ETH 2.0: Three Birds and One Stone

One step closer to solve the blockchain trilemma

Sooner or later, it will happen. It will change the world. It will make a storm in the market. It will not be like any other piece of news/rumor you have heard before. It is one of a kind! A true game-changer!

ETH 2.0!

If you follow the news and activities in the crypto market, after some time, you will see that people talk about different aspects and use-cases of coins:

• Smart Contracts
• DeFi
• NFT
• Security
• Token Burnings
• Transaction Time
• Transaction Fees
• Decentralization
• Proof of Work vs. Proof of Stake

And you know what? Surprisingly enough, it seems that there is not a single coin that excels in ALL of these areas.

Some coins are better in transaction fees/times.

Some others have better decentralization.

Some are more secure and safe.

Some with more use cases.

No coin is perfect.

At least not yet.

Then you may ask yourself when we will have the perfect (or near-perfect) coin? The answer is when ETH 2.0 goes live. Here is why.

The Blockchain Trillema

Imagine you open an account in a bank.

First things first, you want to put your money in a safe place. You want to secure your funds. No matter what happens in the world outside, you wish nobody could touch your money! Furthermore, you want to make transactions/purchases securely.

Next, you want to have the best transaction performance. Finally, you want minimum transaction fees and the shortest transaction time. For example, you want to transfer $200 from your local bank in the US to your friend in China. You hate to hear your friend received it a week later, and on top of that, you paid $20 fees to your bank.

And hell yes, the less the third parties are involved in the transactions, the better. You want to be the valid owner of your money, and you do not need to share your wealth with anyone. If you’re going to transfer a fund from bank “A” to “B”, you hate to see the transaction going through banks “C”, “D” and E.

Now you may think I am talking about an imaginary world. And you are entirely correct. Because in the real world, no such bank exists!

We all are struggling with super centralized and regulated banks. The transaction fees are high. It sometimes takes days or weeks to perform a simple one. Unfortunately, lots of us are getting hacked, scammed, or frauded every single day.

That is why we need blockchains and, more specifically, cryptocurrencies.

Blockchains give us all the flexibility to have decentralized, secure, and scalable solutions. Or better said, they TRY to reach there!

With blockchains, we hope that:

1. Your funds are secure (Security).
2. You do not need to rely on third parties (Decentralization).
3. Your transactions will be performed fast and cheap (Scalability).

These conditions are what define the blockchain trilemma. Therefore, if you can develop a blockchain that simultaneously addresses all these three concerns, you can claim that it is perfect.

ETH 2.0 & Decentralization

Ethereum is one of the most decentralized blockchains. It has thousands of nodes and miners in different geographical locations.

The introduction of the ETH 2.0 will turn ETH into a yield-generating asset. Therefore, we can expect exponential growth in the number of active nodes in the network. Furthermore, Ethereum 2.0 requires a MINIMUM of 16,384 validators, making it much more decentralized — and hence, secure.

ETH 2.0 & Security

ETH 1.0 is currently using the Proof of Work (POW) consensus. ETH 2.0 will introduce proof-of-stake (POS) to the ethereum. POS will help to keep the ethereum more secure. According to the ethereum organization statement:

Think of it like a public good that will make Ethereum healthier and earn you more ETH in the process. In practice, it will involve you staking ETH in order to activate validator software. As a validator you’ll process transactions and create new blocks in the chain. Staking and becoming a validator is easier than mining (how the network is currently secured). And it’s hoped this will help make Ethereum more secure in the long run. The more people that participate in the network, the more decentralized and safe from attack it will become.

ETH 2.0 & Scalability

ETH 2.0 will also address the transaction fee and time issues with introducing the sharding mechanisms. With this upgrade, the platform will handle thousands of transactions in a shorter period.

Sharding is a significant part of this upgrade. It simply means splitting/partitioning a large chain into smaller ones (shards). Then, the workload will be distributed among several validators.

This distribution improves scalability considerably. The number of transactions that can be handled simultaneously will be increased. As a result, the network congestion will be avoided, and the transaction fees will be reduced.

Final Thoughts

Addressing blockchain’s trilemma is a big deal. The first blockchain which successfully solves the issue will grow exponentially. A fully decentralized, secure, and scalable blockchain will naturally get huge demand and adoption. ETH 2.0 is believed to be able to achieve that.

Here is what we can expect to see once ETH 2.0 is fully released:

✔️ More validators on the networks lead to more decentralization.

✔️ Proof of Stake consensus mechanism leads to more security in the network.

✔️ Sharding leads to more scalability, lower transaction fees, and higher transactions per second.

ETH 2.0 is the future!

This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.

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