What is Ethereum 2.0? How Does It Affect the Markets?


ETH 2.0 is a long-planned upgrade to the Ethereum network, providing it with the scalability and security it needs to serve all humanity. ETH 2 will reduce energy consumption, allow the network to process more transactions, and increase security. Technically speaking, Ethereum will be a Proof of Stake (PoS) blockchain and promote shard chains. This could be a huge change in the way Ethereum works and equally great benefits.

However, this is just a change in Ethereum’s infrastructure. If you are already an ETH owner, dapp user, or dapp developer, you don’t need to do anything because ETH 2.0 will be compatible with the main Ethereum network you are using today.

Will it affect the ETH price and the markets?

According to some analysts, the Ethereum 2.0 protocol update could positively affect ETH’s price in the coming months and years. The update could increase Ethereum transactions’ demand due to increased speeds, falling costs, and more benefits. ETH is required to process transactions, so as transactions increase, the demand for cryptocurrency must also increase. The more demand there is to use the ETH network, the higher the price can go because there is a true underlying value created for the user. EIP 1559 can also support price increase as it will reduce the volatility of transaction fees. Ethereum founder Vitalik Buterin said that if EIP-1559 and ETH2 are implemented at current transaction levels, the ETH supply will actually stop growing. The decline in the ETH market supply can increase the price along with recession and/or increasing demand.

P.S: This is not an investment advice.


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