Could Ethereum pass Bitcoin?

Could Ethereum pass Bitcoin?

Ethereum is the No. 2 overall cryptocurrency, but could it eventually climb to the top spot dethroning Bitcoin? It's definitely what some people believe including Ethereum co-founder and the face of ETH, Vitalik Buterin. But a recently lagging price, clogged network, and exorbitant gas fees have led many in the crypto community to question the long-term validity and viability of the Ethereum network. 

But one gigantic change coming to Ethereum could flip everything upside down. Find out what it is and what you need to do in order to get ready.  In this article, we're going to be going over the basics of ETH 2.0, the dramatic change to the Ethereum network that would disrupt the entire crypto space. And now, some believe this change is going to come much quicker than we ever anticipated. So let's briefly discuss what ETH 2.0 is and can ethereum pass bitcoin in the near future.

Ethereum Serenity Update

Ethereum pass Bitcoin?

Ethereum was originally launched in 2015 led by co-founders Vitalik Buterin, Charles Hoskinson, Gavin Wood, Joseph Lubin, and others. As early as December of 2015, it was apparent that Ethereum in its current construction would never be able to last. 

In a vacuum, Ethereum as a decentralized network was successful on a small level, but as the network would grow, Ethereum would not work over the long term. Vitalik introduced something called the Serenity upgrade. This would be the move that would take all of Ethereum's weaknesses into consideration and fix them. 

Over time, the Serenity update would become known as ETH 2.0, representing the dawn of a new era for Ethereum. One in which the network could scale without gas fees strangling users. At the core of this upgrade is a change over from proof-of-work to proof-of-stake. Proof-of-work is also known as mining. 

Transactions are sent throughout the network based upon miners sending large blocks of transaction data throughout the network. They do this because they're incentivized by rewards earned from those blocks. Bitcoin, the oldest cryptocurrency, is of course a proof-of-work project. Proof-of-stake is something altogether different. 

Here, the network is incentivized to push through transactions based upon the value of the crypto that they hold or stake. Miners are replaced by what is known as validator nodes. These nodes require a user to hold at least 32 Ethereum. 

When the validator nodes decide to take part in the network, they must "stake" their Ethereum, and then they earn returns based upon however much they hold. It's a totally different way of operating, but ultimately the end results should be the same. 

Ethereum transactions get pushed through, and those who participate in the network earn returns. The goal of ETH 2.0 is to make the Ethereum network more scalable, more secure, and more sustainable. Recently, a lot of Ethereum critics have arisen discussing all of ETH's problems. But the important thing is to realize this is a model built to be sustainable, not here today and gone tomorrow. 

ETH 2.0 Phases and how you switch when it's here

While Ethereum competitors Cardano and Polkadot have both set out to solve the scalability and security issues on the front end, ETH has had to work on the improvements to the protocol overtime on the back end. It's really hard to say whether or not they'll be totally successful, but we're moving closer to seeing whether it'll work or not as we're in the midst of the Ethereum 2.0 rollout. ETH 2.0 will take place in different stages or phases. 

The current timeline is Phase 0, Phase 1, Phase 1.5, Phase 2, and then beyond. Right now, we're currently Phase 0. ETH 2.0 Phase 0 was officially live on December 1 of 2020, so it's in its infancy. Phase 0 is the Beacon Chain upgrade whose main purpose is to enroll validator nodes. Over $1 billion worth of ETH was staked in the first two weeks of the launch of the validators. 

ETH 2.0

The next phase coming most likely at the end of this year or early 2022 includes sharding. This is a way for the network to break up transactions into tiny pieces or shards in order to process transactions faster. Following the release of shards, the actual merging of the proof-of-work blockchain and the proof-of-state blockchain will come to completion. 

After this is complete, Phase 2 will occur which will finally see the new operating model for Ethereum. Many believe this final phase won't be operable until 2023, a long time for people to wait. In the world of crypto right now, it feels like Ethereum may be in a bit of a bind. It must push out these updates faster if it wants to compete. If not, newer chains such as Cardano, Binance Smart Chain, and Polkadot, among others, could steal its market share. 

