Ethereum 2.0 is around the corner, and the altcoin nightmare begins

Ethereum underwent an Istanbul upgrade, according to ethernodes.org.

The Istanbul upgrade is the last of Ethereum's four development stages: Serenity. After the Istanbul upgrade is completed, Ethereum is expected to start the "Berlin" upgrade in January 2020. At this point, Ethereum will enter the 2.0 stage, which is what we often say, Ethereum will transfer from POW to POS mechanism.

So will this upgrade pull Ethereum?

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1. What is Ethereum 2.0?

To put it simply, this is the pre-set development stage of Ethereum, which can be understood as a major upgrade of the Ethereum network, and this Istanbul upgrade is the final stage of the major upgrade of Ethereum, and it is also a key milestone.

Why does Ethereum need to upgrade if it is alive and well? Ethereum has ushered in the era of smart contracts, and has firmly secured the second spot in the currency circle. It has the most powerful developer community and is the king of public chains. But this does not mean that Ethereum has no defects. Although Ethereum is positioned as a "world computer", its performance is far from that of the world computer. Only dozens of transactions can be processed in one second. Compared with the centralized performance, this speed is slow.

According to the description of the latest architecture of Ethereum 2.0 by Ethereum core developer Hsiao-Wei Wang, Ethereum 2.0 is mainly divided into four layers:

Main chain: mainly provides rights and interests management, including Casper-like PoS mechanism, shared validator pool, shard chain proposer, shard chain notary;

Beacon chain: mainly used as a random number generator, including selecting block proposers, selecting fair committees, etc.;

Shard chain: as a data layer, it only contains data consensus;

Virtual machine: Provides state execution results, as well as an Ethereum-style virtual machine eWASM.

There is no need to understand too much about the technical level, just talk about the huge changes that Ethereum 2.0 has brought to Ethereum.

1. POW to POS, the largest "Staking" in the currency circle was born

The current Ethereum uses proof of work, that is, the POW consensus mechanism. Like Bitcoin, mining machines are needed to mine to maintain system operation. V God feels that POW is a waste of resources and affects efficiency. After Ethereum 2.0 is transformed into a POS consensus mechanism, the efficiency will be higher. So far, Ethereum will not need miners, just holding coins for mining, which is what we call Staking (pledge economy). For us, if you want to participate in Ethereum mining, you don’t need to buy a mining machine, and you can get mining income by directly holding Ethereum tokens.

2. The performance of Ethereum will be greatly improved

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Second, will this upgrade pull Ethereum?

This is the question that everyone is most concerned about, whether this upgrade and the upcoming 2.0 stage will pull Ethereum. The answer is, not in the short term, because the Ethereum 2.0 plan is an event that has long been announced within the expected range. Simply put, this is playing a bright card. Ethereum has really skyrocketed, and it has little to do with the upgrade.

The most affected by this upgrade are the miners of Ethereum. Although the conversion of Ethereum from POW to POS is not implemented immediately, it is a matter of time before POW miners are driven out of Ethereum, and miners are the maintainers of the network consensus. Improper use may affect network security and lead to a decline in currency prices.

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3. Ethereum 2.0 is a nightmare for altcoins

Beyond Ethereum, blockchain 3.0, millions of TPS...

Haha, are these words extremely familiar? This is a promotional slogan that most public chains love to use. The background of the birth of these projects is that Ethereum currently cannot support large-scale commercial use, and wants to surpass Ethereum 2.0. In essence, their track is the same as that of Ethereum, which is to make a commercial-grade public chain.

A public chain that can support large-scale commercial use needs to meet four conditions:

1. Guarantee security (node ​​decentralization)

2. High transaction efficiency (the higher the transaction volume TPS per second, the better, and the faster the transaction execution speed, the better)

3. Low transaction cost (the less Gas spent per transaction, the better)

4. Strong scalability (the more application scenarios that can be supported, the better)

However, the reality is that there is no project that meets these four conditions. Those projects that once shouted to surpass Ethereum still have no practical breakthroughs in technology. In terms of technical strength, they are far inferior to the Ethereum developer community. Now that Ethereum 2.0 is coming, on the same track, Ethereum is about to be replaced with an internal combustion engine, and they are still bullock carts.

It is not difficult to imagine that those projects that shouted to catch up with Ethereum but made no progress, with the arrival of Ethereum 2.0, what awaited them was their demise.

Ethereum 2.0 affects not only the pattern of altcoins, but also the market of layer2 projects.

In fact, layer2 has been popular in the currency circle for a while. Let me talk about what layer2 is?

Before talking about layer2, we must first mention layer1. Layer1 is the modification of the blockchain protocol or the working method of the client, that is, the upgrade of the main chain. Due to the existence of Ethereum performance defects, off-chain (off-chain) solutions have emerged, that is, business processes such as calculations and transactions are carried out outside the main chain, and only the final results are reflected on the main chain without intermediate processes. The main chain records, this is the layer2 solution.

Layer2 is essentially a solution to indirectly improve the performance of the main chain, but with the arrival of Ethereum 2.0, the transaction speed and user experience will be greatly improved at that time, and the support of layer2 will not be needed at all, and the needs of existing users can already be met. Looking at the many layer2 tokens on the market, they are likely to be eliminated by the rapidly developing main chain technology in the future.

Ethereum 2.0's violent hammering of altcoins may be an exaggeration, because most altcoins can't survive the moment of being hammered by Ethereum, and they have already been played to death by themselves.