What are the chances that Ethereum 2.0 will live up to its promises?

With Ethereum’s current overhaul, which is the Merge that crypto enthusiasts had waited for enthusiastically, developers look for ways to reduce the excessive energy usage that results from cryptocurrency mining. The next version of Ethereum promises to use less energy and deliver quicker transactions and cheaper gas fees.

With the transition from proof-of-work (PoW) to proof-of-stake (PoS), mining for Ethereum has become outdated. Therefore, the generation of the native token Ether will not necessitate using energy-intensive machines, which is why the world expected a 99.95% decrease in the Ethereum network’s energy usage.

The expectations were exceeded. CCRI evaluated the impact of Ethereum’s move from PoW to PoS; the findings illustrate the tremendous impact of changing the consensus protocol: yearly electricity use was decreased by 99.988%, and its carbon footprint was reduced by roughly 99.992%.

Keep reading to learn more about Ethereum’s energy consumption promises and plans to become greener.

Ethereum’s energy use

Ethereum is a green blockchain because it works on a PoS consensus mechanism and doesn’t necessitate heavy computation to participate. It uses staked ETH instead of expended energy and secures the network consequently. Therefore, the energy expended by the Ethereum network is on the order of 0.01TWh/yr, which is relatively small. On the other hand, Bitcoin emits around 100 megatons of carbon per year and expands around 200TWh/yr of energy.

The energy Ethereum consumes is about equivalent to the cost of running a small laptop for each network node. Comparatively, and surprisingly enough, it’s estimated that Ethereum consumes 45 times less energy a year than people consumed watching Gangnam Style in 2019. This technology’s energy consumption is low, and a growing ReFi (regenerative finance) community is developing on the blockchain. ReFi apps employ DeFi components to provide financial applications with positive environmental externalities. ReFi is part of a larger “solarpunk” movement that, like Ethereum, strives to combine environmental responsibility and technical development. So, this technology seems to have become a socially and ecologically positive one.

Ethereum’s vision

Scalability, security, and sustainability are key factors for the developers behind Ethereum. But what does this mean?

• Scalability: The much-discussed nodes are essential to the network participants who operate the blockchain. Therefore, Ethereum has to be capable of processing more transactions per second without growing their size. Increasing them is impractical since only those with expensive and powerful computers can do it. More nodes, therefore, mean more security, and sharding updates are likely to remove the need for every node to hold 100% of data. On the other hand, rollups require inexpensive storage on layer 1 to succeed. Sharding will give Ethereum breathing room by optimising rollup efficiency, allowing for exponential advances beyond the present 15-45 transaction per second limit.
• Security: The anticipated enhancements strengthen Ethereum’s defences against coordinated assaults. Because the validators that protect the network under PoS must stake and deposit huge sums of Ether into the protocol, there is increased security. If hackers try to assault the network, their ETH will be destroyed. However, it’s critical that updates that improve validator’s anonymity, prevent them from attacks and separate block propagation and block construction be deployed ASAP. These enhancements safeguard individual validators and the network as a whole from liveness assaults and censorship.
• Sustainability: Ethereum has evolved into a green blockchain. When proof-of-stake was used instead of proof-of-work, energy usage was lowered by 99.95%. Staking, rather than processing power, is now used to protect Ethereum. This increase in sustainability also has security benefits: staked Ethereum is far more expensive to attack the chain than PoW.

ETH vs BTC

Is Ethereum better than Bitcoin? Well, no one can answer such questions for you. But one can tell the differences between these two renowned cryptocurrencies.

Bitcoin is more liquid than Ethereum and has a lower supply, while Ethereum has more applications than BTC and stronger technology. Before you jump on them, use common sense when deciding how much money you will invest and be prepared for the risks that volatility implies. You have to check the ETH price to see if it is up or down, and it’s wise to look at how other cryptocurrencies are doing, too. These two digital coins have been staples of many investors’ portfolios for a long time, even though thousands of cryptocurrencies are on the crypto market. Yet, some traders choose to minimise risk by also purchasing other digital coins or, why not, assets.

While Ethereum and Bitcoin resemble each other in many ways, they were created for quite distinct reasons:

• Ethereum has a continuous and unlimited supply, while Bitcoin is limited to 21million coins. Over time, BTC’s finite supply might boost each currency’s worth due to increased demand.
• Ethereum’s verification of blocks takes less than 20 seconds, while Bitcoin needs around 10 minutes to process each transaction.
• While both technologies are being updated, there’s a shared belief that Ethereum’s technology is more robust and advanced, and it’s clear to see why.

Ethereum’s impact

It’s interesting to think whether the Merge will solve the problem of centralisation. The issue of centralisation will definitely be a continuous worry, even for Ethereum 2.0, due to the concentration of PoS actors that are coming under scrutiny as more cash comes into Ethereum staking.

Companies are stepping up their efforts in what’s expected to be the next battlefield for virtual coins. At the same time, mining pools and significant exchanges have already rushed to make their claim in the developing industry. Such changes open Pandora’s box of ups and downs that must be carefully balanced. While centralisation risk vectors are controlled, healthy competition among diverse players working at various layers of the stack is desirable, owing to the venture’s underlying commitment to decentralisation.

Nonetheless, the continual growth of Ethereum goes far beyond the underlying blockchain to the different players and technologies pushing them, including regulators, developers, and users. Simply put, the majority of long-term advancements to Ethereum’s usability will come from its ecosystem.

If you want to jump on the trend and invest in the second most popular cryptocurrency available, remember that the market’s volatility can be both a curse and a blessing, and that the Merge’s goal is to make cryptocurrencies greener, more secure and user-friendly.