022 while some say we shouldn’t expect any switch until next year – 2023. This has begged the question “when is Ethereum moving to proof of stake (POS)?”.
However, I’m not going to get into too many details or technical information, but this article will help clarify what POS is, what it means for Ethereum, and when exactly we can expect the switch to Ethereum 2.0.
But before then, it’s imperative to know what Ethereum is all about.
What Is Ethereum?
Ethereum is a revolutionary platform that allows developers to build decentralized applications (or Dapps), run smart contracts, and create their cryptocurrency (the famous ERC-20 tokens like UNI of Uniswap).
Ethereum was co-founded by Vitalik Buterin, Charles Hoskinson, and others. The project went live in 2015, and it has seen rapid growth since then.
Like it was mentioned earlier, Ethereum is a platform for decentralized applications that are secured by the blockchain. It’s been called “programmable money,” and its cryptocurrency, ether, has seen immense growth in 2017.
How Does Ethereum Work?
If you haven’t heard of blockchain before, think of it as a giant decentralized ledger that keeps track of transactions made in Bitcoin and other cryptocurrencies. Every single transaction made with Bitcoin (or any other cryptocurrency) is recorded in the blockchain, and available for anyone to view online. The chain grows continuously, and the consensus protocol ensures that the entire network agrees on which transactions are valid. This means no one can spend money they don’t have, or corrupt the ledger in any way.
The Ethereum network functions using smart contracts. This means that instead of simply keeping track of financial transactions as Bitcoin does, Ethereum can be used to build complex applications that can run without any server downtime, tampering, or control from third parties.
Simply put, Ethereum is a decentralized platform that runs smart contracts, which are applications that run exactly as programmed without any possibility of downtime, censorship, fraud, or third-party interference. The Ethereum Virtual Machine (EVM) is the runtime environment for smart contracts in Ethereum.
To encourage developers to make use of this platform, the Ethereum network offers Ether as a reward for processing transactions and making use of the computing power in the system. Ether is therefore similar to Bitcoin in its function but has an entirely different purpose.
Ethereum enables developers to build different types of applications on top of its blockchain. The applications can be anything from gambling, finance, health care, and gaming., Smart contracts are contracts that are executed automatically if certain conditions are met – this is what makes these Dapps possible.
The native token of Ethereum is called Ether (ETH). Developers who build on Ethereum need it to pay for transactions and services on the network. For example, if you want to store a transaction or piece of data in the network you need to pay some ETH for it. When someone wants to execute your smart contract they have to pay gas in ETH which gets distributed among all the nodes in the network for executing that transaction.
The Ethereum network runs on a blockchain secured by miners executing a Proof of Work consensus algorithm.
What Is Proof Of Stake?
Proof Of Stake (POS) is an alternative consensus mechanism to Proof Of Work (POW) – that is used to validate transactions in the blockchain network.
Proof Of Stake is more energy-efficient than Proof Of Work – as it requires any participant in the network to stake their crypto asset to become a validator in the blockchain network.
Validators are selected based on the amount of crypto-asset (the blockchain native token) they hold and stake without any more high computational power, unlike POW.
Why Do We Need a New Ethereum?
Ethereum has already attracted a huge array of developers, who have built a variety of distributed apps (dapps) on it.
But Ethereum isn’t just useful for finance – it can be used to build censorship-resistant social media, games, voting systems, and much more.
However, Ethereum has some serious problems.
The current version of Ethereum runs on a Proof-of-Work (PoW) blockchain. PoW blockchains have some significant limitations. They’re slow and expensive to use because they require each transaction to be verified by multiple computers around the world (miners).
This also means that they consume large amounts of electricity, which adds to their costs.
The basic argument is that Ethereum’s “proof-of-work” consensus model is a bottleneck, making it too expensive to run and too limited in capacity — a problem that will only get worse as the network grows. A new system based on proof-of-stake would be safer and cheaper to run, but it would require a completely new blockchain, which can’t be created by modifying Ethereum 1.0 (or “Ethereum Classic,”).
