Hackernoon logoETHEREUM 2.0 AND CHAINLINK: The Story So Far And What To Expect In 2020 by@Cryptonite

ETHEREUM 2.0 AND CHAINLINK: The Story So Far And What To Expect In 2020

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@CryptoniteCryptonite

Everything blockchain and crypto, right here on Hacker Noon.

When investing into cryptocurrency you want to look for projects that will make the biggest changes within an industry. This is why I prefer coins like ETH, BAT, LINK, XLM, ONT and NEO.
However today we are going to look at Ethereum and Chainlink, two revolutionary cryptocurrencies that will bridge many gaps present in the blockchain space.

Ethereum 2.0

Ethereum 2.0 is the name used to describe a series of proposed updates that will make Ethereum faster, improve it's scalability, increase it's security and improve its ability to deploy smart contracts and dApps (decentralized applications).

Design Goals:

Ethereum 2.0 has 5 design major goals, below you can see the goals stated by Ethereum researcher Danny Ryan.
1. Minimize complexity: Simplify the Ethereum blockchain, even at the cost of reduced efficiency.
2. Improve up-time: The Ethereum network should remain live during major network splits and when a very large number of nodes go offline. Note: Nodes are computers which connect to the Ethereum network.
3. Ensure longevity: Ethereum 2.0 should be built with components which are either quantum secure or can be easily swapped out for quantum secure replacements when available.
4. Increased security: Use design techniques which allow a large number of validators to secure the network by staking their ETH holdings.
5. Reduce barriers to entry: Make it possible for a typical laptop to process or validate shards.
Ethereum is built in 4 stages (more info later in this post) and the stage that will take us to Ethereum 2.0 is called Serenity.
Serenity is a series of upgrades to the Ethereum blockchain which include:
Beacon Chain (2020) - A "system chain" which will store and maintain a registry of validators, process cross-links between itself and the mainchain, and to process the finality gadget.
To become a validator you will need to make a deposit of exactly 32 ETH into an ETH 1.0 smart contract.
When the deposit is made, this will generate a receipt which contains an ID indicating which shard a validator will be assigned to.
After the deposit, you will become a "pending validator" on the beacon chain.
After some time has passed you will become an "active validator", allowing you to take part in the Proof-of-Stake (PoS) protocol. Activation occurs after the beacon chain processes the deposit receipt from ETH 1.0.
Shard Chains (2021) - Sharding is planned for 2021. Sharding will vastly improve Ethereums scalability, allowing a lot more transactions to take place.
Sharding is where the entire Ethereum network is split into multiple portions known as "shards".
Each shard will function as it's own independent state, maintaining it's own set of account balances and smart contracts. This will enable Ethereum to process more transactions since they cannot bloat the mainchain.
eWasm (2021) - eWasm is short for Ethereum flavoured WebAssembly. This an Ethereum 2.0 optimized, wasm-based Ethereum Virtual Machine (EVM).
This is composed of a section of WebAssembly (Wasm) compatible for the needs of Ethereum.
WebAssembly is a new type of code that can be run in modern web browsers — it is a low-level assembly-like language with a compact binary format that runs with near-native performance and provides languages such as C/C++ and Rust with a compilation target so that they can run on the web.
So eWasm is a version of Wasm suitable for the needs of Ethereum 2.0, eWasm also enables backwards compatibility with Ethereum 1.0 (current version).
The benefits of eWasm include faster code execution, improved hardware support, access to the WebAssembly community and code language portability.

So when is ETH 2.0 coming and why should I care?

When Ethereum was launched on the 30th of July 2015, it was initially intended to be launched in four different build stages:
1. Frontier - The first build at launch, occurring when the Genesis block (the first block) was mined.
2. Homestead - The second Ethereum build, removed Canary Contracts which had previously given ETH core developers the ability to stop network activities.
3. Metropolis - A phase which currently consists of three hard forks, Byzantium in October 2017, Constantinople in February 2019 and Instanbul in December 2019.
4. Serenity - The current and final stage which will transition Ethereum 1.0 to Ethereum 2.0. As mentioned earlier the first stage is Beacon (2020), followed by Sharding (2021) and eWasm (2021).
Ethereum 2.0 is already in progress with the Beacon Chain being released this year.
The complete release of ETH 2.0 (with all phases complete) should be at the end of 2021 or early 2020. Even earlier if we are lucky.
Now here is why you should care.
Once Proof-of-Stake is active on the Ethereum network, validators could earn from 4% up to 10% per year on their staked ETH.
Collin Myers, a senior executive at ConsenSys revealed this information during Devcon 5 in October 2019.
This passive income gives a higher return than most banks which offer up to 5% on fixed-rate savings accounts (there is usually a 5 years lock-in for for this rate) and 0-1% on standard savings accounts.
Assuming validators earn the higher rate, this is also a higher return than the stock market which averages around 7% annually.
However staking on the Ethereum network won't be cheap, as mentioned earlier in this post it will cost 32 ETH to become a validator.
At the time of me writing this, the price of one ETH is $183, so it would cost about $5856 at the current market price to become an Ethereum validator.
Once PoS has been implemented however the price will most likely be a lot different so the current market price is just a reference.
Ethereum 2.0 could be good news for investors considering that large updates to a cryptocurrency tend to drive intense speculation, causing the price to rapidly grow.
With it costing only $183 to own one ETH, the barrier to entry is pretty low compared to previous price points of $500 and $1,000.
In anticipation of ETH 2.0 and the promises it brings, early investors may seek to gain a sizable position whilst the price is low, allowing them to make a healthy profit if the price surges during the later stages of ETH 2.0.
A price increase is likely to occur due to media hype, people buying up ETH to become validators and an increased number of Ethereum based dApps which feature ETH backed assets.
With a higher transaction capacity due to sharding we can expect to see faster and more advanced dApps on the Ethereum blockchain, leading to a surge in the acquisition of ETH to purchase ETH-backed in-app items.
Another fact that could help to drive Ethereum's growth is a technology known as Oracles and this where Chainlink comes in.

Chainlink & Oracles

Chainlink is a decentralized oracle service which aims to bridge the gap between smart contracts on the blockchain and off-chain applications in the real world.
Chainlink is built around the LINK network and it's cryptocurrency "LINK". It uses a technology called "Oracles" to securely supply smart contracts with off-chain data.
The oracle service currently has 25 oracle networks running on Ethereum, you can see a list of these networks here.
Oracles will be one the vehicles that help to bring blockchain technology into the mainstream.
Businesses for example will use oracles to execute smart contracts automatically using real world data.
It might not seem like much now but once blockchain tech has matured, oracles will be one of the many vertebrae which make up the backbone of blockchain technology.
Ethereum and Chainlink can be compared to ISP's which enable us to access the internet, host websites and send email
Oracles can be seen as protocols which ensure that real-world data is securely delivered to its intended destination, connecting blockchain networks with data providers, API's, cloud services, IoT devices and more.

I hope you enjoyed this story, feel free to check out the useful resources below:

You can buy Bitcoin, Ethereum, XRP/Ripple, Litecoin, Bitcoin Cash, Dash, Bitcoin Gold, Stellar/XLM and more from anywhere in the world using CEX
You can buy Bitcoin, Ethereum, Chainlink/LINK, Litecoin, Cardano, NEO, BAT, IOTA, OmiseGo, EOS, TRON/TRX, Bitcoin Cash, Tezos, Monero, and many more from anywhere in Europe using BitPanda.
You can also keep up with me on Twitter.

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