What Is “Ethereum 2.0” and Will It Solve Crypto’s Problems?

What Is “Ethereum 2.0” and Will It Solve Crypto’s Problems?

Ethereum 2.0 is a user name that refers to Ethereum's transformation. The Ethereum Foundation no longer refers to this upgrade as "Eth2" or "Ethereum 2.0" as of January 24, 2022. The foundation refers to it as "the merging" and "the docking."

The foundation now says that the transition to Ethereum 2.0 will occur in the second quarter of 2022.

What Is “Ethereum 2.0” and Will It Solve Crypto’s Problems?

1. A Brief Refresher on Ethereum 1.0

Ethereum is a massive distributed virtual computer that runs over the internet. You've experienced a similar principle if you've ever used an emulator to play MS-DOS games. A programmable virtual computer was running as software on top of another platform.


Ethereum is a distributed virtual machine. It comprises thousands of computers connected via a blockchain. You can execute smart contracts by these nodes. The size of the virtual machine might shrink or grow at any time as nodes join or leave the network.

Payment in Ether incentivizes people to run these nodes. It provides the computational power required to execute smart contracts. The process of verification is known as "consensus."

2. Problems With Ethereum Today

To comprehend Ethereum, you must first comprehend Ethereum's current flaws. Ethereum's architects have identified many major flaws in the way Ethereum works. Here are a few crucial points to consider:

  • Exorbitant Gas Prices: The Ethereum network runs on "Gas." It's a fee paid to miners who offer the network's computing power. The gas price is a fluctuating market price. The higher the demand, the more expensive the gas.

  • Power Usage: Currently, consensus on the Ethereum blockchain is established using cryptographic puzzles. These puzzles must be completed by Ethereum network nodes, a process known as "proof of work."

  • Disk Space Usage: Because the Ethereum blockchain takes up more disk space, running a node becomes more challenging.

  • Network Congestion: Inefficiencies in how Ethereum operates cause network congestion in communication.

  • GPU Prices: The method for Ethereum was created to be profitable to mine on graphics cards. The higher the demand for computation on the Ethereum network, the more miners you pay (in gas fees). It prompts them to purchase additional GPUs in order to earn more money.

3. The Proposed Solutions

The Ethereum Foundation has been aware of some of the issues highlighted above. However, upgrades and improvements became more difficult to deploy. Changes to the network must be approved by at least 51% of Ethereum nodes. Here's how "the merging" and other enhancements will address some of these issues.

  • Switching to Proof-of-Stake: Ethereum will no longer create consensus through proof-of-work. It requires processing power and electricity from miners, after "the merge." Instead, you can use a proof-of-stake mechanism. It will compel validator nodes to risk (or "stake") a specific amount of Ether cryptocurrency in order to validate blocks on the Ethereum blockchain.

  • The Adoption of Sharding: Following "the merge," Ethereum's developers intend to implement "Sharding". It divides the main Ethereum blockchain into smaller chains known as "shards."


The Ethereum blockchain history currently occupies 4 terabytes of space. Full nodes are not required to host the entire amount. Under the new design, they divide the active chain into 64 sections. The division requires each node to host only 1/64th of Ethereum's traditional size.

4. Will Ethereum 2.0 Lower Gas Fees?

Because "Ethereum 2.0" currently represents many things, it's difficult to say with certainty whether it would lower gas prices.

The Ethereum community is skeptical that the conversion to proof of stake ("the merge") would reduce gas fees. The Ethereum foundation does not guarantee that it will. Each Ethereum block has a limited quantity of computing space. Instead, sharding could lower costs by increasing the Ethereum network's computing power.


Other experts believe that lowering Ethereum gas fees will need "Layer 2" applications built on top of the Ethereum network. These applications will execute some of their own independent processing.


With the PoS consensus, Ethereum has reached a tipping point, transitioning from a blockchain 2.0 to a blockchain 3.0. If Ethereum and Beacon Chain successfully integrate, it will usher in a new era for the blockchain and its ecosystem. Recognizing the event's significance, we will continue to monitor it and provide updates to the community.

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Jessica Vieira
Jessica Vieira
Jessica Vieira is ProductReviews's senior media reporter, covering the intersection of entertainment and technology.