The current iteration of Ethereum has a lot of problems with scalability and sustainability, which have led to high fees and issues with network congestion.
So far, so obvious — we’ve known for years that proof-of-work isn’t good enough for mainstream adoption of blockchain technology.
When Is Ethereum Moving To Proof Of Stake (POS)?
Ethereum is the hottest blockchain in the crypto world and thousands of people are looking to invest in it.
Ethereum has been stuck at the Proof of Work (PoW) consensus algorithm since its inception. During that time, it has endured a lot of criticism – which had begged the question: “when is Ethereum moving to Proof Of Stake (POS)?.
The attached image below shows that some people think that we shouldn’t expect Ethereum 2.0 until 2023 while others were making fun of it by saying “2500 years” or the next decades according to responses to a recent survey post.
However, the answer depends on the definition of moving that you like, and we will understand when we should be expecting the shift as this article continue — but first, let’s understand what Ethereum 2.0 is!
Ethereum 2.0 is a new version of the Ethereum blockchain, which will be launched in several stages. In the first stage, Ethereum will move from POW to POS consensus algorithm. The main advantage of POS over POW is energy efficiency.
Ethereum 2.0 is a proposed upgrade to the Ethereum network. It aims to deliver major improvements to scalability, security, and decentralization. If the upgrade is successful, Ethereum will be able to compete with some of the largest payment networks in the world.
Ethereum 2.0 encompasses some different components such as Sharding, Casper, etc. Let’s focus on Proof of Stake.
Sharding is a proposed improvement to the current Ethereum protocol to increase network capacity and reduce waits during transactions.
According to BlockGeeks, Casper is the implementation of the Proof-of-Stake consensus algorithm used in Ethereum 2.0.
The Ethereum 2.0 roadmap is probably the most highly anticipated upgrade in the crypto ecosystem. Some might even say it’s a make-or-break point for ETH.
Ethereum 2.0 promises to solve the current issues and usher in a new era of smart contracts and dApps. It will be a complete overhaul of the current Ethereum blockchain, which means that some changes will be made gradually while others will happen overnight.
Let’s take a look at what’s in store for Ethereum 2.0 to have a better thought of when the new development should be completed.
Ethereum 2.0 Development Phases
- Ethereum 2.0 Development Phase One
The first part of Ethereum 2.0 development will be launching and testing the Proof-of-Stake (POS) algorithm in test networks, while users and miners continue to work on the current Ethereum network (1.0).
- Ethereum 2.0 Development Phase Two
In the second phase, Ethereum 1.0 and 2.0 will run in parallel, and users of the 1.0 network will be able to migrate their Ether (ETH) to 2.0 without restrictions or risks.
At this stage, it is expected that miners who have switched to Ethereum 2.0 will receive an additional reward for mining blocks for both networks simultaneously – for example, +5% for 1.0 and +5% for 2.0 per block mined.
- Ethereum 2.0 Development Phase Three
The third phase will be a complete transition from 1.0 to 2.0 – all users and miners will switch to the new Ethereum network based on POS as soon as it becomes stable enough and has proven its scalability and reliability in a real environment over time.
According to the aforementioned development phases, Ethereum is expected to move to POS (Proof Of Stake) as soon as possible as the first and second development mentioned above has been passed according to a recent report.
One of the most important things to understand about Ethereum is that it is much more than just a cryptocurrency. It is a platform that allows developers to build applications on blockchain technology – which has posed a need for more energy-efficient for validating the blockchain network
The next generation of the world’s leading decentralized platform is around the corner.
However, some people believe that Polygon is Ethereum 2.0 — which is false, because Polygon blockchain is similar to other layers 2 blockchains (what makes it different is that it’s built upon Ethereum blockchain and retains the security of the Ethereum blockchain).
Let me get my fact straight, if the Polygon chain should be considered the Ethereum 2.0, what about other Layer 2 chains e.g Arbitrum, Optimism chain, etc. that possesses a scaling solution and also retains Ethereum chain security? – thus, Polygon cannot be considered the Ethereum 2.0 we have been expecting.