What if, when the digital age was in its beginning stage, you could have invested in the internet itself? How much would an early investment in such technology be worth today? Ethereum’s price has been increasing significantly, is now the time to invest in Ethereum?
Ethereum aims to be the basis of all things blockchain, building its infrastructure to have the capacity to underpin everything from finance to digital identity and energy distribution. As more businesses see the value of blockchain technology and begin to switch over their systems to blockchain solutions, Ethereum is the leading option to build those solutions on.
Already, companies like J.P. Morgan Chase, along with a host of others, have chosen Ethereum as their network of choice for proprietary blockchain projects. Critics of Ethereum have pointed out its original version’s limitations – that it can be slow, expensive, and incapable of handling high network traffic. However, this is where the long-awaited Ethereum 2.0 comes in.
Ethereum 2.0: What’s great about it?
Ethereum 2.0 includes a series of upgrades that have been a long time in the making. However, Ethereum’s long time frame is in direct proportion to its expected longevity – and the seriousness with which it takes its perceived new role as the next iteration of the internet.
In short, the major upgrades the network will be getting are adjustments to increase its speed, lower its cost, and increase its security – all things that will be necessary if it intends to take on the role of Web 3.
Faster Ethereum: Sharding
So how exactly does Ethereum aim to become faster? Through sharding.
Sharding breaks up the network into multiple chains that run all at once, working together to confirm transactions. A simpler explanation is this: in the past, Ethereum made sure transactions were correct by causing every validator to check each transaction, and then make sure they all agree. Now, each validator only has to confirm a portion of each transaction, and then they put all their information together to make sure it fits. It’s the equivalent of, rather than having multiple teams do the same work and then check each other’s work, Ethereum 2.0 has all groups work together as a single team to complete the same task. Since each team now only has to focus on one part of the work, transactions can be confirmed much faster.
Currently, Ethereum confirms about 15 transactions per second. Kick that number up to 100,000 transactions per second, and you’ve got Ethereum 2.0. To put that in perspective, the Visa payment network can process up to 24,000 transactions per second when running at its very best.
Ethereum 2.0’s increased capability is the equivalent of fiber internet versus cable or dial-up. It essentially has a massive amount more bandwidth, allowing it to handle much higher amounts of network traffic. This means, as more users start signing on to the Ethereum network from all over the globe, Ethereum 2.0 will be still able to operate quickly and seamlessly, regardless of how many people are using it.
Cheaper Transactions: Proof of Stake
Proof of stake, or PoS, is what most people focus on when they talk about Ethereum’s upgrades. While it’s just one of the new features, it’s an important one for a reason. Proof of stake (PoS) – where validators are given the right to confirm transactions after investing in the network through staking, rather than earning the right via investing time and energy to solve complex mathematical problems – is much cheaper than proof of work.
Because “miners” don’t have to use tons of electrical power to run operations involving huge numbers of specialized devices, PoS is astronomically less resource-intensive to maintain. When validators no longer have to spend large sums to run the network, costs for them come down – and so do costs for users. This is what makes proof of stake so much more appealing financially than proof of work. Meanwhile, because proof of stake is less taxing on the electrical grid, adoption – for businesses and governments alike – is a much easier choice.
Ethereum 2.0’s proof of stake model not only makes the network cheaper to use for consumers but is also less of a burden on existing infrastructure – all while also being better for the environment.
More Security: Decentralization
Both of Ethereum 2.0’s main upgrades – Sharding and proof of stake – offer the potential for the network to be more secure. Why? Because as costs to be a validator come down, more people will be able to join the network and help run it.
Proof of stake lowers the barrier to entry – those who want to join only need to stake their Ethereum rather than invest in expensive mining equipment and pay for huge electric bills. Similarly, sharding means each validator’s workload is drastically reduced, maintaining low costs and ease of use for anyone who runs a node. The more people who join the Ethereum network as validators are important, because the more people who are working together to run the network means fewer points of failure, and greater stability as control of the network is spread out among a large number of participants rather than relying on a few.
As an investor looking for the next big thing or searching for the company that provides the best product – nothing comes close to Ethereum, and Ethereum 2.0 simply pulls it further ahead of the pack. Ethereum price predictions are massively optimistic because, like any product, Ethereum’s price will increase with demand – and if it fulfills its vision of becoming the bedrock that powers the next internet, there should be quite a lot of demand.
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