Syllabus section- Science and Technology

 

Why in News?

Ethereum 2.0 is set to launch today on a system that is faster, cheaper and more environmentally friendly, than bitcoin which has crossed its all-time high of USD 20,000.

About Ethereum:

• It is the world’s second largest cryptocurrency.

• Ethereum has a market cap of 70 billion USD compared to Bitcoin's 360 billion USD.

• Ethereum 2.0 will move from this proof of work system to ‘proof of stake.’

• In this system, entities to validate the blockchain will be chosen by ‘staking.’

Features:

• The main benefit will be a fall in the cost per transaction, charged by miners/validators.

• It will also allow ordinary people to earn some returns on their ethereum by participating in this new process of validation (staking).

• These returns will fall over time as the amount of ethereum staked goes up but is currently in around 18%.

• Bitcoin will be more seen as a store of value and ethereum, as a medium of transactions.

• Unlike other cryptocurrencies Ethereum offers a technological platform on which smart contracts can be built, for instance loan agreements.

• These contracts can be created by computer code without the intervention of courts or legal authorities and execute themselves (for instance, by automatically seizing collateral).

 

Source – livemint