Crypto space echoed with a succeeding take off in the early weeks of 2021. BTC broke its previous all-time high of $20,000 to a whopping double rally. With Bitcoin crossing over to the $40k territory, Defi space thrived and the global crypto market cap broke the $1 trillion mark for the first time in history. Where Bitcoin was breaking the glass ceilings, Ethereum was striving in its own zone.
Defi industry has invested heavily in Ethereum more than ever. As 2020 came to an end, the latest news on Ethereum talked about its long-awaited transition to its upgrade – Ethereum 2.0. With the growing rate of applications and potential, Ethereum’s blockchain became the architectural standpoint for various decentralized applications. Ethereum ranking as the second-largest cryptocurrency supports several Defi projects including DAO and Compound, followed by token exchanges like AirSwap and Uniswap.
Influenced by the decentralized mechanism, the video gaming industry is one of the leading sectors which heavily adapted to the crypto space. Decentralized games like CryptoKitties, God’s Unchained, My Crypto Heroes, etc., supported on Ethereum’s blockchain quickly gained traction among gaming enthusiasts for collectibles and skins, bringing the NFT market into the spotlight.
Upgrade: Future of Ethereum
The publicly accessible Ethereum’s blockchain network currently follows a proof of work mechanism. Among many other benefits, the main aim of the upgrade is to increase the current scalability of the network. For now, the network has successfully established the genesis block of the new beacon chain and managed to claim the ETH needed to be staked, which is now locked in the network itself.
The staked ETH will allow the stakers to participate as validators in the Ethereum’s network. Also, the Ethereum mining will look quite different in the upgraded version. Instead of competing with each other as miners, validators will be algorithmically picked by the network to act as validators and submit a block in the blockchain. But all this still rests in an untimed future as Ethereum’s network goes about its set phases for the complete transition. The beacon chain, for now, is active but is only managing the staked ETH in the network, at least until the shard chains are successfully introduced.
Why Proof of Stake?
Upgrading to a proof of stake consensus mechanism will possibly increase the number of transactions to match the level of multinational financial services or potentially process more. Where proof of work is a complete and functional consensus mechanism, it still holds the potential for improvement. Hence the proof of stake consensus mechanism is expected to target a few flaws and inevitably improve Ethereum’s network:
- Reduce energy consumption while mining blocks.
- Open doors for new validators in the network by eliminating the need for expensive hardware required to create new blocks.
- Strengthen the system by potentially adding more nodes to the network.
- Introduce shard chains to the network, capable of handling more transactions and eventually increase the scalability of the network.
So far after the pandemic, cryptocurrencies seemed to have signed up for a roller coaster ride in the midst of mass adoption. Where price volatility has become the conventional view for cryptocurrencies, the future of Ethereum is bright but will unfold with the phases of its upgrade. For now, Ethereum has recently crossed over to a new all-time high, breaking the previously set bar in 2018. While many investors, enthusiasts, and even financial analysts have turned bullish in favor of Ethereum, only time will tell how far Ethereum will rise.