Ethereum is the largest blockchain network next to Bitcoin. It is evolving a lot and equally competing with Bitcoin. Ethereum has paved the way for so many blockchains like Solana, Polygon, and Cardano that try to solve the problems and limitations of Ethereum. The following diagram shows the size of the Bitcoin vs Ethereum blockchain.
A Quick History
Ethereum was created with the idea of a permissionless blockchain back in 2015 with Proof-of-Work (PoW) as its consensus mechanism. Until then people have known blockchain only as a cryptocurrency but Ethereum changed it with a plethora of use cases like digital assets, supply chain tracking, etc by leveraging smart contracts and ETH tokens which was famously called a 'gas fee' to validate a transaction which was then paid to the validators in the network for Proof-of-Work done.
Ethereum has many networks for development, testing, and production use cases. 'Ethereum Mainnet' was the primary public Ethereum production blockchain based on the consensus mechanism of Proof-of-Work (PoW).
Proof-of-Work(PoW) is hardware intensive and not eco-friendly as several miners participate using expensive resources in validating the block.
Proof-of-Stake (PoS) lets a validator participate in the Ethereum network by staking the ETH which is more scalable, energy-efficient, secure, and has a lower barrier to entry than PoW.
The Evolution of Beacon Chain
In recent years, Web3 gave birth to a lot of products like Decentralized Finance(DeFi), Non-Fungible Tokens (NFT), etc. Networks have to come up with speed and energy efficiency to serve the purpose and maximize the adoption of blockchain. Ethereum launched Beacon Chain based on PoS in late 2020 parallel to the existing Mainnet to slowly replace it with a single consensus i.e the PoS. The Ethereum team knew that PoW won't be good enough for the long run and decided to merge it with the Mainnet.
Ethereum Mainnet merged with Beacon Chain on September 15, 2022. As Mainnet merged with the Beacon Chain, it also merged the entire transactional history of Ethereum. Mining is no longer the means of producing valid blocks in Ethereum. Going forward, the Beacon Chain is the engine of block production. The merger led the Beacon Chain to accept transactions from the original Ethereum chain, bundle them into blocks, and then organize them into a blockchain using a proof-of-stake-based consensus mechanism.
The term Eth2 has been deprecated. There is nothing called Ethereum 2.0. The new terminologies for Ethereum are as followed,
- Eth1 - Execution Layer
- Eth2 - Consensus Layer
Execution Layer + Consensus Layer -> ETHEREUM
ETH remains ETH. You don't need to do anything from your side owing to this change. All you need to know is that Ethereum now has a new engine based on PoS which is eco-friendly, slightly faster, scalable, and more secure.
Note: This article is more about the technical details of the Ethereum blockchain. Anything related to cryptocurrency is not in the scope of this discussion.