NFTs also is not going anywhere anytime soon and neither is DeFi. So for Ethereum, it could be either shape up or ship out. Before we get into the recent news regarding ETH 2.0 that could change everything, I want to address a question that we get all the time. When the fork is complete, how will users get their ETH 2.0 tokens? 

Here's the great news. You literally don't have to do anything. This is not a traditional token swap where token holders will manually change out their tokens. We have confirmation that Ethereum token holders literally do nothing. And this is good because it's a big leap of faith to think that newer crypto noobs will be able to know how and when to swap out their tokens. 

The long and short of it is that the ETH 1.0 chain is going to be absorbed into the ETH 2.0 chain, transferring all the data including holder information and addresses. All transaction data will be saved. To get ready for ETH 2.0, the only people who need to actively participate are those who seek to become validators on the network. So what about people who don't own 32 ETH though? As of today, that's almost $60K. 

Well, the high ETH requirement seems to lock out the average everyday crypto holder without whale status. At first glance, that's true. However, many exchanges, including Coinbase, have pledged to open staking up to their users with smaller holdings. 

While users won't be able to earn as much as they would if they ran their own validator nodes, they will be able to earn staking interest based upon how much they do own. And that's a win for people who like passive income. Which I think is almost everybody. 

Also Read: Greatest Secret For Private Crypto Transactions|PIVX coin 2021

EIP1559 and war with miners

But still, 2023 seems to be a long time to wait for this upgrade. And ETH developers know this. This is why the controversial EIP-1559 was released that will take place in July for the London upgrade on the Ethereum network. 

This proposed change was passed by the Ethereum developers and will play a dramatic role in improving the network for users, developers, and price speculators. However, it has created a war in the Ethereum mining community. 

ETH 2.0 _ethereum

During his recent appearance on The Tim Ferriss Show, Vitalik Buterin talked a lot about the ETH scaling solutions and pushed back against the miner uprising against the ETH developers. Vitalik proposed that EIP-1559 will actually give Ethereum of everything it needs to fight Bitcoin for the No. 1 spot overall. 

The big thing the miners hate is the very thing that speculators love. Part of the Ethereum transaction fees will now be sent to the Ethereum Foundation in order to be burned or removed from the supply. This will balance out the unlimited supply for Ethereum. 

Each year, under its current construction, Ethereum sees a 0.5% to 2% inflation rate. With the new proposal, the supply will be deflationary as much of the newly minted Ethereum from transaction fees will be burned. The Ethereum miners though are not happy with this at all. Especially since their mining revenue has tripled over the last few months. 

They've even gone so far as to announce a show of force, if you will, on April 1, where the miners will prove how powerful they are. They're attempting to get over 50% of the hash rate in order to show the Ethereum Foundation and developers that they are not to be messed with. This would be kind of like the bank showing how powerful they are by showing that they don't have all the money they say they have. It's counterintuitive. 

It would expose all of the flaws of the network. Talk about shooting yourself in the foot. But a new proposal, EIP-3368, looks to increase the block rewards to 3 Ether per block. Then throughout the completion of ETH 2.0's transition, the block reward will decrease by 0.25 ETH every quarter until it gets back down to 1 ETH per block. 

ETH 2.0 _ ethereum_ bitcoin

Many mining influencers have seen this proposal as a proper compromise. It kind of reminds me though of like a criminal holding a hostage, and then he realizes he's out of ammunition. Like, yeah, of course, then he's going to start to try to negotiate. The mining uprising was never going to work and could have destroyed Ethereum, and they knew that. 

The miners are money-grubbers and may be out of touch, but they know they didn't have many options here. But at the end of the day, I think the worst of this mining war is over, and ETH 2.0 will come marching very soon phase by phase. But let me know what you think about ETH 2.0 and EIP-1559 and then the new EIP-3368. Are you excited? And do you think this could help Ethereum pass Bitcoin? Let me know down below in the comments

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