Ethereum, the second-biggest cryptocurrency, is in the midst of a massive upgrade to Ethereum 2.0, which promises to improve the network’s speed, scalability, and efficiency. For an overview of these changes, check out our previous blogs, What Is Ethereum 2.0 and Ethereum’s London Hard Fork.
The end goal is to transform Ethereum from a proof of work (PoW) blockchain, like Bitcoin, to a proof of stake (PoS) blockchain, like Solana or Cardano. Doing so will eliminate the need for miners (and their power-hungry computers) to confirm transactions. Ethereum 2.0 will be capable of processing thousands of transactions per second (up from 16 TPS) and require 99.95% less energy.
But with more than half a trillion dollars in Ethereum, developers are being understandably cautious about deploying upgrades. Rather than upgrade the whole network at once, they’re implementing a handful of smaller changes over time. The most recent upgrade, Altair, went live on October 27, 2021.
Understanding Ethereum’s Altair Upgrade
In December of 2020, Ethereum launched the Beacon Chain, a PoS blockchain that runs in parallel with the Ethereum mainnet. The Beacon Chain doesn’t record transactions or smart contracts. All of that still takes place on the mainnet. Right now, the Beacon Chain only keeps track of validators, the people/groups who propose and verify new blocks.
The Altair upgrade is the first upgrade to the Beacon Chain. Although the changes aren’t very sexy, they prove that the chain can be upgraded successfully. ETH developers have always been confident that doing so would be possible, but knowing something will work in theory is a lot different than actually making it happen. And with the success of the Altair upgrade, the eventual upgrade to ETH 2.0 is now that much more inevitable.
So what does Altair do? In laymen’s terms, the upgrade makes it possible for basic computers, like mobile phones, to act as validators, proposing and vouching for new blocks on the Beacon Chain. It also increases penalties for inactive or malicious validators.
Whether using a mobile phone or a sophisticated server, validators need to maintain a consistent connection to the network. For doing so, they receive rewards, similar to miners on PoW blockchains. But unlike miners, validators are penalized if they disconnect for long periods of time or if they attempt any (potentially) malicious activity, like proposing two blocks at the same height.
The Altair upgrade increases these penalties, motivating validators to stay connected and follow the rules. The penalties for malicious activity, like double-signing, doubled from 0.25 ETH to 0.5 ETH. And the penalties for inactivity increased by roughly 25%. Although these changes won’t affect the vast majority of ETH holders directly, they pave the way for a faster, more sustainable, and more secure network.
The merge of the Beacon Chain and the Ethereum mainnet is the next planned upgrade, estimated to take place in early 2022. It’s possible that the developers will see the need for additional upgrades before then, but only time will tell.
Are You Ready for ETH 2.0?
Given the price spike after each of the previous upgrades and the significance of the upcoming merge, there’s a very strong chance that ETH 2.0 will cause the coin to climb to new heights. If you aren’t yet happy with the size of your investment, you can buy Ethereum online with a credit card right here on our site. Or, stop by one of our many crypto ATM locations to buy with cash!