The Ethereum 2.0 upgrade release date draws closer, but when looking at Ethereum vs Ethereum 2.0, what’s the difference?
Ethereum is not alone in receiving a hefty update in the near future. Cardano will undergo its Alonzo upgrade next month, implementing smart contracts on the network. Bitcoin is set for its Taproot upgrade later this year, too.
Here’s a look at what Ethereum 2 means for ETH.
Ethereum vs Ethereum 2.0 Differences
One of the major talking points and differences between Ethereum and Ethereum 2.0 concerns Ethereum staking.
Ethereum 2.0 will see the Ethereum blockchain switch from a Proof-of-Work (PoW) algorithm to Proof-of-Stake (PoS). This will lead to the decline of Ethereum mining in favour of staking, deemed a less environmentally damaging method of validating transactions that will make the network nearly 100% efficient.
Another new aspect of ETH2 is sharding. The Ethereum network has grown exponentially in recent years, and to reduce pressure on the blockchain and nodes, Ethereum 2.0 will introduce 64 additional chains via sharding.
With 64 new chains – or shards – the Ethereum 2.0 upgrade will see Eth2 able to process thousands of transactions per second - much more than the current Ethereum network. It hopes this will add further security and scalability to the blockchain compared to the existing Ethereum chain.
The Ethereum foundation blog has further clarified certain confusing statements related to the term ETH 2.0 and whether it's appropriate to address the merge by the said name.
To further clear the air, the blog states that the term Eth1 and Eth2 are being phased out and Eth 1 will now be addressed as the "execution layer" while Eth2 will be known as the "consensus layer".
To make the audience understand better, the blog further illustrated the changes in the following manner.
Eth1 → execution layer
Eth2 → consensus layer
Execution layer + consensus layer = Ethereum
Will Ethereum 2.0 Replace Ethereum?
The Ethereum 2.0 upgrade is not technically a replacement for Ethereum. Instead, it is best described as a merger.
In the Ethereum.org FAQs for Eth2, the site also states it is "not accurate to think of Eth2 as a separate blockchain."
The Ethereum 2.0 upgrade is now closer than ever as ETH devs have recently begun the second phase before the merge. Testing for the merge has already begun and a tentative date for the great merge has also been announced. Per the foundation devs, ethereum's transition towards PoS will officially take place on September 19, 2022.
Similarly, Ethereum 2.0 does not introduce a new cryptocurrency or coin that will replace your current Ether. In addition to this, the merge will not have any impact on the gas fee prices of ethereum either as several users were hoping that they might be introduced to a new low-fee criteria on ethereum post its merge.