Not all crypto currencies are created equal. The future of crypto relies on ease of use, stability, and sustainability—all qualities being optimized by Ethereum 2.0.
For a decade now, we’ve been fed the line “crypto is a new way of payment.” Although bitcoin has been in the collective vernacular for longer than some TikTokers have been alive, rarely is it used for more than investing, payment of ransoms, or scams. Well, save for the man that spent 91.4 bitcoin on a Tesla—at the time worth USD$100K and as of today over USD$4.44 million...talk about a bum deal.
With the introduction of Phase 0 of Ethereum 2.0, or Eth 2.0, in December 2020, it’s become clear that the move from the Proof-of-Work (PoW) consensus algorithm to Proof-of-Stake (PoS) is a vital key in unlocking the usability of cryptocurrencies for payments.
How? Well, let’s start talking about the tried-and-true, classic payment network processor. Visa, the king of payment processing, has the capacity to process up to 65,000 transactions per second (tps) but typically executes around 1,700 tps. Ethereum 1.0 can only do 30 tps. And Bitcoin weighs in at a whopping 4.6 tps. Yikes!
This is where it gets interesting: Before launching Ethereum 2.0 Phase 0, Ethereum co-founder Vitalik Buterin announced that we may soon see Ethereum processing times nearing 3,000 tps. Once Mainnet Ethereum and the Beacon Chain are merged in Phase 1 the processing speed could theoretically reach a capacity of 100,000 tps. By matching and even beating traditional payment processors’ speed, Ether might become well-known even outside the crypto-spheres.
Ethereum’s move to Proof-of-Stake has democratized mining in a way that PoW could never. While PoW has “mining,” PoS has “staking.” The price of maintaining bitcoin’s PoW blockchain building mechanism is astronomical and deeply unsustainable—bitcoin mining is estimated to consume 0.41% of the world’s total annual electricity consumption.
So what makes staking different from mining? Mining involves solving series of complex equations to ensure the safety of the blockchain: this means a lot of computing power and a lot of energy-consumption. Staking, on the other hand, involves Ether-holders temporarily locking up 32 Ether coins to help the blockchain validate it against itself.
Staking itself is extremely easy in comparison to mining and thus there are plenty of staking services to use to stake, most of which require they hold custody of one or both keys. Although it may sound scary, there are non-custodial staking services like Blox. To stake with Blox, there’s no need to hand over the keys to Ether. It gives much more peace of mind when compared to sharing keys with custodial and semi-custodial staking services.
Staking has greatly leveled the playing field. Ethereum is expected to reduce its energy consumption by an estimated 99.95% by the time Eth 2.0 is fully implemented. The average Joe or Jill’s ability to passively earn major (Ether) coin without any surprises on their electricity bill. It’s even easy to start staking with a plethora of staking services, Blox Staking included.
The future of cryptocurrency has not quite caught up with the reality of take-out, but hey, if you start staking Ether now you may be able to pay for pizzas for the rest of your life from the interest earned on staking.
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