Ethereum 2.0 Upgrades Explained - Sharding, Beacon Chain, Proof of Stake (Animated)

have you ever gone to the store with the idea of buying a package of oreos we have for sure the double stuffed oreos are the key to our hearts but back to the story you get to the store and you find that the aisle there is a new version of oreos ones that have a better taste maybe it's the pumpkin spice or the honey cream ones and they stand out because of a new improved look with better branding and to add a cherry on top they even have about 40 less calories than the older ones well just like oreo's new looks and better taste ethereum 2.0 update is doing a little bit of the same thing and is paving the way for an overall better product welcome to whiteboard crypto the number one youtube channel for crypto education and here we explain the topics of the cryptocurrency world using analogies stories and examples so that you can easily understand them in this video we're going to explain what the major changes to the ethereum 2.0 update are and explain them in a way that you can actually understand them without being a developer and maybe even entice you to go get your own package of oreos after this video let's dig in so first off why is ethereum upgrading well it's upgrading so that it is more scalable secure and eco-friendly let's go over each one of these real quick scalability right now ethereum can only handle around 15 transactions a second whenever the network is very busy this means that the cost of transactions start to get very high because all of these transactions are competing with each other they'll each pay higher and higher prices in fact we've seen it get as high as 50 dollars for a single transaction meaning if you want to send your friend 20 in ethereum you would have to pay a total of 70. ethereum 2.0 should have mechanisms in place that allow it to perform up to 100 000 transactions a second and maybe even more second is security so ethereum 2.0 will also be much more resistant to 51 attacks due to how it works in other words it'll be much more difficult to attack the network or to do something malicious to it now in the rest of this video we are going to explain a bit more of the technical side on how that works and lastly it's upgrading to be more eco-friendly right now ethereum uses the proof-of-work mechanism which uses a ton of electricity to help secure the network since ethereum has grown to such a large size and the coin is believed in by many people we can actually switch from proof of work to the proof of stake method which uses much less electricity stick around and we'll teach you exactly how it works in simple words so now we know why ethereum is upgrading so put on your big boy or your big girl pants and let's talk about how they are doing it in this video we are going to be summarizing these ideas however there will be separate videos on each one of these so that you can have a better idea of how the technicals work first off let's go over proof of stake right now ethereum uses a consensus model called proof of work if you're not sure what a consensus model is you should definitely subscribe because we actually have a video coming out soon on this channel of at least like five different consensus models and explaining what they are basically a consensus model is a way for a group of people to agree on something in the case of ethereum the thing that they are agreeing on is all the transactions that are happening in the blockchain now this model they use right now is based on work it's called proof of work think about it like this there's a race and everyone lines up to the race now when the race starts everyone runs to the finish line as fast as possible the one runner who is the fastest will win and since they won we will give them a reward however if you scale this everyone who ran technically wasted their energy especially if they're running in a bunch of races and they keep losing in proof of stake instead we can do three specific things to make this more energy efficient number one we make sure that the runners put up collateral this is called their stake number two instead of letting a bunch of runners run we only pick one runner and lastly number three we shorten the race so that it's much easier to win this way nobody wastes their energy or electricity when they're running the race in other words validating transactions if you want to know more about how the collateral works or how the runner is picked or how short the race actually is check out our video about proof of stake the next big thing about ethereum 2.0 is something called the beacon chain so the beacon chain is a proof-of-stake mega blockchain that actually went live on december 1st 2020. it does not handle transactions or smart contracts but you can think of it as the heart of ethereum 2.0 right now it actually exists separately from the ethereum blockchain running side by side with it it is essentially the ethereum 2.0 blockchain running in parallel with the version 1 blockchain until we switch to it the beacon chain is also responsible for selecting the runners or the validators who get to validate the proof of stake blocks we found that we can't explain too much of it without getting very technical but the beacon chain's purpose is basically to coordinate the entire ethereum network speaking of the entire network let's talk about sharding i'm going to say one more time to make sure you actually heard me sharding so sharding is a very interesting idea and we're going to explain it in an analogy imagine you're wanting to go to work and there is a one highway lane that highway is so backed up that you are now bumper to bumper and your usual 10 minute drive is taking three hours this is currently kind of how ethereum is working it has one lane imagine if they made 63 other highway lanes that went this exact same route but this way a lot more cars could travel on the highway this is essentially what sharding is they are essentially creating 63 more highway lanes so there's a total of 64 lanes they all work together so that the cars can travel now in technical terms the idea of creating these shards is so that they can split the infrastructure of the ethereum network into smaller pieces that way each smaller piece can operate independently of each other with the goal of scalability now in terms of ethereum these shards will allow the storage and accessibility of data but they won't be used for executing code like our current blockchain eventually our current ethereum blockchain will become one of the 64 shards so we will keep all of the old data from the old blockchain and then we'll have 63 new blockchains to start using this process is also a big technical term in the ethereum 2.0 update and it's called docking it also marks the last time we will actually use proof of work in the ethereum network so now that you know what proof of stake is the beacon chain and sharding you might be wondering when all of this is going to take place so just like developers roll out software updates and slow sections to make sure bugs and other issues are reported and nothing horrible happens ethereum 2.0 will be upgrading in sections and around the time period of around one to two years at least according to their website now the plan is to upgrade in phases phase zero includes the beacon chain which uses the new proof of stake mechanisms now as we have said this has actually already happened on december 1st 2020. to do this a bunch of validators have actually volunteered to validate transactions on this new beacon chain and each validator had to stake or in other words lock up 32 ethereum which right now is a lot of money there's actually around 10 billion dollars locked up as collateral for these validators so actually right now the heart of ethereum 2.0 is already running and being tested on the next phase is phase one and that involves the sharding network now the ethereum.org website says they plan for this phase to happen around 2022. this is when they want to launch and start testing the shard blockchains next is phase 1.5 and this is what they are calling the docking and final merging process this is when they'll actually switch from the old ethereum to the new ethereum they will actually move from proof of work to proof of stake and then the old ethereum blockchain will become one of the new shards lastly we have phase 2 which is essentially the final touches the shards will be upgradable to include new features there's also a lot more technical stuff outside the scope of this video that happens in phase 2 but one of them includes an upgrade to ethereum's virtual machine which is actually the thing that runs the ethereum code now i do want to say it should be noted that some of these specifics have been changed in the past at least the timings and the dates rumored about each one of these changes has changed a lot for example some developers thought phase 0 was going to happen in early 2019 when in reality it actually happened in late 2020 so let's go over to summary we've gone over some of the benefits of what ethereum 2.0 is sharding is the ability to split the load of the entire network among a bunch of smaller chains proof of stake will allow validators to use much less electricity to secure the network and finally ethereum 2.0 overall should work in a very similar way to the ethereum that we have today however there are just a lot of major improvements across the whole network now remember as we end this video we've summed up this video so that hopefully you can understand it and if you do please click the like button as it will encourage us to spend more time to create videos like this we hope that you've enjoyed this video we really hope that you've learned something and most of all we hope to see you in the next video

Channel: Whiteboard Crypto

Views: 64,722

Keywords:

Id: pycVClxWUN8

Length: 9min 22sec (562 seconds)

Published: Thu Jul 22 2021