Advantages and disadvantages of Ethereum 2.0 [Blockchain Analysis]

The Ethereum 2.0 network is an update on the first Ethereum network, it includes a number of new features in order to make the network faster and have greater scalability. In this way, it is intended to reduce waits and high costs per transaction.

Ethereum 2.0

Advantages and Disadvantages of Ethereum 2.0

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Ethereum, in its own words, is a global open source platform for decentralized applications. That is, the network is capable of hosting Smart Contracts and DApps.

One of the main new features is the incorporation of the blockchain network the Sharding, monitored and managed by another subnetwork called Beacon Chain. The beacon chain is a 2nd layer blockchain that acts in parallel with the main chain, with the introduction of this chain streamlines the operation of the network. In this way, each node does not need to store and process all the transaction history data. In addition, the chain is responsible for choosing the validators in the process of competitive selection of the creation and validation of new blocks.

It is worth mentioning that the transaction validation protocol is also replaced, the Proof of Work (PoW) system is replaced by the Proof of Stake system. This system is more efficient since it does not require mining equipment, but any node can take on the role of solving the encrypted problem. This innovation also translates into reduced energy consumption and cheaper transactions.

Advantages of Ethereum 2.0:

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  • It is a pioneer in the introduction of new technologies in its block chain. Thus, the network has the interest of several projects and remains in the spotlight, which makes it an attractive project for investors.
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  • Much faster than its predecessor network Ethreum 1.0. Specifically, it can go up to 64 times faster.
  • Its cryptocurrency is one of the most capitalized on the market.  It is one position behind bitcoin, which makes it the second most valuable currency.
  • Many cryptocurrencies are also the second most valuable in the market
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  • Many of the most precious tokens are supported on its network.
  • Reward system for any team without specialization. Thanks to the inclusion of the new Proof of Stake (PoS) consensus protocol.

Disadvantages of Ethereum 2.0:

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  • Limited scalability, currently the network has 15 transactions per second. With the implementation of DeFi’s (such as UniSwap or Compound) they can put the network at risk by saturating it.
  • Scalability limited, currently the network has 15 transactions per second.
  • High transaction costs.
  • Limited access for validators, although with the PoS system any non-specialized team can become a validator, not everyone can afford it. The amount of Ether (native token) that must be blocked to be a validator node is 32 ETH. A high amount if you take into account the capitalization of this currency.
  • Transaction costs still high, despite the improvements introduced with respect to its previous network the costs per transaction are for the majority of users quite high.