Before understanding Ethereum 2.0 and its varied features let us first take a closer look at cryptos.
Cryptocurrencies are nothing but digital currencies enabling trading using the internet. This investment model is different from traditional currency due to its decentralized finance. Cryptos allow for easier peer-to-peer transactions. Investors can also trade their cryptos and convert them to traditional currencies. If you are looking to invest or trade cryptos check out trade btc.
Launch of Ethereum in the crypto industry
Bitcoin was the first crypto to achieve a global launch. The currency came as a blessing to many who were still recovering from the recession. Additionally, the concept of blockchain technology and decentralized finance attracted many.
Ethereum is the second major cryptocurrency launched after Bitcoin. It is also known as silver in the crypto industry.
The currency became an instant hit in the investment market immediately after its launch. The token was capable of addressing major flaws of the Bitcoin platform. Ethereum was able to process a much higher volume of transactions as compared to Bitcoin. Also, the platform became a flexible and scalable solution for many developers.
The Ethereum platform can also handle the execution of smart contracts. It runs a certain set of algorithms in its blockchain. A contract executes between two parties when certain conditions are met.
Ethereum platform mainly works on the proof of work methodology. The energy consumption in mining is much lesser as compared to that of Bitcoin. It became evident that the token is environmentally sustainable and reduces hazards.
At the time of making this article, Ethereum is trading more than 1 million transactions per day. The platform can process close to 15 transactions per second. This is a major advantage as pointed out by many investment experts. But there is a community of investors that differs from this opinion. Given the number of transactions, the gas fees are also higher.
What are gas fees?
With the launch of Ethereum to the larger community, the concept of gas fees also became famous.
Gas fees are nothing but the charges that a user makes to validate transactions. To make it even simpler, gas fees are nothing but Ethereum transaction charges. Depending upon the nature of transactions gas fees vary. Users make these payments to compensate for energy consumption. Every transaction goes through this process in the system.
Compared to other cryptos released after Ethereum, these transaction charges are much lesser.
Launch of Ethereum 2.0 and its unique features
Technology is evolving. While Ethereum was a game-changer in the early phase, it is no longer the same now. Many other cryptos have entered the investment market. These tokens and underlying platforms offer much better solutions as compared to Ethereum. To beat this competition and sustain its top position, Ethereum announced a revamp. The Ethereum token will go through a revamp to alter all issues in the platform. The new version will be Ethereum 2.0.
Ethereum 2.0 works on the proof of stake philosophy. It means every transaction will go through the staking process before approval. This technology is now used by major crypto tokens in the industry.
Another major upgrade is the concept of sharding. It is a built-in module within the platform to allow for distributing the workload. It will allow many user computers to run in parallel and complete user transactions. It will enable Ethereum to process a higher number of transactions per second.
The new platform will be able to handle a higher transaction volume. It will support processing transactions at reduced charges. Yes, you heard it right. With an increase in the number of transactions per second, there will be a reduction in charges for it. Ethereum 2.0 will be a major game-changer to enable reduced charges on transactions.
As an investor, below are a few other tips to help you reduce gas fees.
Batching similar transactions together. If the nature of your transaction or any other method matches, then make it a batch. Allow the system to process all these transactions in one go. It will reduce the gas fees to a considerable extent.
Another possible option is to use a gas charges calculator. Such apps will enable you to gain an insight into possible costs coming your way. This way you can plan your investments in the right batching.
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