It took some time for one of the most important pieces of blockchain news in 2020 to happen. As of December 1, it made its first major step from proof of work into proof of stake. Ethereum 2.0 is a significant improvement to Ethereum. The most important change is the transition from a proof-of-work mechanism to a stake-proof. This is the most important development for blockchain’s future, according to experts. Why? What does this mean for businesses?
What is the proof of stake?
The alternative to the more traditional proof-of-work consensus mechanism, proof of stake is a form of proof of stake. Even people with little blockchain knowledge may have heard of “mining”. Mining is the proof-of-work consensus mechanism. It refers to a computer’s ability and willingness to do the hard work required to complete any blockchain transaction (buying or selling, application usage, etc.). Bitcoin users are rewarded when they provide their computing power with cryptocurrency. This is why the term “mining” for Bitcoin was coined. Proof of stake, on the other hand, measures a user’s currency or “stake”, to validate blockchain transactions and then rewards them for how much they “staked”.
If you’re invested in the future development of blockchain technology, Ethereum’s move to proof-of-stake is great news. With more than 100,000 developers currently working on projects that are rooted within the Ethereum ecosystem, it is the second-largest blockchain after Bitcoin. Ethereum, unlike Bitcoin, is a layer that allows for the creation of decentralized applications. The Ethereum blockchain is scaleable by proof of stake
Ethereum currently processes 15 transactions per second. This is a slow pace in comparison to financial transactions. It has been estimated that proof-of-stake will allow for 100,000 transactions per minute, which greatly expands the range of projects and industries that can be built on Ethereum. Transacting with credit cards can now be done entirely via Ethereum. The phrase “it’s Blockchain so be patient” is no longer necessary. Additionally, any entity that needs tokenization (e.g. logistics industry, health-care project) can now access cheaper ways to run decentralized apps (aka DApps).
Although proof of work blockchains have limited processing power, proof of stake permits theoretically unlimited transactions to be processed instantly. The shift to proof-of-stake in Ethereum actually brings the blockchain future closer to us all.
This change is good for business.
If I didn’t make it clear, this change and other features in Ethereum 2.0 are very exciting to me. This change has been described by me during remote speaking engagements in the last few weeks as the world moving from having credit cards that can only be used at a handful of stores and then waiting for the transaction to complete to being instantly able to use it at all stores and benefit from instant transactions.
As we recover from the recession caused by Covid-19, interest in blockchain technology is increasing. The changes made to Ethereum 2.0 make your company theoretically more competitive with other non-blockchain businesses. It also arguably gives your business a significant advantage over these same businesses. Blockchain technology is now closer to widespread adoption than it was a few years back. As blockchain technology is closer to
becoming a reality, CEOs need to consider how it might affect their business and industry.
Are you ready for blockchain in your business?
There are important next steps to follow if your company is ready to embrace blockchain technology. It can be confusing to know where to start, as the blockchain industry is still in its infancy. It’s always a good idea for your company to have some blockchain consulting. This will help you to understand your company’s path to blockchain integration, how your industry can grow with blockchain, and most importantly, what risks and challenges you might face.
Next, the user interface (UI), has become so unique for blockchain that experts almost joke about it. Every company that uses blockchain, regardless of size, should ensure the user interface is seamless. A poor user interface will make it difficult for your users to use blockchain products. Your users should be able to reap all the benefits of blockchain without even knowing they are using it.
Finally, it is a good idea to hire experienced blockchain talent. There are many blockchain experts available for every rank and department. When hiring blockchain professionals, I recommend that they reject the notion that blockchain expertise is restricted to just a handful of programmers who have a large number of followers on Twitter. Hire people who have been involved in blockchain companies or are looking for blockchain education. They will be much more efficient in transitioning to your company and can offer great value right away.
The shift to Ethereum 2.0 represents a major leap forward in blockchain technology. Many people have always believed that blockchain’s future was bright, even if it is amorphous in terms of appearance and timeframe. The appearance of blockchain is only half the story. This is due to the disruption and innovation that blockchain can bring to many industries. To fully utilize blockchain, visionaries and founders are needed. We are on the right track.