Ethereum

Ethereum 2.0 won’t be faster, but it will be scalable

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There has been some coverage of recent comments from Ethereum creator Vitalik Buterin saying that the second largest blockchain cannot go any faster than it is now.

Which seems to contradict what he and all the other big Ethereum 2.0 developers have been saying for years: that Ethereum 2.0 will be an order of magnitude more scalable than the current blockchain, which has been groaning under the weight of its own success for several years.

See also: PYMNTS Blockchain Series: What is Ethereum? The Blockchain That Moved Crypto Beyond Money

Which one is it then? Is the much-vaunted Ethereum 2.0 stuck at the same speed?

Technically, yes. In reality? No not at all.

In the payments industry, speed tends to refer to transactions per second, or TPS. In blockchain, however, “scalability” is the term used to account for TPS. Speed ​​refers to something else entirely: block time.

Read more: Bitcoin’s 10-Minute Block Time Lots and Fluctuating Transaction Fees Give RTP an Edge

When Buterin talked about “limits to speed up block time” in a recent Reddit thread – that he reposted on Twitter – he was referring to how quickly new transaction blocks are added to the Ethereum blockchain. And this is a question that is more about security than scalability.

Ethereum block time is currently around 13 seconds. And while that’s much better than Bitcoin’s 10 minutes, Solana, one of the current “Ethereum killer” blockchains looking to steal from developers and projects, has a block time of 400 milliseconds – so a new block is added every 0.4 seconds. It can also handle 50,000 TPS.

Read more: PYMNTS Blockchain Series: What is Solana?

But the ongoing project to convert Ethereum to Ethereum 2.0, built on the greener and much more scalable proof-of-stake consensus mechanism (as opposed to Bitcoin-style proof-of-work mining) will allow it to reach 100,000 GST.

Read more: PYMNTS Crypto Basics Series: What is a consensus mechanism and why is it destroying the planet?

Now, blocking speed is very important for payments, but what it affects is transaction time – latency – and final transaction confirmation, which is a matter of security. For all their vaunted immunity to changing information once it has been recorded, blockchain transactions are vulnerable for a short time after being added to a block. You can see the details in the link below.

See more : The 51% Attack: Crypto’s Double-Spend Achilles’ Heel

The blockchain trilemma

“Trilemma” is a word coined by Buterin to describe a problem with the three main characteristics of a public blockchain: they are decentralized, they are secure and they are scalable.

The dilemma part of the word trilemma refers to the widely accepted theory that you must always sacrifice one of these three to strengthen the other two – thus making blockchain design a balancing act.

The way to increase decentralization is to add more nodes – which have complete records of all transactions on a blockchain. But that means more people are vying for the right to validate transactions and add them to the blockchain in exchange for a reward of newly minted coins and transaction fees.

The way to make a blockchain more secure is to spend more time and effort validating transactions. They must all agree – come to a consensus – that a newly written block is accurate; nodes that disagree are grouped into separate blockchains. And that takes time.

Adding scalability means adding more transactions to the blockchain, either by speeding up block time or increasing the size of each block.

Here’s the trilemma: the more nodes you have, the more decentralized and secure your blockchain is, but it takes longer for them all to come to consensus, which hampers scalability.

Likewise, increasing scalability and decentralization means reducing security, because you have to perform more validation faster, and security will suffer.

To be more secure and scalable, you need to reduce the number of nodes and make the blockchain more centralized, because fewer people can reach consensus faster without compromising the validation process.

Proof-of-work blockchains like Bitcoin and the current Ethereum sacrifice scalability, while proof-of-stake blockchains are less secure, but can be more scalable.

Buterin’s view is that by adding new blocks faster than Ethereum currently does, Ethereum 2.0 would be giving up too much security.

How Ethereum 2.0 will evolve

Ethereum 2.0’s proof-of-stake consensus mechanism “attempts to give blocks a very high level of confirmation [meaning consensus of validity] and it requires thousands of signatures. … This process causes latency and takes time.

The way Ethereum 2.0 will circumvent the trilemma is sharding, i.e. creating new side chains that run in parallel with the main blockchain, dividing the load. This allows it to process more transactions – many more – without reducing the number of nodes or speeding up the validation security process.

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